BUY HOUSE WITHOUT A REALTOR, USE A LAWYER INSTEAD

Want to save money?
People have known for a long time that you don鈥檛 have to use a real estate agent to buy a home. The 3% commission that the seller pays to the buyer鈥檚 agent? It鈥檚 real estate鈥檚 dirty little secret. In this internet age, when everyone knows what鈥檚 for sale, savvy buyers know how to leverage that 3% to their advantage. Which means they pay less.

Crazy, but true: a lawyer is way less expensive than a Realtor. If you go this route you鈥檒l also get 鈥 bonus! 鈥 superior representation. Here鈥檚 how it works.

A real estate agent provides two types of services:

Real estate brokerage services. These services include tours of homes and opinions of value.
Legal services. The sale of a home is a legal transaction. Brokers are allowed to engage in the limited practice of law needed to create a contract, such as drafting an offer. But they aren鈥檛 lawyers.
Pre-internet, only brokers knew which houses were for sale. But today, with listings available online, everyone knows whats on the market. Throw in the latest robust pricing tools that use Big Data, and many buyers don鈥檛 need real estate brokerage services. That is so 20th Century!

But they still need legal services. And when those services are provided by a lawyer, instead of a real estate agent, the consumer wins. Because the fact is, buyers benefit from legal services that go beyond writing up a contract (which is pretty much all a real estate agent is allowed to do). For example, only an attorney should help you with:

The Preliminary Title Report 鈥 An attorney will interpret this report and explain what is shows about title to the property. If there is a problem, an attorney will see that it is resolved to your satisfaction.
buy house without realtor is a tough path, but rewarding
Insider鈥檚 Tip: Don鈥檛 rely on the title company鈥榮 review. As an insurance company, its interests overlap with yours, but there are some things important to you that it might not notice. For example, maybe you have to share your driveway with a neighbor. That鈥檚 something you want pointed out to you before you buy.

Your Closing Documents 鈥 Curious to know what you鈥檙e being asked to sign? Wondering what it means to you? With an attorney, you鈥檒l get those answers. These documents generally aren鈥檛 negotiable, except for the deed. But there鈥檚 value in understanding the process.
Seattle Tip: The Warranty Deed by which a buyer takes title is drafted by the Closing Agent. If drafted incorrectly 鈥 which sometimes happens 鈥 it can undermine the legal protections to which a buyer is entitled. An attorney will catch and correct this error.

Your Due Diligence 鈥 A lawyer brings a useful eye to this process. If there are landlord/tenant issues (like an existing tenant, or a requested seller lease-back) or land use concerns (because you鈥檙e planning on changing the property), an attorney can be invaluable.
At the end of the day, buying a home is a legal process. It just makes sense that an attorney would be able to help when you buy a house without a Realtor involved.

How you can save 3% of the Purchase Price
When you find the house and then hire an attorney to help you buy it, you can use the seller-paid commission to get a better price. Here鈥檚 how.

First, for this to work, you have to be looking to buy a home on the MLS (which is almost always the case). That鈥檚 because, for a seller to list on the MLS, she must offer a commission to a buyer鈥檚 agent (as well as pay her own listing agent). That commission is 鈥 strangely enough 鈥 almost always a uniform 3%.

If your attorney drafts the offer and you don鈥檛 have a buyer鈥檚 agent, then there is no 鈥渟elling agent鈥 and no 鈥渟elling office commission鈥 to be paid. So an offer at 97% of list price is, to the seller, a full 100%. In other words, an offer of $485k on a $500k house, using a lawyer and without an agent, is a 鈥渇ull list price鈥 offer to the seller. At less than list, the savings are harder to measure, but clearly they remain significant.

To put yourself into a position where you can capture these savings (plus get the benefits of an attorney), you need to do some serious work.

It鈥檚 Not for Everyone 鈥 and It鈥檚 Not Easy
Best for One Buyer: As an initial matter, this process works best when you are the only possible buyer. For a home new on the market, where there is low inventory (like much of the country, including Seattle) it鈥檚 tough to compete with other buyers when you鈥檙e using a lawyer and not a broker. Tough, but not impossible.

Access to the Home: Still on board? Your next challenge is getting inside the home you might want to buy. You can find a possible winning home for sale online, and you may even be able to 鈥渢our鈥 it via an ever-more-common 鈥渧irtual tour.鈥 But who鈥檚 kidding who. Before you can buy a house, you have to get inside it. It turns out you do need minimal brokerage services after all (but doggone it, you鈥檙e not going to pay 3%!)

For tours, you have three options, all of which have their drawbacks:

Open Houses
The listing agent
Other brokers
Open houses as a general rule aren鈥檛 often enough. The listing agent may or may not be too happy to help. And with any other broker, you should confirm that the the only service you need 鈥 and presumably are willing to pay for 鈥 is access. You may be able to find a real estate broker who can assist with this sort of 鈥渁 la carte鈥 or 鈥渦nbundled鈥 real estate brokerage service. Ask around.

Bad Karma? Finally, you will have to step on some toes. Specifically, the toes of the listing agent. Here鈥檚 why:

The seller has signed a contract with the listing agent. The seller has agreed to pay 6%. If there is a buyer鈥檚 agent, then the listing is obligated to share it. But if there is no buyer鈥檚 agent, then per the terms of the contract, it belongs to the listing agent.

You will of course be buying the house without using an agent. But you are also putting your nose into someone else鈥檚 business, and asking them to take a pay cut. Expect at least a tiny of ill will.

That鈥檚 from the listing broker鈥檚 perspective of course. FWIW鈥..

Are you willing to tackle all of these challenges? OK, you鈥檙e on your way to significant savings and superior protection 鈥 welcome aboard! It鈥檚 gonna be a great ride