Buying house without an agent
First time home buyer here. I've obtained pre-approval. Not in a particular hurry to buy a home, definitely want to avoid overpaying. With the apps doing most of the work, I don't see a point of paying the agent several tens of grand just for showing up. Anyway since the agent makes money on selling price, I'm unable to see why they'll have my best interests in mind. I think I can handle the negotiations and paperwork on my own, trying to negotiate lower purchase price since seller doesn't need to pay my agent. Would like to know people's thoughts... TC 300k 5 yoe, wife TC 220k 5 yoe
First mistake: Think the apps can do everything for you. Agents have much deeper access to historical and upcoming data than is publically available. 2nd mistake: you don't have contacts and relationships to trusty contractors and vendors that a good agent brings with them. 3rd mistake: you don't know real estate law well enough to not land yourself in deep legal shit. 4th mistake: what contingencies do you put into a contract offer that the seller will accept? What are deal breakers today? How much earnest money to seal it? Which title agency? Which building inspector? Which plumber? Which roofer? Which bug report contractor? How do you remove asbestos? Which rat proofer and feeces remover? Which HVAC ? 5th mistake: assuming you are saving money buying a house without an agent when the seller is paying them. 6th mistake: assuming there is a way to not over pay in Cupertino. Now if you find that widow who just wants to move out of state to her son's home in Michigan and doesn't care what price she gets, you may be able to put a roof over your head. Just because you can defend yourself in a court of law rather than pay hundreds of thousands of dollars for a lawyer to sit besides you is not a good idea. Get a real estate degree and do a dozen transactions and you'll be qualified to represent yourself on the largest monetary transaction your will make in your life.
You shouldn't be relying what is really work for a general contractor such as plumbing, roofing, asbestos removal, and HVAC, just that the buyer agent knows rough costs for these and can factor this into a realistic offer amount.
Yes, getting reliable cost estimates and inspections within the contingency time box as well as getting lender mandated work completed prior to closing all require a level of trust usually built through prior engagements. Yelp and Angie's list are a poor substitute for a good agent.
A good agent will help you in many ways. But that's only if you have a good agent worth anything. Typically, they offer 3% to the buying agent and 3% to the selling agent. Technically the house seller pays these fees as it comes out of their profit. It never costs a buyer or renter to use a realtor. If you were to go to directly to the selling agent, you might talk them down to 4.5% total, but not likely. My selling agent recently did an amazing job selling my house. He deserved his share and convinced me to list at a higher price, putting more money in my pocket, even after his cut.
Anyone who tells you to use a buyer agent is just regurgitating realtor SEO articles. You don’t need a buyer agent at all. Most are completely useless and it’s mostly a legacy rent-seeking industry in the app age. Most other countries the commission that goes to agents is lower than the US btw. Seller agents are necessary and if you get a good one are amazing - largely for their network and influence in the community. But that’s probably like top 5% of seller agents, so you have to choose wisely. But since you’re buying, what you do is when you’re seeing the house you want the seller agent will ask you who your agent is, tell them you dont have one. From then on they’re locked in on you, they are highly motivated to push their seller to sell to you, since they will get both sides of the commission. And many will cut part of the buyer agent fee too (in my case that’s what happened), so you will def save money, on top of likely getting the best deal. The funny thing with RE agents is this is the only situation where the agent is actually “on your side”, since their financial interests are aligned with yours. As far as paperwork, if you’re on East Coast you will need to have an attorney for the transaction anyway. If you’re on West Coast, you won’t need one (you could still hire one), but your bank will have one present (since they’re actually the ones buying 80%+ of the house). And it’s really not complicated anyway.
Was going to post this. We used a dual agent when we bought our house (meaning we did not have a buyer's agent and used our seller's agent instead) and it was great. We were bidding against 4 other couples and won even with a below ask offer. We had an excellent attorney (who we hired on our own) and did all of the price negotiation on our own, but our house was a bit of a mess when we bought it so it was basically as-is. We found our own inspectors and similar. I don't feel like we missed out on anything by not using a buyer's agent.
Get referrals for agents. Use one as it will save you a lot of headaches esp since you are a first time buyer. There are so many little annoying things that happens between offering and you actually closing.
Why use an agent when you can Google your way to every answer. Same goes for getting a lawyer, dentist and doctor. You’ll be fine. You have Google.
It takes you couple weeks and about $500 to obtain a real estate agent license. If you’re worried, get a license yourself and you’ll be up to speed with legislation. And Chris’s Voss book “Never split the difference” can help you with negotiations.
Considering these rules are set by 50 different states, I call this out as Fake News.
Obviously, you need to get a license in the state you’re buying. Every state issues its own license. Did I miss that OP was living in Cali and buying in Alaska?
You won’t save any money by not using a buyers agent, but you will appear less than serious when you make offers. Understanding the format of an offer letter, reasonable contingencies, your rights under contract, and how best to negotiate ONCE IN ESCROW are not things you are likely to grasp without prior experience. I am an engineer, but my experience is that most engineers overestimate their intelligence relative to the general population. Most of the people replying to you would be easily outmaneuvered in any negotiation.
People generally don’t want to sell to someone who doesn’t have an agent if they don’t need to.
If your not looking for a full concierge service then get an agent that shares their commission. Ranges somewhere upto 2%. Redfin agents do 1% and are full service. From a sellers perspective they have already factored in the commissions and they won’t reduce the price plus your offer will look less serious as compared to other buyers. Also, the sellers agent themselves will discount your offer telling the buyer that statistically buyers not using the agent have lesser probability to close and often back out of offers. Hope this helps
There are 2 agents, buyer and seller agent. Buyer agent is on your side. It doesn’t save you money to not use agent because the seller agent won’t give you rebate anyways even if you don’t use agent.
have you tried this to know for sure?
I'd imagine this depends on market, how many offers seller is getting, your negotiation skills etc.