Now that so much of the homebuying process can be done online, some buyers might wonder if they still need to hire a Realtor. While there are many ways that a Realtor can help guide you through the homebuying process, you don’t need to hire one to complete the home purchase.
Here’s a look at how to buy a house without a Realtor.
1. Understand What You’re Sacrificing
If you decide to forgo hiring a Realtor, it’s important to understand what you’ll actually be sacrificing. Some people think that buying a home without a Realtor will save them money, but the seller is usually the one who pays the real estate agent commission.
Realtors help buyers save money in different ways:
- They can assist you in making an offer and negotiating a lower price.
- They help make sure you aren’t making any expensive errors, like neglecting to include the right contingencies in your purchase agreement.
- There’s a lot of paperwork involved in buying a home, and your Realtor can help you understand everything before you sign.
2. Do Lots of Research
If you won’t be able to rely on a Realtor’s experience in the field, then it’s that much more important to educate yourself on the market and how the homebuying process works:
- Look into where interest rates are at relative to years prior, as that will affect your monthly mortgage payment and how much total interest you’ll pay.
- Determine if it’s a buyer’s market or a seller’s market.
- A buyer’s market occurs when the supply of available homes for sale exceeds demand. Sellers might be more willing to lower their price or to otherwise negotiate with buyers.
- A seller’s market occurs when demand exceeds supply, and many buyers are competing over available homes. Sellers may be able to sell their home at a premium.
- Research the local market and how much homes in the area have sold for recently.
3. Get Preapproved for a Mortgage
Preapproval gives you an idea of how much house you can afford, but it shouldn’t be confused with a guaranteed offer. Before you get final approval, the lender will need to review your finances in depth to verify that you’ll able to pay off the loan.
Many sellers want to see a preapproval letter before considering your offer. Mortgage preapproval shows sellers that you are serious about buying and will likely be able to get financing.
4. Tour Open Houses and Ask Questions
Here comes the fun part! It’s time to start touring open houses and scheduling viewing appointments. You can take virtual tours at many places, but visiting homes in person allows you to get a better understanding of the true condition of the home and what it might be like to live there.
Because you don’t have a Realtor, you need to pull listings and arrange these visits yourself. You’ll also want to prepare a list of questions so you’ll know what to ask at each open house or viewing appointment.
5. Make an Offer (and Negotiate)
Once you find the right home, you’ll make an offer, which should include the contingencies you want. Contingencies are conditions that must be met for the sale to be finalized, and help protect your earnest money. If a contingency isn’t met, then you can walk away from the deal without penalty.
Because the seller needs to agree to your contingencies before accepting your offer, some negotiating may be required. How much leverage you have to negotiate will depend on whether it’s a buyer’s market or seller’s market
When it’s time to draft an official offer letter, you’ll want to consult with a lawyer or real estate expert. Your offer will be a legal document, so it’s best to have a professional make sure everything checks out.
6. Apply For a Mortgage
After the seller accepts your offer, you can get a home loan — but you need to be approved. Your lender will dive into your finances to make sure you have the income and assets to keep up with your monthly mortgage payments. This is called the underwriting process, and it will require you to provide certain financial documents — like tax returns, pay stubs, and W-2 or 1099 forms. If you meet your lender’s eligibility requirements, then you’ll likely be approved for a mortgage.
7. Buy Insurance
You’ll likely be required to purchase homeowners insurance as a condition of your mortgage. This type of insurance typically covers you if something happens to your home and belongings. It also provides coverage if an accident or injury occurs on your property.
8. Get the Home Appraised and Inspected
Your lender will likely require you to get a home appraisal — though it’s beneficial for you as well. During the appraisal, a licensed third-party professional will examine the home and quote its fair market value. The appraisal helps the buyer confirm that they’re getting a fair deal on the home, and shows the lender that the loan amount is appropriate. If the appraisal comes back lower than expected, it can give you leverage to negotiate with the seller to lower the price, or dispute the appraisal.
It’s also a good idea to get a home inspection. During the inspection, a licensed professional will examine the condition of the home to confirm it’s safe and livable. If the home inspection detects major issues and you have the right contingency in your purchase agreement, you should be able to negotiate with the seller to have them conduct repairs or cover the cost. Skipping the inspection means you won’t find out about any problems until after the sale is finalized — and you might inherit some expensive headaches.
9. Conduct a Final Walk-Through
The final walk-through is your last chance to ensure the home is in good condition and ready for you to move in. If the seller agreed to complete certain repairs or replacements, this is your opportunity to confirm that they are done. You’ll also inspect the home room by room to make sure any items that were supposed to be included in the sale are accounted for, and all the seller’s belongings have been removed.
A Realtor would know all the things to look for, so be sure you’re prepared to handle the final walk-through on your own. It may help to print out a final walk-through checklist to cover all your bases.
10. Close On the Home
Closing day is the final step in the homebuying process and would typically be facilitated by the buyer’s and seller’s real estate agents. In place of an agent, it’s advisable to have an attorney present to make sure the process follows all legal guidelines and is binding.
Here are some answers to a few frequently asked questions about buying a home without a Realtor.