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When they first begin looking for a home, many buyers ask
"can't we do this on our own? Do we really need to use a Real Estate Agent?" The answer is yes, you can
do it on your own. There is no law that prevents you, as an individual, from buying property without professional
Real Estate assistance. You can search for homes, arrange showings, and even negotiate on your own (although, in
some localities, the actual contract for purchase will need to be drawn up by an Attorney). The real question may
be "do we want to do it on our own?"
There is a misconception among many first time home buyers that by using a Real Estate Agent, they will be subject
to paying a commission. In virtually all situations, this is not the case. The commission for the sale of a home
is paid for by the seller, not the buyer. If you went to your local appliance store and bought a new refrigerator,
you wouldn't expect to pay a commission to the salesperson. The same applies when you buy a house--it is the seller
of the item (in this case a house) that is responsible for paying to have it sold.
If you do decide to "go it on your own," your choices will obviously be very limited. The only homes
that you can buy without any Agent assistance are those that are "For Sale By Owner" (FSBO)--generally
a small percentage of the market. These are home owners who, for whatever reason, have decided not to use an Agent
in the sale of their house. It may be because they think they can get more return by not paying a commission, or
it may be because there was no Agent who would take their house listing at the high price they demanded. Many Real
Estate analysts have found that the selling prices of FSBO homes are equal to--or higher--than those listed by
Agents. A problem arises when, as a "do-it-yourself" house buyer and without the benefit of a Comparative
Market Analysis, you need to make a determination whether or not the house is worth the asking price. How do you
decide? There is too much money potentially involved to make a "seat of the pants" decision.
The next mistake that many buyers make, when they find that their choices are so limited by only dealing with homes
for sale by owners, is to jump into the "listed" market by checking advertisements and calling Listing
Agents directly or visiting Open Houses. There is not a dime to be saved with this strategy (the seller is still
going to pay a commission) and you run the risk of ending up with no representation, since the Listing Agent is
duty bound to represent the seller. Please see the discussion on Agency. It is crucially
important that you understand how it applies when you buy a home.
A checklist on the advantages of "On
Your Own" or With an Agent
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You
can try to find a "For Sale by Owner" who is willing to sell at a reduced price.