Buying a House Without a Realtor: Pros and Cons to Consider

A couple standing in front of their new home.

Everyone strives to save money on major purchases. So when it comes to buying a house, paying a realtor's commission can seem daunting and expensive. The fee—often based on a percentage of the cost of the home—can add up to thousands of dollars. But for that money, a potential homeowner gets days, weeks or even months of service and guidance from a housing professional. Are you considering buying a house without a realtor or real estate agent?

Pros of Going Solo

Being cost conscious is a great way to dive into home ownership. Ten to 15 percent of homeowners take the plunge and buy a house without the aid of a realtor, according to Total Mortgage, a mortgage broker offering services since 1997.

If tackling the house-buying process without the guidance of a realtor tops your agenda, several experts want to give you a pat on the back. Here's what they're saying:

1. Buyers Enjoy Purchase Price Flexibility

The number one reason buyers opt to explore housing options without a realtor is to save money. And for some savvy consumers, this might be a great option.

"The truth is, in 2014, with technology and the numerous available property listings online databases there is no longer the same necessity for a buyer to engage a realtor as there is for a seller," expalined Robert Soniker, real estate attorney and general counsel at MSCO. "With no realtor, the seller should be more flexible on pricing as he/she does not have to pay a 5% commission on the sale to a realtor."

2. There's No Middleman to Deal With

If you want to work with the seller directly, cutting out the middleman is appealing. There's no need to relay messages, wait for callbacks or trust your interests are being accurately shared with the seller.

Soniker also notes, "Sometimes this could work to the parties advantage. The buyer has the opportunity to communicate thoughts/needs/offers directly to the seller."

3. You Have the Upper Hand in Negotiating

For interior designer Melissa F. Lindberg, forgoing a realtor worked to her advantage. She was able to implement her own marketing ideas and stage her home for sale exactly as she saw fit. She offers this bit of insight on working with buyers directly.

"During negotiations you are able to see how emotionally attached the buyer has become to your property and you can leverage that knowledge with their requests (lower price, repairs, etc.). If it is obvious they love it, you may be able to give less," Lindberg explained.

4. You Have First-Hand Knowledge

Are you making an offer on your neighbor's house? Or are you buying property from a family member? This first-hand knowledge of property for purchase is only known by you, so why get a realtor involved?

Although she warns it's risky to buy without an agent, Tampa Bay-area realtor Kella McCaskill of Deleon Sheffield Company, LLC has met buyers with inside knowledge of a property who have had luck purchasing on their own.

"I find that sellers are sometimes very comfortable around a buyer when they are in one another's presence. I met a buyer who was working without an agent. The buyer went to a For Sale by Owner home and met a very nice woman who was recently widowed and needed to sell the home. The buyer was super excited but the seller disclosed everything she thought she knew about her home," McCaskill explained.

Unfortunately this particular sale didn't go through because the buyer felt overwhelmed with too many details. But for transactions between family members and friends regarding property about which both parties have in-depth knowledge, the outcome may be different.

Cons of Buying a House Without a Realtor

Of course, deciding to forgo using a realtor or real estate agent to buy a home comes with a few words of caution. There's a reason people get certified to take care of home buying negotiations and transactions for the public. Here's what to know when buying a house without a realtor:

1. There's a Mountain of Questions and Paperwork to Navigate

The Federal National Mortgage Association, better known as Fannie Mae, recommends hiring a real estate agent when you first start house hunting. After the excitement of attending open houses and browsing house ads online fades, you'll have a professional available to answer questions about cleaning up your credit report and securing financing. Best of all, you show up for the house closing to simply read and sign the legal documents prepared by the agent for you.

2. You Might Give Up Some Advantages

If you approach a selling agent as a solo buyer, they might ask if you'd like to participate in dual representation. At a first glance, it's enticing. The seller's agent helps you with paperwork and decision making. But remember: the seller's agent will always have the seller's best interest as a primary focus, according to Loan Safe, a consumer-based home buying resource. If the house-buying process becomes frustrating, you might choose dual representation and give up the advantage of keeping your financial information to yourself during the delicate negotiation process.

3. The Home's History Is a Mystery

"One huge factor that comes into play when buying a home without a realtor which we've seen time and time again is the fact the buyer does not know the history of the property," explained Sherry Bender of Affiniton, LLC. "We work with property owners who have purchased a property and later find out the place was used as a meth lab. In some states, Realtors are now required to disclose whether a property was a 'meth home', but that is of course assuming even the realtor knows. If it's a private sale, there's even more of a chance this fact would not be disclosed."

4. Hidden Expenses May Linger

"The benefits of using a seasoned agent span well beyond the negotiations process. These agents often know the pros and cons of various neighborhoods and areas that may become more costly for a buyer in the long run in regards to insurance costs and maintenance issues," noted Mark K. Card, P.A., CRS, SRES, ePRO with RE/MAX Property Centre.

5. Buying Can Take More Time Than Expected

Buying a house without arRealtor isn't a weekend project. From researching the projected cost of utilities to local zoning restrictions (Is it legal to run your home-based business from the new dwelling?), you're going to invest countless hours in research before making an offer.

"As a buyer, and especially as a seller, you will invest a much greater amount of time, and incur a much greater amount of opportunity cost, than you originally envisioned," commented Mark Mallardi, CEO of Listen for Life Global Productions.

6. Learning a New Community Can Be Daunting

If you're buying a home without a realtor in a new city or state, it's tough to know the ins and outs of your potential new area. An agent working in that community on a daily basis can be a wealth of information.

"A buyer who tries to 'go it alone' also loses an edge, as he doesn't have the advantage of knowing the subtleties of the specific market area. A real estate agent has this knowledge, and can help a buyer craft an offer that will be realistic and have the comparable statistics to substantiate it," explained Sandi Klein, a realtor of 38 years in Greenwich, CT.

Once you've made an offer on your new home, with or without an agent, start shopping for homeowners insurance. You can save money by working directly with an independent insurance agent. Trusted Choice® independent agents work with you individually and offer several price quotes on homeowners insurance for you to evaluate before signing a contract.

Angela Tague, popular blogger

About the author: Angela Tague writes blogs for major brands including Bounty, Lowe's Home Improvement and Hidden Valley. She also provides feature content to newspapers and writes blogs for Daily Glow, Everyday Health and Walgreens.

Angela has worked in news writing since 1998. Her journalism career has led to positions at The Quad-City Times in Davenport, Iowa, The Sioux City (Iowa) Journal and several weeklies in the Midwest.

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