Buying A House Without Real Estate Agents

My naive, young adult self had assumed real estate agent were required to buy a home when in fact they are not. Real estate agents are service providers and just like other services, you can take the risk and attempt to do it yourself or pay experienced professionals to do it for you.

As first-time home buyers, it may have been overly ambitious to purchase our house without a real estate agent. We didn't do it intentionally, but it ended up saving both parties a lot of money. And we learned a lot about real estate and felt confident in our purchase.

OUR EXPERIENCE

Originally, we were working with Redfin because buyers get part of the commission or what they call a Redfin Refund. For example, you'd get around $700 back on a $280,000 home. Plus, our agent was very knowledgeable and helped us figure out what we really wanted in a house. And then...we ditched him (sorry, Andrew!).

A new listing popped up for a great house in our ideal location but it was For Sale By Owner (FSBO in real estate lingo). According to their app, "Redfin does not currently provide agent service for this type of listing." We still decided to stop by the open house that weekend and, of course, we loved it. My husband and I had no idea what to do since this was our first rodeo. But with a little help from our families and a lot of help from our attorney, we were able to pull it off.

THINGS TO CONSIDER

Lay of the Land

Real estate agents are neighbor specialists that can whip up house comparisons and negotiate terms in their sleep. So we had to become experts overnight in order to come up with a realistic number for our offer. We researched the neighborhood and nearby houses using Zillow. Our attorney surprised us with a complimentary audit from his real estate agent buddy, and comparatively we did a pretty decent job.

Management

Agents are also the coordinators. They schedule showings, inspections, the final walk-through, the closing, etc. So while we were being bombarded with document and signature requests from our mortgage lender, we were also going back and forth with the sellers, home inspector, accountant, and our attorney. Truthfully, it's a lot to juggle. But thankfully my job entails sitting at a computer all day so I could answer calls and emails.

Sales Commission 

If you're not familiar, only the seller pays sales commission to the real estate agents or brokerages at closing, which on average is around 6%. The listing agent (their guy) and buyer's agent (your guy) split the commission. So you're not actually responsible for paying your real estate agent, which is why most buyers use them.

Since neither of us used agents, the seller didn't have to pay any sales commission, which is a huge cost savings. Using the same example from before, 6% of $280k is $16,800. That's a lot of dough. So as the buyers, we used that as leverage to negotiate and bring down the price. They saved, we saved.

OUR ADVICE

Agents are the professionals. They eat and breathe real estate. By not using an agent, you're essentially removing the middle man, which means a lot more work, headaches, and stress eating. It's not for everyone. But we learned so much since we were involved in every single part of the transaction. And most importantly, we were able to make a lower offer so it was worth the struggle.

Our biggest piece of advice, whether you use an agent or not, is to hire a great attorney with lots of real estate experience. Our attorney walked us through the offer letter, gave us home inspector recommendations, worked well with the seller's attorney, made sure everything was by the book...he was there every step of the way. Technically, that's their job and all, but his patience and knowledge got us through on a great deal. That's who you need in your corner.