Closing on a house without a Realtor

With all of the resources available to homebuyers, it may be tempting to purchase a home without a real estate agent. If you do it right, you could save thousands in agent commission. However, most buyers benefit from the expertise of an agent, so it’s important to evaluate your options.

Just 11% of homebuyers opted to purchase a home without an agent in 2019, according to the National Association of Realtors. Some 52% of homebuyers found the home they purchased online, while only 29% found their home through an agent.

Still, buying without an agent may be a viable option if you’re familiar with the house; perhaps the property belonged to a neighbor or a family member. Closing without an agent on “an intrafamily transaction is fairly common,” says Pamela Linskey, attorney and founder of Linskey Law LLC, which specializes in real estate, estate planning and probate in Massachusetts.

Most people, however, are looking to save some money, a goal that may be misguided given how commissions are typically structured.

“Generally, the only advantage to buying a home without an agent is saving the money it would cost to pay the agent, typically about 3% of the purchase price,” says William P. Walzer, attorney at Davidoff Hutcher & Citron LLP in New York. “For expensive homes, that amount isn’t trivial and could come to tens of thousands of dollars.”

If the buyer agent’s commission is 3% on a $450,000 home, that equals $13,500. But because the seller pays the commission, Linskey doesn’t know if there is any real money-saving advantage for the buyer: “The seller pays the brokerage fee for the listing agent and any buyer agent, so there’s really no benefit to the buyer for going it alone.”

Linskey adds that having an agent means that there will be “an extra set of eyes and ears at the time of the offer, throughout the process and at the closing.”

“From the mortgage application and the formal offer letter to the deed transfer and the bill of sale, handling that paperwork is never fun, but a good real estate agent can assist a homebuyer to make the process easier,” Walzer says.

If you decide to make an offer on your own, here’s how to buy a house without an agent and what to expect at the closing.

1. Negotiate with the listing agent

As the buyer, you may be able to negotiate the price of the home with the listing agent since you’re saving the seller from having to pay your agent’s commission. Negotiating on a home takes skill, but if the seller lowers the purchase price to reflect the lack of agent fees, this would result in a smaller mortgage and lower monthly payments.

2. Review the closing disclosure and ask questions

The closing disclosure is an important document that includes information about the terms of your mortgage, closing costs and your average monthly payments. This document is usually about five pages long, and can be reviewed up to three days before your closing date.

3. Have a professional review the paperwork

Hiring an attorney to review the documents is a smart move because a house is a large transaction — and the documents can be complicated to read through and understand.

Issues can come up at any time as well, and a real estate lawyer may be your best resource.

4. Gather a cashier’s check, proof of insurance and your IDs

There are a few important things you’ll need to bring to your closing. Have these items ready a day or two before so you don’t run into any issues on the big day.