Do I need a Realtor to buy a house?

If you’re wondering “do I need a real estate agent to buy a house?” the short answer is no. You can certainly buy without one. However, weigh the pros and cons first: A Realtor can be a tremendous help in guiding you through the complicated buying process, and you may be able to negotiate their fee or even have the seller pay it to save you money. While you aren’t required to hire an agent to buy a house, consider all the angles before deciding to go it alone.

Buying a home with an agent’s help

All real estate agents are licensed professionals; those who are members of the National Association of Realtors (NAR) may also be called Realtors. Most home sellers have an agent working on their side of the deal (typically called a listing agent because they’re handling the listing), so it’s smart to have someone on your side as a buyer, too. A buyer’s agent will have your back in negotiations and can help you make an appropriately competitive offer on a home.

A buyer’s agent can also help homebuyers in a host of other areas. Here are some of the tasks you’d have to do yourself if you were to buy a home without a Realtor:

• Find a home that matches your budget and needs. Real estate search sites give you a sampling of what’s available, but determining whether asking prices are justified takes research. An agent will do this for you based on comparable home sales in the area, saving you time and offering the benefit of their professional expertise.
• Dig up facts on a neighborhood, including ones that a seller might not disclose. Your agent can share insight you might not have thought to ask about, too.
• Negotiate an offer, including the price and other clauses and contingencies in the purchase agreement.
• Navigate the home inspection, and negotiate needed repairs or credits with the seller.
• Decipher paperwork that could be filled with complex jargon and legal terms.
• Request and review seller disclosures. You might not know what to ask for, or what sellers in your state are required to disclose, but agents do.

Buying a home without a pro at your side can be risky, so unless you’ve been through the process before and are very confident in your knowledge, it’s often better to go with an agent. “There are too many legal loopholes and fancy terms that can get overwhelming and confusing for someone who’s not well-versed in the real estate business,” says Laurie Blank, an agent with Timber Ghost Realty in St. Paul, Minnesota.

Agent commissions

When a real estate transaction is completed, the agents involved each earn a percentage of the home’s sale price. This amount typically runs somewhere between 2.5 and 3 percent. It used to be that the seller was responsible for paying both agents’ fees (their own and their buyers’ as well), but new commission rules will go into effect this year that mean buyers may have to pay their own agents directly. Who pays will depend on the details agreed upon in each individual sale.

If you’re concerned about the cost, real estate commission fees are often negotiable — you may be able to work out a lower rate with your agent. You may also be able to negotiate with the seller to have them cover either all or part of your agent’s fee at closing. There are also a variety of “discount agents” who represent clients for a significantly lower rate than traditional agents.

This is one of the biggest, most important purchases of your life, and there’s a lot of money at stake. Paying a pro to work on your behalf gives you the benefit of their knowledge and expertise. Without one, you risk making any number of mistakes that could cost you more money than you save.

Buying a home without an agent

The vast majority of homebuyers do work with an agent — 89 percent in 2023, according to NAR data. But buying a home without one can be a viable option for some, especially if you’re familiar enough with the market that you know your property’s worth.

Another example is if you know the seller: If you’re buying from a family member, for instance, it might seem silly to hire an outsider to negotiate on your behalf. Skipping an agent on a family transaction is fairly common, according to Quincy, Massachusetts attorney Pamela Linskey of Linskey Law.

Here are a few other reasons why you might choose not to work with a Realtor:

• You’re already working with an experienced real estate attorney to walk you through the paperwork and offer legal advice.
• You’ve purchased multiple properties in the past and understand the process very well.
• You’re hoping to save money and don’t want to pay the commission for a buyer’s agent.

Downsides of not using an agent

Most buyers considering not using an agent are looking to save money. However, working without a buyer’s agent means you have to do all the work on your own, and it’s easy to overlook details an experienced agent would know to look out for. Here are some downsides to consider:

• It takes a lot of time, work and research to manage a home purchase on your own.
• Without an expert’s knowledge of fair market values in your area, you might unknowingly overpay.
• Agents have expert negotiating skills. Without one, you must negotiate the terms of the contract on your own. “I’ve heard stories where buyers worked out terms for a contract and found multiple, serious problems after they moved into the home,” Blank says.

How to buy a home without a Realtor: 5 key steps

If you’re ready to buy on your own, here’s how to make it happen, and what to expect at the closing.

1. Negotiate with the listing agent

Negotiating on a home’s purchase price takes skill, but it’s worth trying. Some sellers may be willing to lower their price to help close the deal — sellers hoping to make a quick sale may be more likely to give you a lower price if they haven’t had any offers, for example. Any discount you’re able to score on the price can mean a smaller mortgage and lower monthly payments for you.

2. Review the closing disclosure and ask questions

The closing disclosure is an important document that includes information about the terms of your mortgage loan and closing costs. Be sure to read this document carefully and compare everything to the original loan estimate you got from your lender. If you notice any discrepancies, now is the time to ask questions. Take special note of the interest rate, number of payments, whether there’s a prepayment penalty and any significant changes to closing costs, including the lender fees and title services fees.

It might also be wise to submit a request for final bills to be delivered on closing day. This will show that all of the seller’s outstanding bills, such as utilities, have been paid. In addition, you may need to prorate or give credit for real estate taxes, service contracts and homeowners insurance.

3. Have a professional review the paperwork

If you’re not using an agent, be sure to hire a real estate attorney early on to review the purchase agreement and other documents. “Forget waiting until the closing to get an attorney,” Linskey says. Buying a home is a large commitment, and the paperwork can be complicated. An experienced lawyer will be able to advise you throughout the process and incorporate language into the contract to protect your interests.

4. Bring cashier’s checks, proof of insurance and your IDs

There are a few important items you’ll need to bring to the closing. Have these items ready well in advance so you don’t run into any issues on the big day:

• Certified or cashier’s checks: You should be notified in advance of the checks you’ll need to bring to the closing, including who they should be made payable to and the exact amounts. Personal checks are usually not accepted. Always confirm payment instructions with the title or settlement company directly, and be very cautious if you get an email asking you to wire the funds instead — this can be a sign of mortgage fraud.
• Proof of homeowners insurance: You’ll likely need to show proof that you have secured a policy to insure your home on the day of the closing that is good for at least one year.
• Government-issued photo ID: Make sure you have a current driver’s license or passport with you. If you’re buying a home with a partner or spouse, you’ll both need legal ID.

5. Sign all the documents and get the keys

At the closing, plan to spend one to two hours reviewing and signing two sets of documents: One outlines the agreement between you and your mortgage lender, and the other outlines the agreement between you and the seller. Take your time and read everything — and, if possible, have an attorney present. You never want to sign a legal document you don’t fully understand.

FAQs

• Do I need a lawyer to buy a house?

  It depends on which state you’re in. Many states legally require homebuyers to hire a real estate attorney, or require an attorney to oversee the closing. Even if your state does not require it, it is still a good idea: Real estate contracts are complex, and the stakes are high, so it’s smart to make sure everything is legally buttoned-down.

• Can I buy a house with cash?

  Yes. Cash home purchases, meaning you pay the full price upfront rather than securing a mortgage loan, is fairly common. Most people don’t have such a large amount of liquid funds to spare, but if you do, a cash purchase can save you from having to pay back a large loan with a hefty interest rate. It saves you money in closing costs as well, since many buyers’ costs are lender-related.