Buying a home without a buyer’s agent. A mistake made when buying a home could cost you thousands of dollars.
By Ilyce Glink and Samuel J. Tamkin
Q: In what circumstances would you recommend purchasing a property without a buyer’s agent? I don’t see the clear value in the age of Redfin/Zillow, and from my experience I’m not sure any real estate person is going to be as hard-working and diligent as I’d be in [doing the research]. Plus having many thousands of dollars in extra buying power is obviously a giant plus for me.
Do you have any tips for people who are opposed to using a buyer’s agent?
The real estate industry has come a long way.
A: In our columns, we’ve talked about the effect the internet has had on the real estate industry. For the most part, the information you get on real estate properties has improved vastly over the years. It was only thirty years ago that almost all the information on properties for sale was kept in black and white listing books. These were printed on newsprint by local Realtor associations, refreshed every two weeks. And, you couldn’t view those listings without working with a real estate agent that was a member of that Realtor association.
The real estate industry has come a long way.
Today, you can get information about homes from so many different online sources. Online, you can find specific real estate tax information, hyperlocal crime statistics, view information on school districts and individual schools, obtain flood zone information and see most any property from the air and ground using one of many online resources. You can also measure the size of the land, determine what the price history was for a home, and even compare what a handful of websites think a particular property might be worth. (And, of course, you can check the online rating of individual brokers and their firms.)
First time home buyers will benefit from a good real estate agent
With all that information, a resourceful buyer might not need a real estate agent to help them buy a home. But, you still might not get the full picture of a property without the insider knowledge of a great real estate agent. Some first time home buyers will benefit greatly from the expertise a good real estate agent. The agent can provide in evaluating the various options they have when buying a home, and particularly if they’re buying a first home.
You seem to feel that you have a good handle on what you want and how much you can spend. If you don’t feel you’d benefit from the advice, knowledge and experience a good real estate agent might bring to the table and if you’re comfortable searching for a property on your own, you can go without a real estate agent.
Remember, however, that a mistake in this area could cost you thousands of dollars.
Negotiate the right price and terms for the home
Let’s say you find a property listed with a real estate company. And, let’s say that the seller is willing to entertain an offer from you, an unrepresented buyer (not all will). You might think that you might go in and negotiate a purchase price and then try to get the listing broker to pitch in one-half of the commission. Well, you’ll quickly find out that listing agents won’t give much, if anything.
Their listing agreement with the seller requires the seller to pay them a commission (let’s say, 4 to 6 percent of the sales price), which they are required to share with the buyer’s agent – if there is one. If you don’t have an agent the listing agent may be under no obligation to pitch in some of that cash to make the deal work. (They might, or not.)
We like that you’ve taken the initiative to do the work it takes to find the right home. But, finding the right home is just the first part of the process. Next, you need to negotiate the right price and terms for the home.
Buying a home without a buyer’s agent.
Here’s the rub: Buyers who buy without an agent are at risk for overpaying. Because they may not have critical information about the property, or what similar homes in the neighborhood are selling for in real time. Sellers who sell on their own may likewise settle for less than the true market price simply because they don’t know what kinds of bids (or bidding wars) the local market is generating.
If you want to buy a home on your own, and you’re prepared to get as much information as possible about the property, neighborhood, school district, upcoming changes in the neighborhood, what other similar homes are selling for and other information critical to a successful outcome – have at it.
Buying a home without a buyer’s agent my not reduce how much buying power you have
But in a hot market especially, going it alone may feel daunting. If you keep losing bids, or find that homes are being sold so quickly there isn’t time for you to make an offer, then consider hiring an agent. This agent will assist you in making your single biggest purchase to date.
One last point: Exclusive buyers agents require you to pay for their services. They work to negotiate a lower purchase price to cover that amount. Agents that represent buyers and sellers are paid a share of the commission paid by the seller. While that ultimately is funded by you. Since you’re paying for the home, going it alone may not reduce how much buying power you have.
Good luck and please let us know how things turn out.
©2021 by Ilyce Glink and Samuel J. Tamkin.