Don’t we all like to have a permanent address? A forever home, where you can plant roots and raise a family? As anyone will tell you, buying a home is big achievement. For most of us, it is also the biggest financial transaction of our lives, one that involves several important decisions. One of these is finding the right property to buy.
It is not uncommon to wait months before you can find the right property to buy. There may not be good houses available to buy in your desired neighborhood and in your price range. But what if a friend just also happens to be selling their house and the house ticks all the important boxes for you?
Since you are buying the house from a friend, it is a good opportunity to save some money by not engaging a realtor, right? On the surface, yes, but there are some serious pitfalls you have to be aware of.
Can You Buy A House Without A Realtor In Canada?
You are not mandated to use a realtor when buying a property in Canada. You can represent yourself in the transaction, from negotiating the sale price, filing all the necessary documents, and closing the sale. That said, there are several reasons why this may not be the best way to proceed.
Before we discuss the reasons you may be better off engaging a realtor when buying a house, it is prudent to consider the situation where there may be positive outcomes to go it alone, especially when the seller is a friend.
Firstly, since you are friends with the seller, you can rely on your personal relationship to negotiate terms that benefit both parties. Secondly, you may already be familiar with the property and feel you don’t need realtor to come in organize an inspection and a viewing.
It is possible you may also be familiar with the area and contend that you have a good idea on the prices of comparable properties. Armed with that market knowledge, you may even feel you are in a position to negotiate a better price than the realtor.
In some cases, buyers simply don’t trust agents, concerned that they may push them into quickly buying a specific property so they get their cut of the commission. The worry is you may end up buying the wrong property or simply pay more than you should.
Not hiring a realtor usually does not save a buyer any money
The most common reason why some buyers choose to not hire a realtor is the assumption that you will save on the realtor’s commission. We say assumption because not hiring a realtor will not necessarily save the buyer any money. That is because it is the seller that pays the realtor’s commission - both yours and theirs.
Why Buying A Home Without A Realtor May Be A Bad Idea
Over 80 percent of homebuyers buy through a real estate agent. There are very good reasons why they do this. Even if the seller is your friend, it may still be in your best interests to hire an agent. Here’s why:
The home buying process is complicated
If you are buying a property for the first time, you may be biting more than you can chew by trying to navigate the home buying process by yourself. Buying a home is not as simple as agreeing a price and signing on it. The process is complicated and time consuming.
To start with, you have to sign a purchase agreement that spells out contingencies on what to do in the event of certain eventualities. For example, if the home inspection turn up previously undiscovered repair and structural issues, the purchase contract must have explicitly worded provisions that allow you to withdraw from the purchase agreement.
There are also state and local regulations you must meet before closing the purchase. Failure to complete and properly file certain documents may cost you money and time. A person not familiar with the homebuying process may also underestimate the amount of time, expense, and hustle it takes to follow the process through.
Negotiating the right price takes skill and expertise
The fact you are buying from a friend may prove to be a handicap when negotiating the price. Because you share a relationship with the seller that you are keen to protect beyond the transaction, you may not be able to aggressively pursue a better price.
An agent on the other hand, is unshackled from any sensitivities and best positioned to negotiate the best price and terms for their client. In the case where your friend is represented by an agent, you can even find yourself at a disadvantage.
The seller’s agent will have the experience and can use the tricks of the trade to secure the best deal for their client. For a fairer price negotiation, it is best you also have an agent representing you.
Even when you feel you know an area so well that you have a good idea what a good price will be, it is still wise to buy through an experienced realtor. They are best-placed to match your needs and wishes with the right property.
Get guidance on important technical matters and disclosures
Unless you are buying a new house, you should expect that there will be repair and structural issues the seller will need to disclose and take care of even after the sale has been agreed. Examples could be fixing a leaking toilet, a bad roof, or replacing a broken gate.
You may even allow the seller to keep some of their belongings in the garage on the promise that they will collect them at a later date. Without a legally binding, explicitly worded agreement, problems will arise if the seller fails to make good on their promises. The same friendship that was the basis of this transaction may be ruined as a result.
Though they are legally binding, verbal agreements are difficult to enforce. To protect yourself, it is critical that all agreements with the seller are memorialized by a communication trail and protected by a written contract. If the other party reneges or defaults on their promise, you then have a viable recourse.
While you may easily neglect to have all your agreements with the seller written down, an experienced realtor will make sure to cover all bases as that is part of their fiduciary duties.
Property lines are also a common cause of conflict. An experienced realtor will know not to take the seller’s word in terms of where the property line is. They will arrange to have the property properly surveyed and marked so you don’t run into disputes with your neighbors down the line.
Why Using A Realtor Is Important
Buying a house is a complicated process with many potential sink holes. It is not the type of transaction where you want to cut corners and neglect certain steps no matter how trivial they may seem. If something goes wrong the hit to your pocket may be substantial.
To protect yourself, it is critical to have a realtor navigate the process for you. They know the ins and outs of the real estate market and the home buying process itself and will save you from wasting time and risking your hard earned money.
Search Souqh for the best realtors in your local area, wherever you are in Canada. Souqh is a marketplace for real estate service providers, from realtors, real estate lawyers, to contractors. Our platform simplifies the homebuying process to save you time and money.