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Buying a home without a Realtor. The reality.

So I was perusing my favorite social media platform the other day, and I ran across this headline from a friend of a friend.

“What do you do when you finally close on your first house after opting out of using a realtor?”

Before even seeing the name, I flew into a rage about that disloyal so and so… oh wait. No I didn’t. The reason I didn’t get upset about it is because even if it had been someone who knows me (and they didn’t), no one owes me or any other Realtor their business. It is our job to demonstrate the value of our services.

That said, lets talk about why the young man that made that post probably messed up big time.

For starters. Unless the seller was a FSBO (for sale by owner), he threw away a service that was already paid for by the seller. You will notice I didn’t spread the fiction that our professional services were free. It makes for nice sales talk, but it just isn’t true. In reality, he just refused to use a service that he likely paid $3000 (a typical buyers agency commission for a hundred thousand dollar home) or more for.

As to the daily argument I see about how the seller will negotiate that money as a discount on the purchase price. While I am sure they would entertain that if they could, the commission paid is negotiated in the listing contract. They have to pay the listing agent the full commission (buyers agency commission comes out of that), whether a buyers agent is involved or not. THIS IS ALSO TRUE WITH NEW HOME CONSTRUCTION. You pay for the Realtor even if you go in unrepresented.

Now I don’t know about you, but with the story starting out with not sing a service you paid $3000 for does not inspire me with confidence that one has the life experience or the know how to conduct this transaction without a trained professional at their side…well at least without spending more money than needed or exposing oneself to legal risks.

Just to frame the opportunities for negative things that can happen when you choose to buy a home without a Realtor, lets look at some of the process.

The Offer: Most people look at buying a house like any other negotiable purchase. I will pay $xxx for this house. This is more or less true, but the part that is being overlooked here is there are 14 different parts of a purchase agreement (Indiana Association of Realtors residential purchase agreement) that can either cost or save you money. I don’t mean $20 either. Check the wrong box and you may end up paying 10 years worth of someone else’s back property taxes.

How many homebuyers do you think know what each of those areas are, what is the normal expectation for each, or how to leverage negotiations to their own benefit? How many of them do you think do it so well that its worth not having a professional (that they are paying for whether they use them or not) do it for you?

And that is just the money. Lets talk about risk.

That purchase agreement outlines every potential outcome of a real estate purchase. Some of them could expose you to serious legal risks.

For example, that same post had the following statement in the comments:

“House warming will be a little ways out. The seller has 30 days”

Wait! Did the buyer give the seller 30 days after closing to give possession? It sure looks like it.

When they did that, I cannot help but wonder if they factored in any potential liability they face if something happens on their property while the sellers are still using it?

Did the seller sign an insurance addendum to maintain coverage while they are in possession?

Did the buyer get written assurances of condition, with re-inspection rights at the time of possession?

Did they even know how much potential exposure when they agreed to that possession schedule?

I doubt it.

And possession issues are just one of the areas where a professional Realtor can steer you clear of risk.

The long and the short of it is, you pay for a buyers agent whether you use one or not. If you are paying for the services without using it, you are taking some serious risks that you don’t have to take. Even if you don’t hire me, hire someone you trust. Don’t get caught in a potentially expensive and risky DIY lesson.

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