It is estimated that approximately 15 percent of home purchase transactions are done without the services of a realtor. The reason why many home buyers prefer to go it alone is because buyers’ realtors earn a commission from the sale proceeds. Money, however, is not the only motivation that drives home buyers to lock out real estate agents from the sale transaction.
As a home buyer, you will prefer being more hands-on throughout the whole process instead of taking advice from someone who has a financial interest in the deal. Despite the common perception that buying a house without a realtor is a tough undertaking, there is absolutely no reason why you cannot execute the whole deal without a realtor. When buying directly from the seller, be prepared to tackle a lot of logistics involved in the whole process. In addition to this, the whole process requires a lot of collaboration between you as the buyer and different industrial experts for the whole transaction to be successful. Here are the basics of buying a house without a realtor.
Number Nine: The Price and Place Factor
When buying a house, there are two factors that you might want to consider. You might want to focus on your budget regarding whether you can actually afford the house. Secondly, where you want to live comes into play, particularly during the house search process. A midsized suburban house that has great schools in the neighborhood is likely to cost more than a relatively bigger house in the outskirts of town located in a neighborhood known for its crowded schools and lack of social amenities. A condo, on the other hand, appears like a great bargain to many people but when you factor in the homeowners association monthly fee, it is not so much of a bargain.
Number Eight: Getting Pre-Approved
Getting pre-approved is the make or break situation for any home buying transaction. The home seller is interested in establishing whether you can actually afford the house. For this reason, getting pre-approved for a loan gives the seller the assurance that you are in a position to buy the house. It makes no sense negotiating a house you are fully aware that you cannot afford. Using supporting documents, provide proof of income to the seller as well as documents showing your net savings. Also have documents showing monthly deductions in the form of loans and other non-negotiable financial obligations. Last minute donations from friends and relatives are often viewed with a lot of skepticism by the home seller. A high credit score can also work to your advantage as it means that you’re regarded highly trustworthy by lenders. If you credit score is low, then you will have to pay for your mortgage if actually succeed in getting one.
Number Seven: Contact the Seller, Not the Realtor
The beauty of buying a house without a real estate agent is the fact that there are no middlemen taking you through a circus of phone calls and trying to interpret what is best for you. Remember, all the middlemen involved have a vested interest in the process. For this reason, it is better to gather the facts yourself about the house without getting distracted by superficial decorations hurriedly made to influence your purchasing preferences.
Number Six: Getting an Evaluation Report
Getting an evaluation report helps you compare between what the owner is asking for and the price of recently sold houses in the same neighborhood. One of the reasons why people require the services of a realtor is because the agents prepare what is known as a comparative market analysis. However, a computer-generated evaluation report works in the same way as a comparative market analysis and is an acceptable substitute in most cases.
Number Five: Use the Services of an Attorney
While attorney services are seen as more of a cost to the home buyer, a few hundred bucks will reinforce your bargaining power in that an attorney will offer legal counsel related to house sales. At this point, it is important to hire an attorney who is knowledgeable about the local real estate market particularly on matters related to tax laws and state disclosure.
Number Four: Make the Seller an Offer
Once you are satisfied with what you have seen firsthand and get the property evaluation report, you can then proceed and make the seller an offer. Your attorney should have the necessary documentation required in the process in order to ease the technical aspects of the purchase. Making an offer, however, is not a simple as it sounds. You will need to strike a balance between making an offer that has some room for negotiation but at the same time not too low that it is insulting.
Number Three: Mortgage Commitment
This is perhaps the most crucial part of any home buying transaction without a realtor. After the initial agreement with the seller, the status of the transaction changes to ‘under contract’. At this point, you will need to undertake several crucial tasks simultaneously. It does not matter whether you are prequalified for the mortgage with your lender. Always ensure that you shop around for the lowest rate. You can also do a price comparison between mortgage lenders and banks.
Number Two: Carry Out Home Inspection
A common mistake that most home buyers make is overlooking the importance of home inspection. It doesn’t hurt to spend a few hundred bucks in order to ensure that your home is in a perfect condition. Most home inspectors ask for between $300 and $600 and the whole process only takes a few hours. Any mechanical or structural damages to the house will be contained in the inspection report. Depending on the outcome of the inspection report, you might want to consider renegotiating on the price of the house. If there are any replacements that need to be made, the seller is obligated to lower the price as compensation for the expected expenses.
Number One: Close the Deal
The last stage of buying a house without a realtor does not require too much of your input. During this stage, your attorney will take care of the paperwork while your mortgage lender will handle the financing as well as providing the seller’s payment. After all the paperwork is completed, the seller should sign off the deed of the home.