These days, we’re hearing from a greater number of younger buyers who believe they can handle the home buying experience entirely on their own, with the help of the Internet. Often, these buyers (mistakenly) believe they’ll save money by purchasing a home without an agent, because the seller will only pay a half commission, instead of the full commission.
That just shows ignorance of the process. Sellers who have listed their homes generally pay between 4 percent and 6 percent of the sales prices as a commission to the listing agent. The listing agent, in turn, typically pays the buyer’s broker around half of the total commission. No buyers agent means the listing agent doesn’t have anyone to share in the commission. So, unagented buyers unwittingly allow the listing agent to pocket the entire commission.
Unagented buyers make other mistakes in the process that can cost them money, like not understanding how pricing works in a neighborhood, not understanding how to make a viable offer, and not understanding the relative value of specific amenities to a particular property. These mistakes, among others, can inflate the value of a property, causing an unagented buyer to offer more than they should.
Competent agents can help buyers avoid these mistakes, which is why we think all buyers should use one. But there’s no law that requires you to use an agent. You certainly are within your rights to buy on your own.
The purchase of a home is generally the largest single financial transaction most people will make during their lifetime. While we can’t compare buying a home with getting medical advice, we have heard stories of people trying to diagnose their illnesses without seeing doctors and others who make repairs to homes that would have been better left to professionals.
So, yes, you can buy on your own. And you might overpay, buy the wrong home or make other home buyer mistakes. Ilyce has written several books that list some of the most common home buyer mistakes, and you might want to look them over.
But if you’re determined to do this on your own, here’s a list of several common home buying mistakes that you might encounter:
1. Overpaying for a home: If you think you can understand the real estate market solely by viewing homes on the Internet, you might miss out on the very nature of what makes real estate unique. Where a home sits on a lot, within a street, within a block, within a community and within a town can make all the difference. Subtle differences can make all the difference in what a home is worth.
2. Buying the wrong home: Sometimes you need a second set of eyes to help you understand you’re looking at the wrong type of property, in the wrong location or in the wrong price range.
3. Choosing the wrong location: Sometimes first-time home buyers don’t understand the importance of location, and the factors that go into choosing the right location. Will you know that new developments are going in a certain neighborhood, that the local grocery store is closing, that a road is going to be expanded, that a school is closing, that bus service to that area is changing, that train service will be disrupted due to construction, that the homes behind a home you are looking to buy will be torn down or that the town plans major infrastructure improvements and they will be billed to the owners on that street? All of these can, and should, have an impact on a home buying decision.
4. Relying on the Internet for information and feedback: While the Internet is a wonderful tool to use in searching for a home, you need to do more than look through real estate listing sites. So get out from beyond your computer, walk through your neighborhood of choice and see your target property in person.
When Sam bought his first home, he walked around the alleys in the neighborhood to get a sense of how clean they were, how much graffiti was on garage doors, how noisy the streets and alleys were when cars went by, and the general safety or sense of safety of the neighborhood. Yes, you can do some research online, but nothing replaces checking out the interior and exterior of a home and touring the neighborhood.
5. Skipping a professional home inspection: You may get lucky and figure out what to buy and how much to pay for it on your own. It’s unlikely you’ll pick up all of the issues a professional home inspector will.
Good luck with your home purchase.