Do You Need a Realtor to Buy a House?

One of the questions homebuyers ask is "Do I need a Realtor to buy a house?"

The short answer is “no.” In the same way you don’t need a mechanic to fix your car, a lawyer to represent you in court, or a dentist to pull your tooth out, you don’t have to have a licensed Realtor represent you. But, much like with the aforementioned scenarios, the more nuanced answer is “It depends.”

Let’s look at why you should have a Realtor represent you when buying a home, and all the scenarios in which you might be able to forgo representation.

4 Pitfalls of Buying Without an Agent

Unless you work in real estate full-time, it’s easy to get blindsided by a situation you didn’t think was possible. Here are four examples:

1. Unseen Issues and Oversights

I know a man, we’ll call him John, who decided to purchase a large lot of vacant land without a Realtor. He relied on the listing agent’s assertion that the property could have multiple homes built on it, so he paid a price based on the value of it being a multifamily lot. After closing, he requested building permits from the county and found out that the land could actually only have one home built on it. This was after John had already paid to have plans drawn up and spent money prepping the land. Because he wasn't aware of certain zoning laws and restrictions that affected the property, he overpaid for it and then had to take a huge loss selling it.

The seller’s Realtor may unintentionally provide inaccurate information because you are not their main priority. Without your own representative who can point you in the right direction to get your questions answered, you may incorrectly assume something, which can become costly in the long run.

2. Hidden Costs and Risks

One of the most common misconceptions is that buying without a Realtor will save you money. However, this isn't always the case. Self-representation can lead to unexpected expenses.

Case in point: not understanding the paperwork. You might miss critical inspections or fail to include necessary contingencies in the contract. Not understanding the timeline of your contract can lead to you missing a deadline which can cause frustrations, delays, and even the loss of the property. A poor understanding of your obligations and rights can lead to costly legal disputes. Or you may unknowingly give up your rights to certain protections because you were unaware of them. And not knowing what kind of home inspections you should get can lead to future hassles and expensive repairs.

There are so many steps in the process of buying a home that you can easily miss things if you are not extremely well-versed in what to look for. These oversights can result in hefty expenses or legal complications down the line.

3. Negotiation Challenges

Negotiation is a crucial aspect of the home-buying process. Without experience, you might find yourself at a disadvantage. I've seen buyers who opted to self-represent end up paying significantly more than they should have. For example, one person I met believed he was a good negotiator because of his experience in negotiations at work. However, real estate negotiations require a different skill set. He ended up overpaying by thousands of dollars because he wasn't aware that similar homes in the area were selling for less.

A skilled Realtor will use market analysis and comparative data to negotiate a fair price, potentially saving you money. An online estimate of a property’s value is not a substitute for a comparative market analysis (CMA) created by a knowledgeable Realtor. If you don’t have the proper training on how to assess a home’s value, you may overpay or get outbid if you don’t offer enough.

A good Realtor is also well-versed in the nuances of the contract and can help negotiate the best terms. Many times, I have secured a much better deal for my seller client because the buyer didn’t understand what they agreed to when they signed the contract. This can apply to things like home inspection negotiations, escrow deposit protections, offer price, and more.

4. The Stigma Of An Unrepresented Buyer

Another critical aspect to consider is how the seller and seller’s real estate agent perceive self-represented buyers. Sellers and their agents often prefer working with buyers who have professional representation because it streamlines the process. They know that a Realtor on the other side means the transaction is more likely to proceed smoothly.

Self-represented buyers might face resistance or find their offers less likely to be accepted because the seller’s agent might worry about the potential for delays or complications. The seller’s agent may also charge the seller an additional fee for the extra work they will have to do because an unrepresented buyer needs more hand-holding, and that may make your offer look less competitive.

3 Times You Could Buy Without an Agent

While the average home buyer would be wise to hire a real estate agent, there are a few scenarios where buyers might consider going without a Realtor.

1. Purchasing From Family or Friends

If you're purchasing a property from a close family member, you may not need a Realtor.

Different states have different requirements for the process, but you may be able to directly transfer your property to a family member with very little hassle - if you all agree on terms.

However, if you have reason to believe a family member may not be being fair or truthful, sometimes bringing in a Realtor as an unbiased third party can help all involved. Some agents are willing to significantly reduce their fees for transactions like this, so the peace of mind their professional presence brings to the process can be worth what they’re charging. They can offer insights that might not be immediately apparent and ensure that all legal and procedural aspects are covered. It’s also nice to have someone who can help you take the emotion and personal relationships out of it, which can uncomplicate the process.

Here’s a story to consider if you think you can completely trust your family or close friends in a real estate sale: A couple decided to sell their home to a close family friend they had known for years. The young woman buying the home was like a second daughter to them. After closing on the home, the woman discovered major structural issues with the property that the previous owners claimed they were not aware of. She sued them for several hundred thousand dollars. This destroyed their relationship. That likely could have been avoided if a Realtor had been involved as they would have advised a home inspection that would have uncovered the issue.

2. You’re an Experienced Real Estate Investor

Experienced real estate investors who have a thorough understanding of the market and purchase homes with some consistency might feel confident navigating the process on their own. Note, though, that there’s a big difference between attending a weekend investment seminar and actually going through the paces of a real estate transaction. If you’re a first-time or newer investor, working with an agent who understands the investment niche can help you learn a lot and help you make smarter investment choices.

3. You’re In The Industry Yourself

If you were previously a licensed Realtor or are licensed in a different state or in an adjacent industry like title or mortgage, you may be able to navigate the transaction yourself. But keep in mind that laws and customs can vary from state to state, and the industry changes frequently, so what you were used to before or somewhere else may not be applicable in your current buying situation. Also, you know from direct experience how much work a Realtor does for their clients. By hiring an agent, you can focus on the excitement of buying and not worry about the little details that your agent will take care of for you.

Additional Considerations If You Decide To Go It Alone

If you do decide to represent yourself, there are several important details to keep in mind:

1. Education and Preparation: Make sure you thoroughly educate yourself about the real estate process, including local market conditions, legal requirements, and potential pitfalls.

2. Professional Services: Consider hiring professionals for specific aspects of the transaction, such as a real estate attorney for contract review or a home inspector to identify potential issues with the property.

4. Emotional Detachment: Try to remain as objective as possible. Emotional decisions can lead to overpaying or overlooking critical issues.

5. Resources and Tools: Utilize available resources and tools to aid in your search and due diligence. This includes online property databases, market analysis tools, and financial calculators.

So What’s Right For You?

While it is possible to buy a house without a Realtor, doing so comes with considerable risks and challenges.

Real estate transactions are multifaceted, and having someone who is solely focused on your best interests can provide peace of mind. When buying a property, you need someone who can offer objective advice, spot potential issues, and handle the myriad of details involved in the transaction.

In my experience, the benefits of having a knowledgeable and dedicated Realtor far outweigh the potential savings of going it alone.