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Landmark Verdict Has Homebuyers Asking ‘Do I Need a Buyer’s Agent?’

First-time homebuyers walking through potential new home with real estate agent.
The Bottom Line

A landmark lawsuit against the National Association of REALTORS® is reshaping how buyer’s agents are paid, and some buyers may now need to cover that cost themselves. As a result, homebuyers are weighing whether the value of professional guidance is worth the potential added expense.

For over 100 years, homebuyers have had a pretty sweet deal.

In 1913, the predecessor to the National Association of REALTORS® (NAR) instituted a rule saying that a home seller’s real estate agent must split their commission equally with the buyer’s agent.

This mandate means the home seller pays the buyer’s real estate agent, typically 2.5% to 3% of the home price.

A 2024 landmark case is changing that. A jury in a Missouri case decided that NAR’s long-standing Clear Cooperation rule limits competition and should be abolished, leading to a historic $420 million lawsuit settlement with NAR. It has paved the way nationally for sellers to opt out of paying the buyer’s agent commissions, putting the ball firmly in the buyer’s corner. However, as always, real estate commissions remain negotiable.

With all the headlines these commission lawsuits have gotten, some homebuyers might have to choose between two options: pay for their own real estate agent or forego using one at all.

Do Home Buyers Need a Real Estate Agent?

Technically, homebuyers aren’t required to use an agent to purchase a home. They can go it alone if they know how to complete the transaction and what issues to look out for. However, being your own buyer’s agent is harder than it might seem.

Up until now, there has been little reason not to use a buyer’s agent. After all, the seller pays the upfront cost, which is folded into the asking price.

Except in rare cases when one family member sells a home to another with no agents involved, a buyer’s agent can help you navigate tricky situations, particularly if you’re a first-timer.

So, faced with paying for one themselves, should buyers use an agent in this changed environment? Let’s take a look.

How Buyer’s Agents Help

Finding a home you love has become much easier, with millions of listings available in a few clicks on property search websites like Zillow, Realtor.com, or Homes.com. But the ins and outs of buying real estate can be complex.

Outside of the mortgage process, buying a home is a tough decision full of ambiguity. A good real estate agent can help you navigate tricky situations, such as inspections, a competitive market, and high-stakes negotiations with sellers in a bidding war, for instance.

Representation

A buyer’s agent represents the buyer’s interests, while the seller’s agent is only concerned with the seller’s interests. A buyer with no agent is 100% responsible for negotiating, drafting a fair contract, and knowing the steps to complete the transaction. Most seller’s agents will simply outskill even experienced buyers.

Contract drafting

When you make an offer on a home, you’ll notice that the contract is at least 20 pages long. Why? Some parts are there to comply with state and local laws while other parts protect your investment during the transaction.

Most buyers don’t know how to put together a solid purchase contract on their own.

For example, a financing contingency gives the buyer an “out” if financing falls through. An inspection contingency protects the buyer from buying a home that needs expensive repairs revealed during a home inspection.

The purchase contract is one of the most important pieces of one of life’s largest financial transactions.

Context

Ask any real estate agent and they’ll tell you they learn something new on every transaction. Plus, no two homes are alike.

An agent brings context to issues that buyers will undoubtedly face.

For instance, what are the risks of buying a home with a septic system or well? Will a greenbelt behind the house eventually be full of homes or commercial development? Does it matter if that structure in the backyard is to code?

Negotiation

A good buyer’s agent can pay for themselves. For example, the buyer’s agent knows the local market is soft and advises an offer of $5,000 below the asking price.

In addition, she negotiates $7,500 in closing costs in lieu of repairing inspection items. The seller’s agent accepts both requests.

Most first-time and even repeat buyers haven’t honed their negotiation skills nor do they have the real estate knowledge to leverage these situations to their advantage.

Local knowledge

A good real estate agent knows when a new employer is moving to town or when a city is planning a downtown revitalization project. They can also advise which neighborhoods meet your needs — and which ones might not be a fit for you and your family based on your criteria.

They are on local boards and know city council members personally. An agent breathes and sleeps local real estate, which is nearly impossible for someone with a day job and all of life’s other responsibilities.

Getting an accepted offer

Many sellers and seller’s agents won’t entertain offers from self-represented buyers, and that may be the case in the future, too. It’s about more than commissions.

Agents know that the transaction will be smoother and carry a lower risk of unraveling when the buyer works with an agent. Sellers typically want to close as quickly as possible, and there’s a big risk of a sale falling through when a new buyer has no agent to walk them through the process.

Disadvantages of a Buyer’s Agent

Buyer’s agents are often worth every penny, no matter who pays. But there are drawbacks to using them, too.

Cost

In theory, the buyer’s agent adds 2.5% to 3% to the home’s sale price. However, it’s unlikely that home prices will drop by similar amounts if sellers stop footing the bill for the commission.

It’s hard to predict how much a buyer’s agent would cost under a self-pay system. But most agents who are used to working for 3% of the home’s price will probably not settle for $500. Cost is the top disadvantage of using a buyer’s agent.

Free access to home listings

Most buyers don’t need much help finding homes. In pre-internet days, a buyer’s agent shared and showed suitable homes. They alone had access to the Multiple Listing Service (MLS). Those days are gone.

That being said, only an agent can get the inside scoop on a home directly from the seller’s agent. It’s what’s not on the listing information that’s important, such as the seller’s timeline, their motivation to move or why the previous buyer backed out.

Some agents don’t add value

In 2023, the median number of transaction sides among all REALTORS was 10 per year, according to NAR data.

Some agents haven’t been in the business long enough to guide buyers through a transaction; agents with two or fewer years in the business close a median of 2 transactions annually, NAR found.

These statistics might lead some buyers to think agents aren’t providing enough value to warrant the commission fee, especially if they hire a real estate attorney for a nominal cost to review their contracts (this might be required in certain states anyway).

Homebuyers should ask for recommendations and interview agents no matter who pays the commission.

So, Can I Buy a Home Without an Agent?

Homebuyers can purchase property without an agent, and real estate commissions are always negotiable.

Some will skip using an agent to save money while others won’t see the value for the cost.

Most first-time buyers have just enough cash for a down payment and closing costs. Unless new mortgage options arise to finance agent commissions, some buyers might be tempted to go it alone.

Unfortunately, some first-time buyers may pay the price — even if they don’t use an agent. Buyers could lose their earnest money, pay too much or buy a home they regret later. Yet, some could come out ahead.

Only one thing is nearly certain: homebuyers should prepare now for the possibility of paying for their own agent if the seller isn’t willing to negotiate.

Article Sources

MortgageResearch.com often links to authoritative websites to verify facts and claims made in our articles. Read our editorial standards for more about our mission to deliver accurate and impartial content.
About The Author:

Tim Lucas is the editor and Lead Analyst for MortgageResearch.com. Tim spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. He has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.

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