Pros and cons of buying a house without a realtor

Ready to purchase your first home? If you're considering buying without a buyer's agent, make sure to do your homework. (iStock)

For most people, purchasing a home is the single largest financial investment they'll ever make. Many buyers are also looking to save money and don't know if buying a home without a buyer's agent is a good idea.

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A buyer's agent works directly with the purchaser of a property. Their goal is to make sure deals are in the best interest of their clients. A buyer's agent will handle much of the paperwork and negotiations. They also help buyers find properties to tour.

According to a study by the National Association of Realtors (NAR), 6% of buyers purchased their home without the help of an agent or building company, and 77% of buyers who did use a realtor only interviewed one before moving forward.

Pros and cons of not using a real estate agent

If you're considering forgoing a buyer's agent during your homebuying process, here are a few pros and cons to consider:

Pro: You may be able to purchase your home cheaper if you buy a for-sale-by-owner (FSBO) property without the help of an agent. According to NAR, the average FSBO sold for nearly $24,000 less than an agent-represented property.

If you're ready to buy a new home and want to undergo the process completely online, then visit Credible. The online marketplace can help with your house-hunting by comparing mortgage lenders and rates within minutes.

Con: You'll be responsible for getting all the information you need about your perfect home. You'll want to compare property values and determine the sales prices of other homes in the area. Additionally, you'll be responsible for finding properties to tour and contacting sellers to schedule walk-throughs.

If you opt to skip a buyer's agent, you'll be on your own for finding a lender, too. Visit Credible to get personalized rates and preapproval letters without affecting your credit score.

Pro: You could save money on closing costs. While the prevailing argument is that the seller pays for both realtors, the sellers typically wrap the realtors' fee into the sales price of the home, so the buyer may actually pay for the realtors with their home loan. According to realtor.com, the average agent charges a 6% commission.

Whether you choose to use a buyer's agent or not, make sure to visit an online marketplace like Credible to compare rates from multiple lenders.

Con: You may need to hire a lawyer to help with paperwork. Unless you're familiar with crafting sales contracts, you may need to hire an attorney to draft a legal agreement. If the seller offers the contract, you may still want to pay an attorney to review the contract to ensure everything looks okay.

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4 mistakes to avoid when you don't use a buyer's agent

Once you've decided to move forward with your home purchase without a buyer's agent, make sure to avoid these common mistakes:

  1. Don't rely on the information you see online
  2. Don't assume you can negotiate on every property
  3. Don't ignore significant problems in lieu of pretty fixtures
  4. Don't buy a home just to buy a home

1. Don't rely on the information you see online

While many buyers admit to heading online to get their first view of potential properties, this shouldn't be your primary source of information. Specifically, don't rely on listing information alone. You may be able to access public record information about the property on your local government website. You may have to pay a small fee to access some information, but it could prevent you from making a bad purchase.

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2. Don't assume you can negotiate on every property

Understanding the property's value and what homes are currently selling for in the neighborhood will help ensure you don't underbid and lose out on your dream home. According to NAR, most buyers paid 99% of the home's asking price.

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3. Don't ignore significant problems in lieu of pretty fixtures

While a beautiful tub or stunning backsplash may look nice, they're much cheaper to replace than a leaky roof, sinking foundation, or damaged water heater. Don't skimp on your home inspection.

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4. Don't buy a home just to buy a home

Purchasing a home you have reservations about could leave you with buyer's remorse. At the same time, don't skip over a home you love just because you think you might find something you like more. You may lose out on your dream home as homes in many markets move quickly.

Because buying a home is such a significant commitment, make sure to look to reliable resources, even if you opt to buy your home without the help of an agent. Use a tool like Credible to get current mortgage rates from multiple lenders so you can make an informed financial decision.

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