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The concept of “For Sale By Owner” — or “FSBO” for short — is nothing new. Many sellers choose to take the reins when selling their homes to save tens of thousands of dollars in realtor commissions. However some buyers may also choose to forgo the use of an agent to represent them when looking for a home to purchase. 

But are the benefits of buying a house without a realtor worth the potential risks involved?  

Can You Buy A House Without A Realtor?

Yes, buying a house without a realtor is possible, and some Canadians have done it successfully. There is no legal requirement to use a real estate agent to buy a home in Canada, but going it alone means there’s a lot more work for you to do. Plus, there are certain risks you’ll be assuming if you don’t have an agent acting as a representative on your behalf. 

Benefits Of Buying A House Without A Realtor

There are a few reasons why homebuyers may want to purchase a home without having a real estate agent involved:

Direct Communication With The Seller

Many buyers prefer to get information about the home and the transaction directly from the seller without having to go through an intermediary. For instance, the buyer can call the seller directly to ask questions about the property, schedule visits, or negotiate a deal. With no agent involved, this process can be simplified for both parties. 

Save Money

Real estate agents generally require compensation for their services. This can be as much as 3% to 7% of the house price. So if you’re purchasing a $600,000 house, you’ll need $18,000 to $42,000 to pay them. While these costs are typically divided between the buyer and seller, there may be times it completely falls on the buyer. 

This happens when the seller is not working with an agent. Some sellers who are not working with an agent may also add a note to their listing indicating that they will not negotiate fees with the buyer’s agent. In this situation, the buyer’s agent will still expect to be paid for their services, which would fall on the lap of the buyer. 

Set The Pace Of The Transaction

With no real estate agent involved, you and the seller can set the pace of the transaction yourselves. You can also retain all control over the transaction, which you may be even more comfortable with if you’ve already been part of a few real estate transactions in the past.  

Drawbacks Of Buying A House Without An Agent

There may be some good reasons to leave a real estate agent out of the picture, but there are plenty of drawbacks to consider before going it alone:

Time-Consuming

Real estate agents do a lot more than just peruse the internet looking for homes available for sale and scheduling visits. There’s a lot of work that’s done behind the scenes that you may not be aware of. All the tasks that an agent would typically take care of would now be your responsibility. You could find yourself spending a ton of time looking for homes for sale, scheduling home visits, managing price negotiations, and completing all the paperwork.

Lack Of Understanding Of The Current Market

Unless you have experience buying and selling homes yourself, you may not have the skill set or experience to comprehend the current housing market and how that may affect the price you pay for a home. While buying without an agent could potentially mean some savings, it could sometimes cost you more money if you don’t know what the home you’re buying is currently worth. Plus, if you fail to negotiate effectively, you could be spending more money on the home than you should.

Limited Access To Properties For Sale

Real estate agents have direct access to the backend of the Multiple Listing Service (MLS), an online database of properties available for sale. But even though you may be able to search this website on your own, you won’t have access to off-market listings that are only communicated amongst real estate agents. As such, you could miss out on great homes that match your search criteria and budget.

End Up With A Home With Major Issues

If you don’t take the necessary steps and precautions when inspecting homes for sale, you could inadvertently choose a home that’s got serious problems that are not easily evident. It’s not unheard of for buyers going solo to end up discovering several serious issues after they move in. While this may still be possible when an agent is involved, you can drastically cut down on the chances of this happening with the help of an agent. 

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Tips When Buying A House Without A Realtor

If you decide to take the DIY approach to buying a home, consider the following tips to ensure a successful transaction:  

1. Get Pre-Approved For A Mortgage

Getting pre-approved for a home loan before you start house hunting will give you a clear idea of how much you can afford in a home purchase. Then you can focus only on properties that fit your budget, which will save you lots of time and disappointment. Plus, being pre-approved will show sellers that you are serious about buying a home and are financially prepared and qualified to complete the purchase.  

If you’re unsure about who to apply with and who you can get pre-approved with, applying with a mortgage broker such as Mortgage Maestro can help. They can help provide customized solutions and a more seamless experience. 

2. Find A Real Estate Lawyer

In Canada, a real estate attorney must be part of these transactions. Real estate lawyers will take care of all the complex paperwork involved and will ensure that you are fully protected against any liabilities when agreeing to buy a home.  

3. Do Your Homework On Comparable Sales

One of the more important steps in buying real estate is coming up with a fair offer price on a home. You don’t want to pay more for a home than you should, and the best way to come up with a sound offer price is to base your offer on what similar properties in the area recently sold for. 

These are referred to as “comparables“, or “comps” for short. Make sure you look at a handful of these comparable sales to see what their sale prices were to help you determine the right offer price.   

4. Make An Offer

A formal offer should be provided in writing on a standard offer form. Alternatively, your real estate lawyer can prepare a written offer for you, which should include both your name and the seller’s name, the offer price, your deposit amount, conditions that are to be met to seal the deal, and the date the offer expires, among others. The offer should be signed by both parties for it to be legally binding.

5. Have A Home Inspection Done

Always conduct a home inspection before finalizing a real estate purchase transaction. Ideally, you should hire a professional home inspector to do this job. These experts have lots of experience looking for issues that the average buyer may overlook. If you notice any problems, you can either walk away from the deal (as long as you’ve included a home inspection condition), request that the seller fix the problem, or renegotiate the purchase price to accommodate the cost of rectifying the issue yourself. 

What’s A Private Sale House? 

A private sale listing is one that does not involve a real estate agent. Instead, the owner of the home is selling directly to a buyer without the involvement of a realtor. 

Sellers typically choose to sell privately to avoid paying expensive commissions, leaving more money in their pockets. 

Buyers who opt for a private sale may also want to try to save money by negotiating a lower price on a home from a seller who doesn’t have an agent to pay. Plus, buyers may prefer a more simplified process without the need to go through a middleman to communicate with the seller.

Final Thoughts

Buying a house without a realtor is certainly doable, but it’s important that you understand everything involved in the process. Most likely, the goal is to save money and enjoy a more transparent purchase process. But if you don’t dot the i’s and cross the t’s, you could leave yourself open to legal issues and potentially spend more than you should. In this case, getting some advice and guidance from a real estate lawyer would be valuable. 

Buying A House Without A Realtor FAQs

Is a private sale risky?

Yes, there are risks associated with buying a home without a real estate agent. You could pay more than necessary, wind up with a home with major issues, and leave yourself vulnerable to litigation if you don’t cover your bases with the proper paperwork. To minimize these risks, hire an experienced real estate lawyer.

Can you get a mortgage on a private sale?

Yes, you can obtain a mortgage when you buy a home privately from the seller. Like a typical real estate transaction, your lender will need a copy of the purchase agreement, along with all other documents that lenders typically require to assess your financial health and creditworthiness. Buying without a real estate agent shouldn’t get in the way of getting approved for a mortgage, as long as your finances are in order.

How do you make an offer on a house without an agent?

To make an offer, get pre-approved first and submit your pre-approval letter along with your written offer. Decide how much to offer after researching recent comparable sales in the area. Determine a closing date that both you and the seller can agree on, and include conditions to protect yourself, such as home inspection and financing conditions. It’s always a good idea to have a lawyer help with this process to make sure you’ve covered all your bases, since this will become a legally binding contract when both parties have signed it.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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