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Can you buy a house without a realtor, is it cheaper?

Hi RS,

I was just wondering if anyone has bought a house without a realtor?
Is it cheaper if I do this?

I'm just looking at MLS right now and there are a lot more "deals" now then before, and i was just wondering what the process is like to buy a house without a realtor, is this advisable, if I go directly to the listing agent, will I get the commission portion of the buying agent, even though I don't have an agent?

Thanks

Quote:

Originally Posted by PeanutButter (Post 8939603)

Hi RS,

I was just wondering if anyone has bought a house without a realtor?
Is it cheaper if I do this?

Typically not for the buyer. If you sell without an agent, it can be cheaper...but comes with it's own issues.

Quote:

I'm just looking at MLS right now and there are a lot more "deals" now then before, and i was just wondering what the process is like to buy a house without a realtor, is this advisable, if I go directly to the listing agent, will I get the commission portion of the buying agent, even though I don't have an agent?

Thanks

Typically the only time you would enter a transaction without an agent is when both parties know each other quite well, trust each other, and wish to do the transaction directly. You lose a fair bit of protection in doing so, but the seller will typically save the commission fees, and (usually) pass some of that onto the buyer as savings. The seller would also (presumably) save the fees of listing the house, staging, etc.

So, no, on a house you find on MLS you aren't going to convince the seller to drop their price cuz you're buying without an agent. They've already signed up with an agent, and are already contracted for the fees.

As far as advisable, in general I would say no. Your real-estate agent is responsible for researching and disclosing things about a property, plus most of them know the history of the inventory in the area and can tell you more than they are required to. If you enter a transaction on your own, you're only losing...not gaining anything.

As for the commission fees, the seller doesn't pay party A and then party B. The way fees work is the selling agent collects their commission fees from the buyer, before the money moves from Escrow into the sellers bank account. The selling agent then pays any commissions to the buying agent directly. Good luck convincing a selling agent to pay you those commissions, it's just not going to happen. There is no legal requirement for there to even BE a buyer's agent commission, that's just something the industry does as a courtesy to each other. So, just like leaving a tip in a restaurant...if an agent doesn't HAVE to leave a tip, because there was no waiter, they aren't going to just hand it over to you.

As a buyer, unless you're dealing with a purchase on a house that is yet to be listed, there is very little reason why you would ever NOT go with an agent.

You could make an argument as to benefits as a seller, but now that the market has started to cool (even a little) the risk/benefits may not be there.

My wife and I have purchased two homes, and sold one, without a realtor. The paperwork/documentation was $15 at Staples and all three deals took about 60 mins of negotiating at the dining room table. Pay a notary a few hundred dollars to sign the paperwork, have a reputable company perform a home inspection and you’re done. We split the commission savings each time between buyer and seller. Based on my experiences, I would never want to pay 10s of thousands of dollars to realtor for nothing more than an mls listing; I really don’t believe they provide any additional benefits.
Disclaimer: I’m in Penticton where the market for different spots around town is very easy to ascertain without a realtor.

Quote:

Originally Posted by PeanutButter (Post 8939603)

will I get the commission portion of the buying agent

lol

https://www.redfin.com/blog/2019/01/hello-canada.html

RedFin seems to be launching in Canada - they seem like a pretty big deal in Seattle with on demand home showings, 3D home scan, transaction history, etc.

I'll be curious to see if their 1% commission affects the number of showings they get from more traditional realtors in new markets.

Quote:

Originally Posted by CCA-Dave (Post 8939612)

Typically not for the buyer. If you sell without an agent, it can be cheaper...but comes with it's own issues.

Typically the only time you would enter a transaction without an agent is when both parties know each other quite well, trust each other, and wish to do the transaction directly. You lose a fair bit of protection in doing so, but the seller will typically save the commission fees, and (usually) pass some of that onto the buyer as savings. The seller would also (presumably) save the fees of listing the house, staging, etc.

So, no, on a house you find on MLS you aren't going to convince the seller to drop their price cuz you're buying without an agent. They've already signed up with an agent, and are already contracted for the fees.

As far as advisable, in general I would say no. Your real-estate agent is responsible for researching and disclosing things about a property, plus most of them know the history of the inventory in the area and can tell you more than they are required to. If you enter a transaction on your own, you're only losing...not gaining anything.

As for the commission fees, the seller doesn't pay party A and then party B. The way fees work is the selling agent collects their commission fees from the buyer, before the money moves from Escrow into the sellers bank account. The selling agent then pays any commissions to the buying agent directly. Good luck convincing a selling agent to pay you those commissions, it's just not going to happen. There is no legal requirement for there to even BE a buyer's agent commission, that's just something the industry does as a courtesy to each other. So, just like leaving a tip in a restaurant...if an agent doesn't HAVE to leave a tip, because there was no waiter, they aren't going to just hand it over to you.

As a buyer, unless you're dealing with a purchase on a house that is yet to be listed, there is very little reason why you would ever NOT go with an agent.

You could make an argument as to benefits as a seller, but now that the market has started to cool (even a little) the risk/benefits may not be there.

You omitted the part the lawyer plays in real estate transactions with respect to handling the money. I can add a bit to this.

The real estate agents normally get their commission from the buyer's deposit, which deposit forms part of the purchase price.

The buyer pays the deposit to his agent. The buyer's agent deducts his commission from the deposit and holds his commission in trust until the deal closes, at which time he gets paid. The buyer's agent then forwards the excess deposit to the buyer's lawyer to hold in trust until completion.

I'm going to simplify a bit for this part but what happens is the buyer's lawyer sends money to the seller's lawyer in exchange for signed transfer documents. The buyer's lawyer then registers the transfer in the Land Title Office. After that, the buyer's lawyer then authorizes the buyer's real estate agent to release the deposit the agent is holding. The buyer's lawyer then forwards the seller's real estate agent their portion of the commission.

You can do a transaction without real estate agents but you need lawyers (or notaries) to deal with the money and actually register the transfer of title.

Quote:

Originally Posted by AstulzerRZD (Post 8939639)

"Homebuyers who work with Redfin also save because the company refunds part of its commission to the buyers it represents. Our technology helps buyers act fast with instant alerts that let them know when homes hit the market or drop in price. With Redfin’s Book It Now feature, homebuyers can set up property showings with a few taps on a smartphone."

Very cool. Thanks a lot for this link. Much appreciated.

I guess I won't be getting anything from buying myself, so this seems like the best scenario.

if BC can't have Uber without rules that makes it almost as good as useless
Redfin Canada will probably be some watered down crap
shame because I love their data and have gone to a few of their open houses

Like most things in life - you can do a lot of things DIY, but end of the day are you
1) saving as much as you think
2) actually getting quality advice which is well worth the $ saved

DIY vs paying a carpenter who has experience.
DIY contracts which has liabilities and lupuls (loopholes, sorry RS joke) instead of $500/hr lawyer
... the list goes on.

The seller will dictate and end up paying most of the fees in the transaction. Though that will obviously affect what price you ultimately pay.
Standard listing commission:
7% on first $100K
2.5-3.255% on remaining above $100K.

Split between:
Selling realtor: Everything else minus buyer portion (gets more due to work/open house/prep)
Buying realtor: 3.255% on first $100K and 1.1625% on remaining

So technically without a buying realtor (filtering out and helping out) the selling realtor stands to get the full commission. Very unlikely they are paying you anything $ as Disclosure of Renumeration form (now required on all deals) tells consumers how much $ is being paid to all sides.

On plus side - some sellers MAY look at that as a factor for more money in their pants and lower their acceptable price if their listing realtor is willing to take less money too.

Also, doing your own research without access to past MLS/Paragon data is a pain.
Even with access to it, certain specific area knowledge and building knowledge may not be found online but through contacts/networks certain brokerage/realtors have. That's likely well worth paying $ for that experience.

The biggest reason for using realtors regardless is errors & omission insurance.
TLDR - if the realtor you use screw up bad and you go to court, Real Estate Board has significant insurance ($2M+) to cover for your damages.
By writing contracts yourself you have no recourse on missing details, miscounting floorplans, saying something was misrepresented, views were blocked, no one told you the backyard has sewage backup, place was a grow-up (stigmatized property).

Source: bought and sold my own properties, ended up with a realtor license myself to save money, & ended up running a small presales online business