A house is likely the largest purchase you will ever make. When making such a critical transaction, conventional wisdom would say to get as much help as possible to make the deal. Such help includes working with a real estate agent.
While using a real estate agent to make a house offer can be helpful, it’s not required. You can absolutely buy a house yourself. If you’re going to go this route, however, there’s plenty you need to know to ensure you’re making the best financial decision possible.
Thinking of making a house offer without a real estate agent? Keep reading to learn the steps you’ll need to take before making the offer, the advantages and disadvantages of working without a real estate agent, and more.
Who Should Make a House Offer Without a Real Estate Agent?
Anyone can try to buy a home without working with an agent, but that doesn’t mean that everyone should. Those who are (and aren’t) equipped to handle such a big purchase without help depend on a number of individual factors. For example, a buyer who’s well-versed in real estate as well as sales and the law is probably better suited to buy without an agent. It’s also helpful if you’re buying the house from someone you know personally or if the home is move-in ready vs. a fixer-upper. Additionally, even if you don’t plan to use an agent, plan to hire a real estate attorney who can look over paperwork for you.
Meanwhile, making an offer without an agent might not be a great idea if you want to purchase a home in a popular market that has multiple offers on it. Buying a home that needs a lot of work or specialty inspections without an agent can also be challenging. Making an offer on a house yourself that’s in a market you’re unfamiliar with can complicate the process as well. Buyers who don’t have experience with real estate contracts or who aren’t working with a real estate lawyer should also think twice about making an offer without an agent.
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Pros and Cons of Making a House Offer Without an Agent
Attempting to purchase a house without a real estate agent may sound risky, but it can come with benefits. Here’s a look at the advantages and disadvantages of taking on a house purchase sans an agent:
Pros
- Potential money savings: Home sellers typically pay for their agent and the buyer’s agent’s commission, so you may not save money in that regard. However, there's a chance to save on your purchase price because the seller might accept a lower offer since they won’t have to pay a second agent commission.
- Full control over the process: You will be in the driver’s seat when you work without a real estate agent. You can speak directly with the seller (and their agent if they’re using one) about price or any other questions you may have about the property.
Cons
- You’ll have to educate yourself: Real estate agents are well-versed in all aspects of the buying and selling process. If you opt to go solo, you’ll need to learn each step of the process to ensure you don’t miss any critical details. Additionally, you need to get up to speed on what to look for in a real estate contract and local and state real estate laws—or hire an attorney. You’ll also have to play negotiator, which will require you to know what neighboring houses similar to the one you’re eyeing cost.
- Lack of real estate tools: Unless you’re a real estate agent yourself, you will be working without the tools agents have, such as Multiple Listing Services (MLS). These databases give agents a competitive advantage because they often have property details that aren’t initially available to the public.
4 Steps for Making a House Offer Without an Agent
Now that you know the advantages and disadvantages of buying a home without a real estate agent (and whether you’re suited to do so), here are some of the key steps to take to ensure you succeed in your purchase:
Create a Game Plan
Working without a real estate agent can put you at a disadvantage in this process, so you must be prepared from the beginning. Your plan should include your budget and an idea of how much similar properties cost. Additionally, know how you’re going to communicate with the home’s seller and/or their agent. Be sure to also carve out enough time to conduct research, set up showings, write up offers, etc.—the tasks an agent usually handles.
Conduct Research
To avoid overpaying for your home, you need an idea of what comparable houses cost. Check out homes in similar neighborhoods that have about the same square footage and number of bedrooms and bathrooms as the one you want to purchase to see what they are selling (or sold) for. If the house you’re looking at is outside of an area you’re familiar with, research the neighborhood, the surrounding area, and the proximity to things that interest you. Narrowing down the areas you want to live in will help reduce the number of listings you have to go through.
List Contingencies
Contingencies are conditions that parties agree have to be met before the closing date. They usually revolve around inspections, appraisals, financing, and the sale. They help protect the buyer’s interest during a real estate transaction. Some contingencies you may want to include are:
- Financing: Provides the buyer with the ability to get a mortgage to buy a home. If you were unable to get financing by the agreed-upon deadline, the contract can be voided without any penalties.
- Home sale: If you already own a house, the home sale contingency shields you from having two mortgages if your home doesn’t sell. The transaction only moves forward if you sell your current property.
- Title: The title contingency ensures that the seller, in fact, owns the home you want to buy and can legally sell it to you. If, for some reason, the owner can’t sell the home because of an issue like a lien against the property, you, as the buyer, can terminate the contract.
- Inspection: Getting a home inspection done gives you a chance to find any issues with the property before you buy it. This contingency offers you a timeframe for an inspection before the contract is locked into place. Any problems that pop up during the inspection could give you negotiation leverage or even permit you to walk away from the deal.
- Appraisal: An appraiser determines a property’s value. If the home’s appraised value is less than the purchase price, this contingency allows you to exit the contract.
Including contingencies can be a bit of a tightrope walk; they exist to protect you, the buyer, but sellers generally don’t like them because they’re excuses to back out of the contract. Decide which ones are the most critical for you, but don't include so many that the seller doesn’t want to work with you.
Make an Earnest Money Offer
Earnest money is a “good faith” deposit that’s put toward the purchase of a home. Earnest money is typically 1%-2% of the home’s sale price, and it allows the seller to take the property off the market. Payment is often made once the purchase contract is signed. The deposit is a win-win; it gives the seller some financial peace of mind when they take their home off the market, and the buyer knows they’re first in line for the house they want.
If you’re concerned about being locked in so early in the process, don’t worry. The previously mentioned contingencies offer protection, so under certain circumstances, you could cancel the deal and get your deposit back.
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Should You Make a Home Offer Without a Real Estate Agent?
Whether you should or shouldn’t buy a house without an agent depends on your personal preference. It’s a big undertaking. Are you up for it? If you decide that you are, be prepared for the amount of time it will take to go through the process—finding homes you like, negotiating prices, reviewing contracts, scheduling inspections, and more. Be sure to familiarize yourself with the process and local and state real estate laws, and even if you opt to go without an agent, still hire an attorney who can ensure you don’t miss any key details in the contracts.
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