3 Significant Risks of Buying a Home Without a Real Estate Agent

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Are you in the market for a home? Many homebuyers are hesitant to hire a real estate agent because they do not think that it is worth the investment, while others believe that agents are only concerned with closing deals. If you are considering the challenge of purchasing a home without a real estate agent, you may also consider the potential risks beforehand.

You are responsible for your own negotiations.

Negotiation is an important aspect of the homebuying process. Without a real estate agent in your corner as a buyer, you are fully responsible for your own negotiations. Experienced real estate agents will have a better understanding of the negotiation process, and this process can be exceptionally difficult to navigate without context. When you have a real estate agent working for you, you can rely on both their knowledge and experience to negotiate for the best deal possible.

You are responsible for the paperwork.

The homebuying process requires a significant amount of paperwork along the way. An experienced agent can help to guide you through the documents that may require your signature. Your agent will also help you by answering any questions that you may have, providing you with peace of mind that everything is running smoothly.

You are responsible for inspections.

When you choose to buy without a real estate agent, you must independently determine which types of inspections to select based on the needs of the home. The majority of buyers today are unsure of how to spot potential problems within a home, such as mold and structural issues.

HUD Foreclosures

HUD foreclosures and VA Foreclosures are some of the best homes to buy when price is part of the equation. As with most Americans, price is always a concern. If not buying the same house for less, why not buy more house for the same dollar invested? When looking for a good deal it is hard to do better than the VA or HUD foreclosures market. The simple truth is that there are just more VA and HUD homes on the market, as they represent such a large number of mortgages that are generated each year. This translates into more foreclosures just by the magnitude of difference between all others comparing to the two largest.

The two largest also being government owned and operated means that they have less time to wait to make money back on the home. The FHA is especially known for selling HUD homes for less than the average sales price in a given area. FHA foreclosures represent a fraction of HUD but they are still a significant number of homes and both should be considered.

VA (Veterans Administration) and HUD (Housing and Urban Development) have different and unique opportunities for the buyer. Both are often forgiven for the local taxes normally associated with the purchase of a home (this is on a county by county basis). Be sure to ask the local title company or escrow company to look into it for you before closing as this is often missed due to their are not used to dealing with the 2 to 3 percent of the market that VA and HUD foreclosures represent.

Foreclosure Listings Increasing

As the market settled after the mortgage meltdown foreclosure listings also settled and fewer homes were on the market with a placard reading “Bank Foreclosure” in big red lettering. This was a good thing for the entire real estate market. Having an abundance of foreclosures brings the entire market down and it makes it harder for home owners, who would like to move, to get the appropriate price for their home as a similar home down the same street was sold for substantially less and the appraiser is using the foreclosure as a comparable sale.

This is just one of the problems when there are too many foreclosure listings in any area. Another issue is the television set that sits in everyone’s living room harping about the price of homes based on the number of foreclosures and this constant barrage of negative information makes most people sit on the sidelines waiting for the market to either implode completely or to correct itself. Meanwhile while they wait, others are buying foreclosure listings and making great investments.

Whatever the reason, a market can only handle so many foreclosure listings at any given time. The more foreclosures, the lower the market gets and this is a lesson the banks that were foreclosing and selling off realized too late. The market and their investments would have been better off if there had not been a rush to divest themselves of the toxic assets made more toxic by their own actions.