OT-buying a home without a realtor

[sjbraun]

It looks like we're going to purchase a townhouse directly from its owner. Obviously, this works better for both of us, but not having purchased a home in 31 years and never without the assistance of a realtor, what do I need to be aware of?
I imagine we'll want to consult a lawyer to draw up a contract, but I'm curious to learn from the collective's wisdom as we move through this process.

Thanks

[mbrtool]

yes, have a lawyer assist you.

ray

[yngpunk]

Don't forget to get an inspection as well.

[daker13]

I've always heard this is fine, as long as you have a good lawyer.

[AngryScientist]

the lawyer is the important part.

[Ken Robb]

the lawyer is the important part.

Gee, you sound angry, Scientist. :)

[AngryScientist]

Gee, you sound angry, Scientist. :)

haha, not at all.

we've actually been working with a very good realtor for the last year or so on a house hunt.

the realtor is helpful finding the right houses, arranging the viewings, talking to the other realtor.

once you've found a place and decided on it, as it sounds like the OP did - the realtor usually steps aside and the lawyer takes over. just sounds to me like that's the point the OP is at.

it must be a challenge to be a realtor in the times of corona, that';s for sure!

[avalonracing]

Real estate agent here. I would not do this without the guidance of a Realtor or a lawyer who is actually experienced with real estate transactions. I've dealt with other types of lawyers on the opposite side of transactions and it can be surprising to see how they can mess up a deal with their strike-throughs additional addenda. Some settlement officers are actually Title Attorneys and they might good to reach out to.

[smead]

I've done several private real estate transactions, it is especially easy if you are the buyer. Make sure the title is clean, open escrow at the local title company, do your inspections, split the commission saved between yourself and the seller. If you want, draft up a simple contract with the basic terms and conditions. My experience has been if stuff does come up, having a realtor will in no way protect you from anything other than what is already in the contract. Sorry if I offend any realtors here ..

[Ken Robb]

haha, not at all.

we've actually been working with a very good realtor for the last year or so on a house hunt.

the realtor is helpful finding the right houses, arranging the viewings, talking to the other realtor.

once you've found a place and decided on it, as it sounds like the OP did - the realtor usually steps aside and the lawyer takes over. just sounds to me like that's the point the OP is at.

it must be a challenge to be a realtor in the times of corona, that';s for sure!
Real estate sales vary greatly from state to state. In California almost no one uses a lawyer in a simple home sale and there is no "closing ceremony". All the paperwork is completed before the closing date and the escrow agent and title company record the title in the buyer's name and gives the funds to the seller. OTOH I know many states back east still have principals and their attorneys meet around a table and pass documents for all to sign before handing over the $$$.

[stephenmarklay]

haha, not at all.

we've actually been working with a very good realtor for the last year or so on a house hunt.

the realtor is helpful finding the right houses, arranging the viewings, talking to the other realtor.

once you've found a place and decided on it, as it sounds like the OP did - the realtor usually steps aside and the lawyer takes over. just sounds to me like that's the point the OP is at.

it must be a challenge to be a realtor in the times of corona, that';s for sure!

It does differ from state to state usually. Many states will “close” sales via a title company as well.

It also varies in that some states do table funding and other do not which makes a difference.

[jghall]

Personally speaking, having my license and formally being in the business, the contract alone is a pretty easy transaction. Much of it is canned fields. At least in the state I'm in.

That said, you absolutely want to do a property inspection and all the other due diligence that goes with buying a home.

Better safe than sorry!

[stephenmarklay]

Real estate sales vary greatly from state to state. In California almost no one uses a lawyer in a simple home sale and there is no "closing ceremony". All the paperwork is completed before the closing date and the escrow agent and title company record the title in the buyer's name and gives the funds to the seller. OTOH I know many states back east still have principals and their attorneys meet around a table and pass documents for all to sign before handing over the $$$.

Yeppers. Here is Washington state it is as you described but I have sat around the table in Boston with 3 cats because we were out of the house and hitting the road right after.

I prefer non table funding myself.

[azrider]

Yes, find a lawyer immediately. We sold our last home without a realtor and the best advice we got was getting attorney involved immediately.

Congrats on finding your own seller!!

[AngryScientist]

Interesting! I had not considered that the customs and general practices would vary so much state to state.

My experience just here in the NYC metro area.

Always learning new things here.

[pasadena]

You really should get a good realtor.
A lawyer will cover on on legalities in the paperwork presented but there may be a lot of nuances -especially with a townhome- that will be needed in the contract and through escrow procedures.

Though it can be straighforward, you really don't want to miss something critical that could save you a lot of headaches or money later.

An experienced realtor will make the process smooth and easy.

[JasonF]

In California almost no one uses a lawyer in a simple home sale and there is no "closing ceremony". All the paperwork is completed before the closing date and the escrow agent and title company record the title in the buyer's name and gives the funds to the seller.

This was our "closing ceremony" when we bought our L.A. home: a part-time actor, model and mobile notary shows up with his ponytail and hands us the keys after we sign about 600 pages of docs. It was super-weird coming from the east coast where lawyers are involved. Also strange to us was that escrow is 30 days and closings that take longer are very unusual and means something is wrong. Back east a closing that took twice as long would be considered fast.

[CNY rider]

Interesting! I had not considered that the customs and general practices would vary so much state to state.

My experience just here in the NYC metro area.

Always learning new things here.

Remember the contested Presidential election, with the “hanging chads” in Florida?
Took me days to understand what was going on. I figured everyone voted like we did in NY, with a voting machine and levers to pull. I could not figure out what had caused the little hanging tabs on their ballots.
Had no idea other people voted in all different ways.

[buddybikes]

House wasn't emptied? Did you have a walk-through morning of closing?


This was our "closing ceremony" when we bought our L.A. home: a part-time actor, model and mobile notary shows up with his ponytail and hands us the keys after we sign about 600 pages of docs. It was super-weird coming from the east coast where lawyers are involved. Also strange to us was that escrow is 30 days and closings that take longer are very unusual and means something is wrong. Back east a closing that took twice as long would be considered fast.

[zambenini]

Realtors are very good at protecting their cottage industry ... it shouldn't be so complicated or expensive to sell your own home. Depending on your market they can sap a lot of free equity money you thought you were getting as the home appreciated - 6%, that's like a year or two of appreciation in our market, depending on where you live. For buyers, that means you're paying for it, too. That said, "the market" includes realtor price-inflation because of how pervasive their cottage industry hold is on the market itself. There are upstarts trying to challenge it, but I suspect they'll replicate the realtor hold on the market if they succeed, and not much would change.

That said, when you need your realtor, you really need your realtor. We have only had good ones; current is a close friend. One was great at giving us the straight dope/wisdom we needed right on time ("Accept this offer, you'll regret it if you don't,"), the other made life easy in a stressful time - got us 3% over asking on our house and juijitsued it to an "as-is" sale (in the hot Nashhville market, but still). When you need them, you need them. Your seller or your buyer will have one, so get one to represent your interests, too.

[buddybikes]

House wasn't emptied? Did you have a walk-through morning of closing?


This was our "closing ceremony" when we bought our L.A. home: a part-time actor, model and mobile notary shows up with his ponytail and hands us the keys after we sign about 600 pages of docs. It was super-weird coming from the east coast where lawyers are involved. Also strange to us was that escrow is 30 days and closings that take longer are very unusual and means something is wrong. Back east a closing that took twice as long would be considered fast.

[djg]

Real estate sales vary greatly from state to state. In California almost no one uses a lawyer in a simple home sale and there is no "closing ceremony". All the paperwork is completed before the closing date and the escrow agent and title company record the title in the buyer's name and gives the funds to the seller. OTOH I know many states back east still have principals and their attorneys meet around a table and pass documents for all to sign before handing over the $$$.

Many states still require the presence of an attorney for closing, under special (one might say "odd") circumstances. I live in Virginia. When my wife and I bought our home (more than 20 years ago at this point), we had to pay a lawyer who was not our lawyer in the usual sense-- that is, did not owe us any of the typical fiduciary duties a lawyer might in just about any other circumstances. The law didn't keep us from hiring another lawyer to represent us, but the mandatory closing lawyer was there for the deal, not the people paying him. FWIW, I found our realtor helpful in many regards, but not so much in the deal or closing itself. In our state, the default arrangement didn't have the realtor acting as our agent either, although we could have hired a realtor to play that role. Still, as I said, I found our realtor helpful in various ways, and I agree with others that a buyer could find it very useful, and cost-effective, to hire a real estate attorney to actually represent him or her (or them).

[JasonF]

House wasn't emptied? Did you have a walk-through morning of closing?

That was the house we were renting at the time.

[fijichf]

I haven't sold a home in quite a few years but I am amazed that Realtors are still paid a percentage of a sale and that most agents are not employees, but commission based "contractors". In my market, one agency controls the majority of the listings as well.

[benb]

We always seem to need a lawyer for all this stuff here, but the Realtor seems totally optional.. I would happily buy a house without a realtor.

The only value the Realtor seemed to provide us when we bought our house was she had an inside connection and got us into our house on day 0 before the house went up on any websites or ads.

The housing market is always a seller's market here.. even in the bottom of recessions. We bought our house in a bidding war on day 1, in 2010 at the bottom of the market. We would never have gotten it without the realtor's inside connection to know the house was going on the market and get us there at the 0 hour.

But yah, I don't trust the banks or any of them with these ridiculous reams of paperwork without having a lawyer go over everything.

We even used a lawyer to refinance our house this spring. The bank was so skeevy like used car salemen that I would *never* have trusted them without the lawyer. We also had to move our house out of trust and then back into the trust to refinance.. again stuff that would have been near impossible here without the lawyer, even though it's trivial stuff for a real estate lawyer.

I do find it odd the realtor seems to make like 10-100x what the lawyer does for this kind of stuff.

Our rate has gotten so low now I don't think it will ever be possible for a bank to sell us another re-fi so hopefully we never go through it again.. the process really sucked with all the extra Covid crap.

[C40_guy]

I've seen good and bad realtors. We bought our current house with an "average" realtor, who was good at finding houses and setting appointments. She was even pretty good at helping to manage the price and non-price negotiations.

However, a good friend of ours, who is also a realtor (but didn't cover the market we were shopping in), is a master. He took one look at one candidate house and said "ouch, when was the addition put on, and why are there two front doors..." things that weren't obvious to us. His knowledge of construction and systems allowed us to dodge a couple of other bad candidates.

Buying a house is a huge investment. You need a partner who can help you find a property that really suits you, short and long term, and eventually, will be marketable to a large audience when it's time to move on. He or she will point out substantial value and defects in properties that you and I won't see. A great realtor has been selling around or against these issues for a long time and knows how things work.

Also, we were *very* fortunate to end up within walking distance of 1100 acres of singletrack (and deeded access to a good sized kettlepond). We weren't really aware of that resource...a realtor more in tune with our needs would have been a lot more vocal about its detail and value... We were looking at houses across one town....if I had known then about the conservation land, I would have stopped looking at houses elsewhere and just waited for a house to go on sale in our neighborhood.

[robt57]

Don't forget to get an inspection as well.


You get what you pay for with this. Research well who will be doing your inspection I suggest.

This should include radon testing, preferably not of the single sample variety if practicable.

I used to do these, and also was a FEMA and HUD contracted inspector.

Use a big company with history and insurance or a guy like me if you can find with a very long experience resume. That has insurance/bonding etc.

[robt57]

Also, we were *very* fortunate to end up within walking distance of 1100 acres of singletrack (and deeded access to a good sized kettlepond).

Assets 99% of the public would not see the value in. ;) I sure miss my property of 2002-2011 one mile from trail head of an 800 acre Nature Park with a 5 mile outer perimeter trail, not to mention miles of connectors across the middle.

[2LeftCleats]

IMO realtors can be very helpful and sometimes worth every dollar of their percentage. Other times, not so much.

We sold last year in IN, and had a buyer willing to pay the asking price. We contacted our respective attorneys, drew up the contract, did inspection and necessary repairs. Our guy held the earnest money and did the closing with both parties in his office. Very modest fee.

Moved to OR. We met our realtor on a scouting expedition to the area a year before and stayed in contact. Her local knowledge helped filter the choices and she was invaluable dealing with a stubborn seller. We did find it weird that in this state, seller and buyer sign documents separately and never have to meet. We always liked meeting the folks who would be taking over something we spent a lot of time and effort on.

OTOH, I signed a contract for a realtor to sell my mom’s house in another town. Before we put up a sign, guy driving by offered cash ‘as is’. Realtor wouldn’t accept any less than his 7%.

[prototoast]

With the disclaimer that I'm in California where attorneys are not generally part of the process, when buying our house, our Realtor was worth every penny he made and more. Before buying, I always imagined that the bulk of the realtor's work was in finding a house a making an offer. In our case, the real work started after the offer was accepted. After that, we had problem after problem with the seller and our lender, with seemingly every day a new fire to put out, and mountains of unexpected paperwork. Our 30 day close took about 45 days, and we never would have been able to navigate all of that on our own. The realtor managed the process, got us what we needed, and really went the extra mile to do the work so that we didn't have to. For all the things that came up, hiring an attorney instead of using a realtor probably would have cost us more than the commission our realtor made.

[benb]

You can pick up a lot of the knowledge that a realtor has free just by browsing the web & apps these days.

My wife loves to peruse the ads, Zillow, Trulia... she is so into it she is totally on top of the entire market in our town..

If you're moving into a new area it's harder to have that but if you're looking the area you already live in you can easily get this knowledge yourself.

It's not the same as back in the day when the Realtors had a major leg up on information.

The only thing they're getting that you can't is knowing which houses are coming on the market before they come on the market if they are getting information from their colleagues or other customers before that information gets published.

[FriarQuade]

If ever there was an industry ripe for disruption, it's real estate. For every person I've had a good experience with I've had 2 that weren't worth their fee. Then we had the broker that cost me 15k due to his sheer incompetence. Which was impressive given he had been doing commercial real estate in the area for his whole career.

If a realtor is needed, shop the deal. You need someone to do paperwork and that's not worth their normal commission. Seems reasonable that someone would do it for $1000 all in.

[robt57]

You can pick up a lot of the knowledge that a realtor has free just by browsing the web & apps these days.

In this day of interwebs, most county tax web sites data is a must to see before even looking at a property beyond a drive by IMO.

For my house the tax map app layers include SAT pics for 12 years, and overlay triggers for landslide, floodplanes, and radon hot spots. You'll wanna know this data if you are going to buy.

[buddybikes]

In our situation, we bought a property which the sellers realtor must of been a friend not living in the area. They heavily undervalued it (in our estimation and based on prices of houses near us...and ours is right on estuary...seconds from beach). We walked it, placed firm offer 24hr acceptance on spot. We had our own inspector (friend) at the showing (was a open house) so no second visit was needed other than us doing general walk through) Realtor on our end, we met at the house, she I think was shocked at how fast (and lack of work on her end) it was.

House we sold, was one we bought through 33 years earlier. She was heavily invested, helping to stage (no charge), clean, and let in various readiness people. We didn't need to go to closing, in fact advised not to. This was a historically old house (1700's) so had those little nuances. She over earned her cut.

[benb]

In this day of interwebs, most county tax web sites data is a must to see before even looking at a property beyond a drive by IMO.

For my house the tax map app layers include SAT pics for 12 years, and overlay triggers for landslide, floodplanes, and radon hot spots. You'll wanna know this data if you are going to buy.

Depends on the state, but you can access all of that without a realtor.

We've pulled that kind of information on houses in our town we were interested in before.

You can usually even find out whose behind on taxes & such and in danger of foreclosure.

We have done some of that research because one of our targets in town is to buy a house that needs a teardown or massive renovation and build our "goldilocks" size house. The developers snap up 95% of those houses here and take a 1000-1500 sq. ft house and replace it with as large of a house as the zoning will allow. Once they do that we have no interest in the 5000 sq. ft house they build.

And the negative stuff you can dig for.. the realtors will do everything they can to hide some of this stuff.

[pdonk]

As a person who works in the housing industry, I would not bother on my next go around to use a realtor to buy - unless the realtor could get me a scoop on a house in a hot neighbourhood. With the standardized forms we use here (Ontario) any good lawyer is good enough and paying 2.5% of the purchase price to have someone walk me through a house maybe once and watch me inital a few pages is not worth it.

Now for selling, yes I would use one, and chisel them on the fee (typical here is 2.5%). I don't have the time for organizing an open house, answering questions etc. plus on the sales side there is potential liabilities for representing yourself and withholding certain relevant knowledge (either on purpose or accidently).

[jlwdm]

I was an attorney in Washington State and have been a Realtor (primarily in higher end homes) in Arizona and Texas for the last 24 years. I have only seen an attorney involved on rare situations, usually a buyer from the East Coast who is used to using an attorney. I have closed lots in a couple of days and homes in less than a week. I don't understand why it takes so long in some areas of the country.

There is overlap at closing, but Realtors are doing many different things than attorneys.

At a lower price in a neighborhood of similar houses it is not too hard to proceed without an agent, but there still might be issues.

In my main market last year 40% of the homes sold outside of MLS. Having this information is valuable to clients. I have a lot of successful clients and many times I am left to negotiate the sale without talking to my client again.

I have seen a number of higher end home sales where a buyer has purchased directly from a seller and paid well more than the property was worth - thinking they were getting a good deal because of no commission.

I work a ridiculous amount of hours and with some buyers and sellers I get nothing and spend a lot of money. But overall I am well compensated for my time. I attend HOA meetings, Town Council meetings and Planning and Zoning meetings. I also keep an extensive data base of people and properties.

Lots of people think it is easy selling real estate, but if you do it right it takes a big commitment.

Like so many things 20% of the agents make 80% of the income.

Jeff

[benb]

It's actually the law to have an attorney here, there has to be one presiding over a closing. The closing is usually hosted at a law firm & we have always brought our own attorney along representing us. (Massachusetts)

The costs to do so are a joke compared to the risks involved, especially considering how expensive houses are here. TX and AZ might have much thinner regulations and less stuff to deal with making it easier to go without.

It seems popular to crap all over attorneys on the internet but in general in closing loans we've always felt like our attorney was far and away the most trustworthy person we were dealing with.

We actually had a "event" (damage to the house after the inspection but before closing) when we bought our house.. the $$$ on that event if we'd got stuck with it would have been considerably more money than we've spent on attorney fees in the last 10 years.

[Clean39T]

Dunno, I think my realtor earned their commission in the sale of our home recently - they helped us find stagers, repairs contractors, carpet installers, etc. - all at a discount - and those people actually showed up on time/schedule - did the marketing - handled the paperwork - negotiated the deposits and contingencies and closing schedule - and made the buyer stick to that.. Would it be better if they were on a flat-fee schedule vs. commission? Maybe. But if anyone thinks the answer is houses being bought 1:1 off Craigslist.....yeah, no thank you.. Maybe for new construction. In competitive resales markets, no way in heggle.

[robt57]

My last buying realtor was excellent on all levels. My last selling realtor OTOH.... I threatened to refuse her buyers offer 10 days before her exclusive expired. Only way I will sell is with an exclusive. Not done it any other way outta 5 houses.

A few said no way, I showed them the door and they signed exclusives. And all sold my properties. Although the last PITA, who was the Mayor in the town learned I don't bluff... ;)

[C40_guy]

You get what you pay for with this. Research well who will be doing your inspection I suggest.

This should include radon testing, preferably not of the single sample variety if practicable.


Even with a good inspector, we had issues to address immediately after closing. The PO installed a NG hot water heater that was too tall for the venting, and we were getting exhaust gases backwashing into the basement.

Effing plumber (who installed the tank) couidn't find anything wrong, twice, even though we could smell gas in the basement. Mass Save inspector found the problem after we closed, and I spent $6K converting from an 80 gallon NG tank to an indirect. Could have saved some money and gone with a smaller NG tank, or a hybrid electric, but the indirect provides the most consistent supply (has never run out on us).

No permits were pulled for the NG tank, or the finishing of the basement. Town Hall said "I dunno." Plumber who installed the tank (stickers with his name on it) said "I dunno...I think the homeowner sourced the tank..." and refused to take any ownership of a potentially dangerous situation.

[pasadena]

Agree and this is my experience as well.
We have jobs and I'm not going to take on another full time job as a realtor because... I don't want to pay commission? They are professionals and earn their keep.
The process is hard enough just finding something, but our realtor was amazing in all aspects and saved us a lot of money and time.

The OP already has their property picked out, but that was a small part of the entire process. At least in CA.
It sounds very different in other states.

I was an attorney in Washington State and have been a Realtor (primarily in higher end homes) in Arizona and Texas for the last 24 years. I have only seen an attorney involved on rare situations, usually a buyer from the East Coast who is used to using an attorney. I have closed lots in a couple of days and homes in less than a week. I don't understand why it takes so long in some areas of the country.

There is overlap at closing, but Realtors are doing many different things than attorneys.

At a lower price in a neighborhood of similar houses it is not too hard to proceed without an agent, but there still might be issues.

In my main market last year 40% of the homes sold outside of MLS. Having this information is valuable to clients. I have a lot of successful clients and many times I am left to negotiate the sale without talking to my client again.

I have seen a number of higher end home sales where a buyer has purchased directly from a seller and paid well more than the property was worth - thinking they were getting a good deal because of no commission.

I work a ridiculous amount of hours and with some buyers and sellers I get nothing and spend a lot of money. But overall I am well compensated for my time. I attend HOA meetings, Town Council meetings and Planning and Zoning meetings. I also keep an extensive data base of people and properties.

Lots of people think it is easy selling real estate, but if you do it right it takes a big commitment.

Like so many things 20% of the agents make 80% of the income.

Jeff

Dunno, I think my realtor earned their commission in the sale of our home recently - they helped us find stagers, repairs contractors, carpet installers, etc. - all at a discount - and those people actually showed up on time/schedule - did the marketing - handled the paperwork - negotiated the deposits and contingencies and closing schedule - and made the buyer stick to that.. Would it be better if they were on a flat-fee schedule vs. commission? Maybe. But if anyone thinks the answer is houses being bought 1:1 off Craigslist.....yeah, no thank you.. Maybe for new construction. In competitive resales markets, no way in heggle.

[Alstra]

Sure, you can always try and get a deal for yourself but are 100% certain that what you have chosen is a reliable choice for the rest of your life possibly? We were so sure with my father than buying an apartment in downtown Seattle would be an easy task and thought the only thing the realtor would do is add more money to the total price. Well, let me tell you that our attempt of saving money was about to end as a terrible situation where we almost bought an apartment that was overvalued. We were just lucky to call Mike, which we found through a realtor database (https://www.realestateagentlist.net/), and he was able to bargain with the owner, and we got it actually under the real value of the market.

[19wisconsin64]

Here's what I've learned after being involved in hundreds of transactions in many states over the past 25 years and counting:
-Yes, hire a good attorney, make sure they are good with communication. So many things can go wrong, the fee attorney's charge is well worth the cost-most are fairly priced.
-Realtor-I'll go back to a pre-med class I took at UW Wisconsin, being taught by a Noble Prize winner ....they said " In any given situation never expect more than 15% competency". Yes, this holds true for realtors. That being said, I have had a great career in Real Estate working with some amazing professional realtors-both in my 18 years in mortgages and 25 plus years of residential investing. My two cents-if needed to not hesitate to engage in an excellent realtor. Excellent is the big word here. Most...... are not excellent (yikes).
-Mortgage - make sure you are following the local norms if there is a mortgage involved, and follow up on all paperwork ASAP.
-Get things in writing.
-Be prepared to walk away from the transaction if the property does not either appraise for the value or has some un-fixable issues at reasonable costs shown by inspections. You may need all sorts of inspections.
-Survey-you may need one, consult with your attorney on this.
-Be patient, pro-active, positive, and professional. It may take a little extra work, but caution and hard work payout long term in real estate transactions.
Good luck!

[Hardlyrob]

We bought a piece of property adjacent to our house last year in a private deal. No Realtor, but we did engage a real estate lawyer - you really want someone with experience specifically with real estate - if they've spent their career doing family practice, wills, estate and divorce - they may be technically qualified, but unlikely they will be completely up to speed.

We had valuation questions with the town - the land was a carve out from another property, and our lawyer was very helpful with scenarios and a negotiating strategy with the tax assessor - paid for her fee right there.

RE laws vary widely from state to state - I bought a couple houses years ago in Connecticut where there are no standard contracts and you MUST hire a lawyer to "write" your contract from scratch - in addition to paying realtor commissions - what a scam. That said, I've bought or sold in NY, PA, NJ, CT and MA - every state is different.

Yes to inspections, radon, possibly a survey if it hasn't been surveyed or something changes - a good RE lawyer will know the drill for the area you are buying in.

Good luck!

Rob