Can You Save Money by Buying a Home Without an Agent?

In a word: NO.

We keep hearing about people who think they can save money by acting as their own agent when purchasing a home. In truth, it will probably cost them more.

Here’s why:

For starters, without the aid of a buyer’s agent, you aren’t going to know if you’re paying a reasonable price for that home. You can look at similar homes all day and see the asking prices, but without the sales data available to an agent, you will never know the actual selling prices.

You say the neighbors will tell you what they got for their house? Yes, they might. And it only might be the truth. People don’t like to admit taking less than the asking price for their house – and some even like to put on a false front by bragging that they “made a killing.”

Next, without the experience and expertise that an agent can lend, you may forget to include contingencies that can cost you money. For instance: What if that house needs a new septic tank and you forgot to include a contingency for approval after the inspection? What if you forgot to ask for an inspection?

Your home inspector may also find little things that should be corrected before you close – but what if you didn’t include dollars for repairs in your contract with the seller?

And, unless you’re a construction expert, you may entirely miss warning signs that would cause you to bypass a house before paying an inspector to point them out. A good buyer’s agent can protect you from that expense.

There are dozens of details to be addressed in a purchase and sale agreement – and unless you fill them in correctly, you could be liable for thousands of extra dollars.

Remember that the listing agent is working for the seller… not for you. You cannot expect him or her to point out mistakes that could cost you money, or to give you any advice at all. In fact, knowing that you have no one to advise you, they might even push a little harder to give the seller an advantage.

Maybe you’ll get part way through and realize you need advice. Where can you turn to understand your contract when you have no agent? You’ll need to pay a real estate attorney to explain things to you.

Negotiating with the seller is another area where it pays to have an agent on your side. Not only can an agent negotiate from a position of market knowledge, he or she will act as a buffer between you and the seller, or the seller’s agent. That helps keep you out of those damaging “Take it or leave it” situations, and prevents you from revealing information that will damage your negotiating position.

Remember, everything you say to the seller’s agent is being relayed to the seller.

Once you have an agreement, the real work of closing the transaction begins. Your buyer's agent will be looking out for you, coordinating with your lender, arranging for inspections, helping you re-negotiate as a result of those inspections, and tending to numerous other details that you won't have even considered.

But back to saving money… The ONLY way you’ll save any money is if you purchase a “For Sale by Owner” property. In that case you may be able to negotiate the price down if the seller has included dollars to pay a buyer’s agent.

But realize – most people try to sell their homes themselves because they want to save money – not because they want to offer you a lower price.

And of course, in that situation, you’re both back to needing to pay an attorney to make sure the paperwork is done correctly.

If a home is listed, you will not save money by doing without representation.

Some “Do it yourself” buyers say they’ll be able to talk the seller into paying them the money that would have gone to a buyer’s agent. This is entirely false thinking.

When a home is listed with an agent, the commission is agreed upon. The seller will pay either a flat fee or a percentage of the sales price to the listing broker. The listing broker will pay a percentage of that fee to a buyer’s agent – if there is a buyer’s agent involved.

If there is no buyer’s agent, the listing broker and the listing agent will share the entire commission.

Even if they wanted to share with a buyer, they could not. Licensing law is clear about this – commissions may only be paid to licensed brokers and agents. 

The bottom line: Buying without an agent won't save you money, but it could cost you plenty.

 

marte@copybymarte.com

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