Buying a House for Cash Without a Realtor

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Buying a house for cash without a realtor can be done so long as you’ve done enough research. 

For the eager DIYer, buying a house for cash without a realtor could be the perfect passion project. And yes, it’s possible to save money when using a cash offer to purchase a property without the assistance of a realtor. While there are several benefits to this tactic, there are also some potential downfalls you should be aware of. 

In this piece, we’ll examine the potential advantages and drawbacks to understand if such a process is right for you. We’ll also explain how to buy a house for cash without a realtor and hear from a real estate expert on whether it’s a good idea for most home buyers. 

Can You Buy a House for Cash Without a Realtor?

Yes, you can buy a house for cash without a realtor. That said, just because you can do something doesn’t mean you necessarily should. 

“Yes, you can avoid paying [realtors] commission but you may end up agreeing to a higher sale price because you don’t have the same negotiating expertise that a realtor has,” says Adam Hamilton, co-founder of REI Hub, an accounting software for rental property owners. “There are also lots of steps in this process that you would have to do entirely on your own, which can be risky and confusing.”

That said, there are certain advantages, including: 

Full Ownership

When purchasing a home using cash, you’ll have the ability to fully own your home. Full ownership allows you to more easily access the equity built in your property.

No Mortgage

Buying a home without using a loan allows you to skip taking out a mortgage. Avoiding a mortgage helps you keep more money in your pocket because you can avoid interest payments. Interest payments are fees borrowers pay on the loan principal. 

No Commission

When purchasing a home in cash without a realtor, you are able to skip the commission fees. However, it’s important to keep in mind that the amount of money you will save on commission as a buyer will likely be minimal. 

In general, commission fees are paid by the seller of a home. Home sellers account for commission fees in the purchase price of their property so you might indirectly be paying for commission as a homebuyer.

Saves Time Searching for an Agent

Finding the ideal agent can take time. For example, researching and speaking with real estate agents can take days, even months before you feel like you’ve found the right fit. If you have a tight timeline, searching for an agent might add unwanted pressure to finding a home.

Potentially Save Money

As a cash home buyer without a realtor, you may be able to save money. For example, cash offers can lower closing costs when compared to offers using a mortgage loan. The reason closing costs on cash offers are lower stems from the understanding that you will not need to pay loan-related fees.

How to Buy a House for Cash Without a Realtor

Purchasing a home without a realtor for cash can feel complicated, but it doesn’t need to be. Before buying a property, examine your budget and recognize that you will likely need to spend time on research. Take your time navigating the housing market and consider working with a capable real estate attorney to ensure you are on the right path to becoming a homebuyer. 

1. Determine Your Budget

Before diving into the home search, create a reasonable budget. Analyze your finances and decide how much time and money you’re able to dedicate to purchasing a home. Have an emergency fund in place to safeguard against unforeseen events. Contemplate reworking your emergency fund as you prepare to purchase a property in cash to ensure that it can cover future shifts in your spending habits.

2. Research the Housing Market

Researching the housing market without a realtor is a crucial step in your home buying process. Have a clear understanding of larger real estate market trends as well as smaller local movements. Take your time examining the neighborhood where you intend to live and its amenities. Collect information about comparable homes in the area such as estimates and sales details. If possible, speak with people who live in the area to have a better perspective.

3.  Choose Your Property

Select a property that fits your budget as well as your goals. When picking a property, focus on key areas of interest such as the location and price point. Depending on your priorities, choosing a smaller home might make more sense.

When finding the ideal property, remember certain lenders and banks have programs designed to help you fund cash offers. For example, some mortgage lenders have cash programs that allow eligible individuals the opportunity to become cash buyers. Cash offers are often viewed as more attractive by sellers because cash offers tend to have a lower level of risk compared to financed offers. Speak with a reputable financial institution to see if such a program would help you pay for the property of your dreams.

4. Make a Bid and Negotiate with the Seller

When making a bid and negotiating with the seller, consider speaking with professionals as well as individuals who recently sold their homes in the area. Depending on the market, you might compete against other buyers after placing an offer. Making a bid and negotiating with a seller requires a combination of financial and people skills. If you have your heart set on a specific house, you could write to the seller describing how much the property means to you.

5. Make an Earnest Money Deposit

An earnest money deposit helps to show good faith. It’s used to show that you’re committed to closing the deal. An earnest money deposit can help your offer stand out against the competition. 

6. Conduct a Home Inspection

Conducting a home inspection is especially important when you are buying a house in cash without a realtor. Home inspections can point out potential structural issues in the property. According to the American Society of Home Inspectors, you can negotiate on areas of concern that were not previously obvious, such as the condition of the roof.

7. Start the Title Review Research

A title review can indicate potential problems related to the property such as liens. Work with a reputable title company or real estate attorney to expedite the process.

8. Availability of Homeowners Insurance

Research the vast array of homeowners insurance options. Homeowners insurance helps to protect your finances from unexpected accidents or theft. When buying homeowners insurance, review factors such as the relative costs of other insurance policies and third-party ratings related to each insurance company.

9. Hire a Real Estate Attorney

Hiring a real estate attorney is important when purchasing a home without a realtor. A real estate attorney reviews documents and ensures that the transfer of the property is a success. The knowledge that a lawyer possesses can be especially helpful for first-time homebuyers who want to avoid unwanted trouble down the road. 

10. Schedule a Final Walkthrough and Close the Deal 

A final walkthrough provides you with a final opportunity to inspect the property. Take your time and examine details from the appliances to the walls. The goal is to make sure that the property is in the agreed-upon condition before closing the deal.

11. Move in and Enjoy Your New Home

Congratulations! When moving to your new home, remember to change the address on legal documents and subscriptions. When applicable, avoid the hassle of missed mail by switching to online messages and updates.

The Bottom Line 

The housing market provides a vast landscape full of vibrant opportunities and varied options. When buying in cash without a realtor, place an emphasis on research and learning about the market. Decide if you want to put in the extra time. Remember, even if you don’t work with a realtor, you will likely need to use home buying resources. Your dream of homeownership could be closer than you think.  

Why You Should Trust Us

Benzinga has offered investment and mortgage advice to more than one million people. Our experts include financial professionals and homeowners, such as Anthony O’Reilly, the writer of this piece. Anthony is a former journalist who’s won awards for his coverage of the New York City economy. He’s navigated tricky real estate markets in New York, Northern Virginia and North Carolina.

For this story, we worked with real estate expert Adam Hamilton, co-founder of REI Hub, an accounting software for rental property owners.

Frequently Asked Questions

Sources

• Adam Hamilton, co-founder of REI Hub