‘What do I have to do to buy a house without a realtor?’ This is a common question asked by real estate investors. The idea of
house buying without a real estate agent has become increasingly popular in recent years. According to the National Association of Realtors (NAR), homes sold directly by the seller (FSBOs) accounted for 8% of home sales in 2018.
Before we look at how to buy a house without a realtor in 2021, let us first explain who a realtor is and what he/she does.
A realtor is a real estate agent or broker who is an active member of the National Association of Realtors (NAR).
What does a real estate agent do?
Real estate agents are tasked with three main responsibilities:
- Listing homes for sale – Real estate agents get homes listed on the Multiple Listing Service (MLS). This is a database that is shared among other brokers and agents who are members of the MLS.
- Working with property buyers – A buyer’s agent peruses the local MLS listings to find the right income property for sale for his/her clients. He/she also sets up showings, gets home inspections, negotiates on the buyer’s behalf, and helps clients with the paperwork. In addition, agents conduct comparative market analysis or real estate market analysis on behalf of buyers to assure that they are paying a fair market value for the house.
- Working with property sellers – A seller’s agent sets listing prices, markets property listings, stages homes, hosts open houses, and vets potential buyers.
Reasons to buy a property without a realtor
While working with an agent as a real estate investor comes with some important benefits, there are major reasons why you should consider buying rental property on your own. Here are the most popular ones:
- You are a real estate agent yourself.
- You are buying a property from a relative or a friend that you trust.
- You are a real estate investor with lots of experience buying and selling houses.
- You want to avoid paying high realtor commissions.
Guidelines for buying a house without a realtor
Wondering how to buy a house without a realtor?
Here are the steps:
1. Get a mortgage preapproval
Some property sellers will want to see a mortgage preapproval letter before accepting your offer to purchase a home. Preapproval is basically the process of establishing how much cash you can borrow to purchase rental property. To get preapproved for a mortgage, you will require proof of income and assets, employment verification, good credit, and any other documentation the lender asks for.
2. Find the best location
Finding the right location is an important part of how to buy a house without a realtor. To identify the best places to invest in real estate in 2021, you need the right investment property analysis software. Also known as a heatmap analysis tool, the Mashvisor real estate heatmap is a tool that investors can use to easily find the best locations for rental property investing in any market. This tool will help you analyze neighborhoods using filters like listing price, traditional and Airbnb rental income, traditional and Airbnb cash on cash return, and Airbnb occupancy rate. In this way, you don’t need to worry about missing on the analysis to be provided by a real estate agent.
3. Find houses for sale
Once you’ve found a great neighborhood, you can now start looking for investment property that fits your criteria. You can find homes for sale by driving around the neighborhood, attending auctions, visiting the county offices, or checking Craigslist. However, the best place to get great real estate deals is the Mashvisor Property Marketplace. You will find off market properties like auction homes, bank owned homes, foreclosures, short sales, and even tenant-occupied homes. Contact details of property owners are readily available.
4. Analyze the property
Finding a rental property for sale is not enough in 2021; you must conduct investment property analysis to find out its profitability potential. Also known as the rental property calculator, the investment property calculator is the tool you need for analyzing income property. With this tool, you can estimate rental income, rental expenses, cap rate, cash on cash return, cash flow, and occupancy rate. Mashvisor’s calculator will also show you real estate comps and help you determine the optimal rental strategy for the house that you buy.
5. Hire a real estate attorney
Though the law might not require you to work with a real estate attorney when buying income property, it is highly advisable. The attorney will help prepare and review the paperwork involved in the real estate purchase. He/she will also offer advice every step of the way, thus helping you avoid costly legal mistakes.
6. Ask for a seller’s disclosure
As the name suggests, a seller’s disclosure is a statement outlining known problems with a house. The statement could mention things like structural issues, presence of radon or asbestos, plumbing or heating problems, toxins in the soil, or water damage.
7. Make an offer and negotiate
Once you are satisfied with the condition of the home, it is time to make an offer. Decide how much to offer based on the condition of the home, how long it has been on the market, and the prices of similar homes in the area (real estate comps). Your offer letter should mention the address of the home, the amount you are offering, contingencies, seller concessions, and the date you wish to close. Since the seller is likely to make a counteroffer, be prepared to negotiate.
8. Get a home inspection
A home inspection will reveal any hidden issues with the home, probably that even the seller knows nothing about. If the inspection exposes any problem, you could ask the seller to make repairs before closing. Alternatively, ask for a reduction in the sale price. If you cannot come to an agreement, simply cancel the sale.
9. Finalize the purchase
Closing is the last stage in the home buying process. Make sure your lawyer is present at closing to review all the paperwork that you are required to sign.
Anyone can learn how to buy a house without a realtor in 2021. Start by getting preapproved for a mortgage, and then find the best location for investment. Look for properties that match your criteria and analyze them using Mashvisor’s real estate investment tools. Hire an attorney, make an offer, get the home inspected, and close the sale.
To get access to our real estate investment tools to start looking for profitable traditional and Airbnb rental properties across the US, click here to sign up for Mashvisor today and enjoy 15% off for life.