How to Buy a House Without a Realtor: Steps to Follow and Factors to Consider
Buying a house without an agent can potentially save you several thousand dollars. You may already know how the homebuying process works. Or you may know someone with real estate expertise who has committed to offering free services. In these scenarios and others, you may not need an agent to help you accomplish your homebuying goals.
8 steps to buy a house without a realtor
Step 1: Set your budget
Mortgage repayment terms typically last 15 to 30 years, so it’s vital to determine what you can comfortably afford. All of your monthly debt payments (including your potential mortgage payment) should be less than 43% of your monthly income, according to the Consumer Financial Protection Bureau (CFPB). Add up your current monthly debt and enter it into a home affordability calculator to see both the monthly payment and loan amount that fits your budget.
Step 2: Get preapproved
Most sellers won’t accept a buyer’s offer if they don’t see a mortgage preapproval. A home loan preapproval is an initial green light from a mortgage lender, detailing the estimated loan amount you can borrow. A preapproval is based on a review of your credit, income and debt.
Step 3: Find the right home
Many people consider this the fun part. The U.S. Department of Housing and Urban Development (HUD) provides an example wish list that could include things like:
- A specific area of town
- The type of house you want (ranch, two-story, condo, mobile home, townhome, etc.)
- The number of bedrooms and bathrooms
- The overall size the home and the land it comes with (if any)
- The local school district
Step 4: Review the seller’s disclosures
Generally, sellers must tell potential buyers of any known problems with the house that would negatively affect its value. However, the only nationally required disclosure is for lead in the common areas of the house, such as lead paint. Each state has different laws on what a seller’s disclosure must include.
Consider hiring a real estate lawyer
Seven states require that a real estate attorney participate in the mortgage-closing process but, even in states that don’t require it, one could be a useful guide for the typical mounds of legal and financial paperwork homebuyers have to traverse.
Here are the states that require a real estate lawyer:
- Connecticut
- Delaware
- Georgia
- Massachusetts
- New York
- North Carolina
- South Carolina
Step 5: Make an offer
If the house is right, here are the things to consider when you’re deciding how much to offer:
- The asking price
- Prices of comparable homes in the area
- How long the property has been on the market
- Items from the seller’s disclosure and the home’s condition
If the sellers have a real estate agent representing them, you’ll send the offer to the agent. If they don’t, you’ll send the offer to the sellers directly. The offer letter typically needs to contain the following details:
- The home’s full address
- The full, legal names of the potential buyer(s)
- The amount you’re offering for the home and your earnest money deposit amount
- Any proposed provisions, contingencies or seller concessions
- A copy of your mortgage preapproval letter
- State-specific clauses, if required, such as a deed and title discussion
- The date you expect to close and a deadline to respond to your offer
Step 6: Get an appraisal and inspection
Mortgage lenders typically require home appraisals, which provide a professional assessment of a home’s value. Lenders may or may not require a home inspection, which looks closely at the home’s condition, livability and safety. An appraisal can cost $300 to $400 and an inspection can cost $300 to $500, depending on the house and its location. You could use the results from both to help you negotiate.
Step 7: Negotiate
If the appraisal comes in low or the inspection reveals problems, you could ask the seller to cover the difference in value and/or the repair costs. A seller could cover the repairs by discounting the price, agreeing to a reimbursement or fixing the issues before you close on the house. Here’s a full guide on how to negotiate a home’s price.
Step 8: Close on your new home
Once you’ve reached an agreement with the seller(s), you’ll finalize your mortgage and then both you and the seller will sign to finalize the home sale. You’ll need to bring any money to cover your down payment and closing costs when you go to sign on the dotted line. Make sure you get copies of any and all paperwork for your records.
Extra work you’ll need to do without a realtor
- Market research: Real estate agents’ professional lives involve deeply knowing the real estate market. A real estate agent’s license provides access to specialized databases that people without one can’t see. You’ll likely have to spend time getting to know the market in the area where you want to relocate, whether online, in person or both.
- Negotiations: Asking for concessions and responding to counter-offers can be tricky when you have a large personal stake. Agents act as more impartial go-betweens and can provide advice based on experience.
- Third-party professionals: Depending on your state and your exact deal, you may need to hire an appraiser, inspector, real estate lawyer, title company and/or contractors. Realtors typically have a network of professional contacts they can recommend. When you buy without a realtor, you may have to find reputable professionals on your own.
- Paperwork: You’ll need to know of, read, understand, fill out and file all necessary documents.
Will you save money without a realtor?
You could save money without a realtor but it’s not automatic. The seller in a real estate transaction typically pays the 6% agent commission fees (3% each for the agent representing the buyer and the agent representing the seller). If you, as the buyer, don’t have a realtor, you could ask the seller to reduce the home price to reflect this.
When to buy a home without a real estate agent
Here are a few situations in which you may find buying a home without the help of an agent to be most advantageous.
- If you’ve bought several houses: You may have the knowledge and experience behind you to purchase another home without an agent if you’ve been through the process several times already.
- If you have a committed friend or family member who’s a realtor: A close contact who is willing to help you out for free can be a huge asset.
- If you are or were a realtor: If this type of thing used to be your job — or is currently your job — and you’re willing to do the work, go ahead!
- If you’re close to the sellers: Buying the home from family or close friends whom you trust could be great if you maintain open and honest communication.
Pros and cons of buying without a realtor
| Pros | Cons |
|---|---|
Potentially save thousands. You could save about 3% of the property’s purchase price. More control. Without an agent acting on your behalf, you have greater control over the process. Less rigid negotiations. Without a middleman, you can have a more direct connection. | Potential learning curve. If you lack the considerable knowhow and agent experience, you may have a steep learning curve. More work. Even if you know what to do, you’re taking on more responsibilities. No negotiation help. Emotions or inexperience could cause a negative effect. |