It is possible to buy a house without a realtor, but you have to know what you are doing. Going into the process blindly can lead to a bad situation. You might end up paying too much for the home, or the sale might never even go through because the value doesn’t support the price. While there are many benefits of using representation, it is definitely possible to handle it on your own.
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Keep reading to learn how you can do it too.
Get Preapproved for a Mortgage
Before you do anything, you’ll need to be
preapproved for a mortgage. The fact that you will be walking into homes for sale without a realtor is a red flag to sellers. If you also walk in without a preapproval from a reputable lender stating that you can afford to buy the home, sellers may not take you seriously. Take the time to shop around for a lender first, securing quotes from at least three lenders. Once you choose a lender, you can complete the application process and get onto the fun part of shopping for a home.
Getting preapproved first lets you know how much home you can afford. Without the preapproval, you might end up shopping outside of your budget. When it comes time to bidding on the home and signing the purchase contract, you could find yourself losing your earnest money deposit if you can’t secure financing.
Do Your Research
One of the largest benefits (there are many, though) of using a realtor is the little research you have to do. Your real estate professional will let you know when homes that fit your criteria hit the market. When you represent yourself, you have to search daily and sometimes multiple times a day for homes hitting the market. If you are moving to an area where the homes move fast, you may need to be one of the first to see the home and bid on it to stand a chance.
Luckily, the internet makes it very easy to search for homes for sale. You can search sites like
Redfin to see the latest listings. Some sites even allow you to set up alerts so that you know right away when a new listing hits that might meet your criteria.
You’ll Need Some Type of Representation
Even though every home purchase needs a real estate attorney, if you are representing yourself in the sale, you need one right away. This gives you a little back up when signing the contract and determining the fair price for the home. An attorney cannot replace the services of a realtor, but at least having that second pair of eyes go over the contract can help you from making a big mistake.
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If you have an attorney chosen before you even start looking for a home, the bidding process should be seamless. If the seller accepts your bid and a purchase contract is provided, you’ll have your attorney all ready to go over the contract for you. If you don’t have an attorney ahead of time, you could end up losing the sale as you try to secure an attorney’s services to review the contract. Sellers usually move pretty quickly and if they don’t have an answer on the bid/contract quickly, they may move onto the next offer.
Don’t Sign any Forms
Once you start viewing homes, which you can do once you have your mortgage preapproval and attorney lined up, you may be faced with some paperwork. Some sellers and/or realtors require buyers representing themselves to sign paperwork stating that you are representing yourself. Typically, there is no harm in the forms, but you definitely want your attorney to look them over first. Many times, the paperwork has to do with the commission the listing agent will make and/or pay. This could affect the price of the home and many other aspects of the buying process, so having an attorney review them is in your best interest.
Make an Offer
This step is probably the hardest to do on your own. Usually, a realtor handles the offer and negotiations, as many sellers will come back with a counteroffer. In your offer, you will need to include a few things, such as:
- Wording regarding how you plan to handle the real estate commission. Since you don’t have a realtor, you will likely bid a slightly lower price, taking out the buyer’s agent commission. Your contract should include this wording so the seller and his realtor understand this.
- Contingencies – If you have a home to sell or you still need to secure financing, you’ll need contingencies for these items in your contract. You may also want a contingency for the inspection to give you time to have the home inspected to ensure that it is okay.
This step is when your attorney will come in handy since you don’t have a real estate professional helping you. Try not to handle this step on your own as it could leave you without your earnest money deposit if things go bad.
Once the contract is signed by everyone, it’s time for the inspection and appraisal. You may want to be present for these steps. If not, you may want the seller’s agent to be present. If you want the seller’s agent present, you’ll have to work it out with him/her. Whether he/she is willing to do this without compensation is an individual decision. Many realtors do it because they know they will close a deal faster. Others may require compensation from you to be there.
Following through on the appraisal, inspection, and financing will help you stay in the loop. You’ll know when something goes wrong. This may help you prevent unpleasant surprises down the road. For example, if the
appraised value comes back lower than the amount you bid, you’ll know right away. You can then decide what action you want to take to rectify the situation. Usually, you can either negotiate a lower price or walk away from the sale. If you had an appraisal contingency in the contract, you could do so with your earnest money in hand.
Buy the Home
The final step is to get to the closing and buy the home. Again, you’ll want your attorney present for this step. The closing involves a large mountain of paperwork that you probably won’t understand at first. The closing agent usually goes through the deal quickly, which is why having your attorney present can help make sure you understand the documents and only sign what you are comfortable with signing.
Buying a home without a realtor does involve more work on your end. But, it could be worth it if you could save as much as 3% on the price of the home. Sellers’ and buyers’ agents usually split the commission down the middle. The average home sale nets the realtor 6% total, which is then split 50/50 between the two. Without a need to pay the buyer’s agent commission, you could save 3%, which on a $200,000 loan is $6,000!
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