How I Bought a Home Without an Agent After the NAR Settlement

The rules for residential real estate agent commissions changed in 2024 after the National Association of Realtors (NAR) settled a class action lawsuit.

Before the Settlement

It used to be that a home seller agreed to pay a commission to a real estate agent to sell a home, and the seller’s agent advertised on the home listing that they were willing to share their commission (typically 50:50) with any agent who brought a buyer. The commission rate was usually 6% of the home’s price (5% in some expensive areas).

If a buyer didn’t use an agent, the listing agent wouldn’t share anything. This created an incentive for buyers to use an agent in the same way as credit card rewards created an incentive to use credit cards. When the price was the same whether you used an agent, you might as well use one and get whatever little benefits that may exist.

After the Settlement

The class action settlement required that a buyer and the buyer’s agent sign a written agreement to establish the commission upfront before touring a home. The agreement typically says that the buyer is obligated to pay the commission unless another party covers it. As a result, most sellers lower the seller’s agent’s commission to 3% and anticipate that a buyer will ask for another 3% to cover the commission to the buyer’s agent.

It’s business as usual on the surface. The seller still builds an expected 6% commission into the price. The seller’s agent still receives 3% and the buyer’s agent still gets another 3%. Some consumer advocates were hoping that the NAR settlement would change the landscape in residential real estate and lower commissions. That hasn’t happened for the most part. Redfin reported that the average buyer’s agent commission has risen slightly since the new NAR rules went into effect.

Real estate agents don’t lower their commissions to compete for business from buyers because most buyers don’t choose an agent by price. Buying a home is a big decision, and most buyers want a “good” agent or the “best” agent. The industry sows FUD to make buyers suspect that only unknowledgeable or inexperienced agents are willing to discount their commission, and that not using a “good” agent or the “best” agent will only cost them in other ways more than the difference in commissions.

However, the incentive for a buyer to use an agent is weakened after the rules changed. If a buyer doesn’t use an agent, the buyer can offer a lower price and still make it appealing to the seller.

I did just that. I bought a home without an agent, from out of state, over a video walkthrough by FaceTime. I paid less and still beat competing offers.

Agent’s Roles for the Buyer

Before you consider going alone without a buyer’s agent when you buy a home next time, you should understand the roles of a buyer’s agent and be prepared to fill those roles in another way.

Personal Shopper

A buyer’s agent acts as a personal shopper for the buyer, especially when the buyer isn’t familiar with the area. When I bought my first home with an agent before the Internet age, I didn’t know which homes were for sale. Only agents had access to listings. She drove me in the back of her Mercedes from one house to another.

The Internet replaced this role. When I worked with an agent before the NAR settlement, the agent never brought to my attention any listing I didn’t already know from my saved searches on Zillow and Redfin. Instead, I pointed out to her which listings I was interested in and asked her to set up showings.

Education

A buyer’s agent educates a buyer on the legal terminology in the buying process. What’s an offer? What’s a counteroffer? What’s earnest money, and when does it become non-refundable? Which contingencies do you need in a contract, and what happens when the deadline passes? Who pays for what title insurance? What’s an ALTA settlement statement, and how do you read it?

You must educate yourself on these things when you don’t use a buyer’s agent. They’re not that difficult to learn. AI can help.

Resource Recommendations

Real estate agents have contacts for everything. If you need a loan, they refer you to a loan officer or a mortgage broker to get you approved. After you go under contract, they call in an inspector. If the home needs repairs, they have contractor contacts for estimates or to perform the repairs before you move in.

These resources are only referrals. The agent doesn’t cover the cost. You still have to pay each service provider. Keep in mind that an agent’s referrals are optimized for responsiveness, not quality or price. If a picky inspector finds a lot of problems with a home and scares off buyers, that inspector won’t get repeat referrals next time. Time is of the essence in a real estate transaction. The goal of an agent is to keep the deal moving toward closing without delay.

When you go without an agent, you should gather these resources yourself ahead of time. You can find service providers on Google Reviews. Line up contacts to call when you need a loan, an inspection, insurance, a repair estimate, and so on.

Opinion for Quality and Value

Buyers often ask their agent whether a home they’re interested in is “good” or how much their offer price should be. They want their agent to help them avoid a bad purchase or overpaying.

It’s wishful thinking. The best you can hope for is that an agent won’t push you to buy or overpay. It’s against an agent’s economic interest to stop you when you’re already inclined to buy a home, because they only get paid when you move forward. The higher your offer price, the more likely the seller will accept it. It doesn’t matter to the agent which house you buy or how much you pay, as long as you buy one, the sooner the better.

You must make your own judgement. Hire an appraiser to assess a home’s fair value when you’re seriously considering making an offer. Lenders order an appraisal for their own protection when you apply for a loan. Nothing stops you from appraising the property before making an offer. The opinion from a trained, neutral third-party appraiser is much more reliable than the opinion from an agent with a conflict of interest.

An appraiser I used charges $400 for a “desktop appraisal.” The appraiser finds recent comparable sales in the area and adjusts for various factors to calculate an appraised value. It doesn’t require a site visit, and the seller won’t know that you did an appraisal. The price for an appraisal is small potatoes when it guides you to how much you should offer for the property. When you save 3% from a buyer’s agent’s commission, you can afford to pay for a pre-offer appraisal.

Negotiator

Many agents say they’ll help you negotiate the best deal. That’s dubious. Bargaining hard to risk losing a deal is bad for business.

When I made an offer through an agent at one time, the seller countered it by another $30,000. My buyer’s agent said the seller’s counteroffer was “a really generous offer and an excellent value for the home.” She cited market trends, how the property was extremely well cared for, and said that the yard was a big bonus. When I decided to back off for other reasons, the seller came back with an offer that was $25,000 below my original offer.

Going with the agent’s recommendation would’ve cost me $55,000 right there. An agent’s incentive lies in moving toward a transaction, not away from it. It’s wishful thinking to count on an agent to negotiate a good deal for you.

Door Opener

You can go to open houses without an agent. If a listed home doesn’t hold an open house, you need someone to open the door and let you tour the home. A buyer’s agent performs this role. They have apps for requesting a showing time and receiving a code for the key box.

You’ll have to go through the seller’s agent when you don’t use a buyer’s agent. Industry practice doesn’t allow a buyer to tour a home unaccompanied. The seller’s agent can’t just give you a code and let you into the home alone. The agent has to go there him- or herself or send someone from the office.

Sellers’ agents don’t like the additional work because they perceive unrepresented buyers as unserious tire kickers. Tire kickers with a buyer’s agent at least only waste their own agent’s time. You’ll need to convince the seller’s agent that showing the home to you is worth their time and effort. Understanding the roles of a buyer’s agent for the seller and the seller’s agent will help you do that.

Agent’s Roles for the Seller

Why did sellers’ agents share their commission with a buyer’s agent before the NAR settlement? Why do sellers still agree to pay a commission to a buyer’s agent after the NAR settlement when they’re not required to do so?

A buyer’s agent helps the seller sell their home. That’s why the seller is paying a commission.

Qualify Buyers

Buyers’ agents only work with qualified buyers. If a buyer doesn’t qualify to buy a $1 million home, there’s no point for the agent to show $1 million homes to the buyer. When I worked with an agent before, the first order of business was sending me to her lender contact to size me up with a mortgage pre-approval. Sellers know that every buyer a buyer’s agent brings to the home is at least in the realm of buying it.

When you don’t use a buyer’s agent, you must show the seller’s agent that you’re qualified. Obtain a loan pre-approval or proof of funds up front. Offer to send it when you first contact the seller’s agent. The seller’s agent wants to sell the home and earn the commission. They’ll be more motivated when they see you’re a qualified buyer.

Persuade Buyers

The offer-and-counteroffer example I mentioned above illustrates that a buyer’s agent plays an important role in persuading the buyer to purchase the home. A buyer may be skeptical if the same justifications come from the seller’s agent, but they’re more trusting when they hear good things about the home from their own agent, who they think is on their side.

Both the seller’s agent and the buyer’s agent are helping the seller sell the home. Paying a commission to a buyer’s agent is like the seller planting a mole by the buyer’s side. The buyer’s agent is officially the Selling Agent in industry lingo. Let that sink in: a buyer’s agent is the Selling Agent for the seller.

When you don’t use a buyer’s agent, you need to show the seller’s agent that you don’t need much persuasion. You can know so much about a home these days without setting foot in it. Show that you’ve done your homework, you’re ready to make an offer, and seeing the home is only the last step.

Offer to use the seller’s agent to process paperwork if you decide to make an offer. Many agents give sellers a discount if they do both sides of the transaction. A typical arrangement in my area is that the seller pays a 3% commission to list the home, with another 3% reserved for the buyer’s agent. If the listing agent represents both the buyer and the seller, the seller pays 4% instead of a total of 6%. The prospect of earning another 1% motivates the seller’s agent to show the home to you.

Putting Everything in Action

My wife and I wanted to buy a home. We drove around based on current and past home listings to get familiar with the area. We went to open houses.

We narrowed it down to a few specific neighborhoods and floor plans — how large, how many stories, and which rooms we want on the main floor. We set up custom searches with filters on Redfin to notify us of new listings in a hand-drawn area on the map. I established contact with an appraiser and an inspector in advance.

When Redfin emailed us new listings, we checked the website of the local MLS, which had more detailed information than Redfin. The MLS website gave a breakdown by each floor, for example:

• Floor 1: 1,534 sq. ft.
• Floor 2: 1,014 sq. ft.
• Total: 2,548 sq. ft.
• Lot Size: 0.17 Acres

• 3 Total Bedrooms
• 3 Total Bathrooms
  • Floor 1: 2 Full
  • Floor 2: 1 Full
• Other Rooms:
  • Floor 1: 1 Living Room; 1 Kitchen; 1 Laundry Room;
  • Floor 2: 1 Family Room;

These data points, Google Maps, and the listing photos gave us a good idea of what the listed home was like. We didn’t bother asking to see a home unless it met all our specific requirements. If a home checked all the boxes, we looked up the county’s property tax assessment value using the APN from Redfin. The property tax assessment value served as a sanity check in case the listing price was wildly inflated.

It took some time for a home that met all our criteria to come on the market. It was listed on a Monday morning while we were traveling out of state. I sent this text message to the seller’s agent right away:

Hi [name], I’m interested in your listing at [address]. The photos look great. We’ve been to that neighborhood. We’re pretty sure we’ll make an offer if everything checks out. The only thing is we’re out of town until Sunday. Can we schedule a showing for next Monday? We’re not working with an agent. We can send proof of funds.

The agent replied and offered to do a video showing over FaceTime on Tuesday morning. The video walkthrough confirmed that the home had everything we were looking for. I texted the appraiser and ordered a desktop appraisal.

The appraisal came back at a value higher than the listing price, but it was still lower than the county’s assessed value for property tax. The market price in my area is typically higher than the county’s assessment. I knew that the listing price was intentionally set low to attract more interest and encourage bidding.

I downloaded the real estate purchase contract form from my state Division of Real Estate’s website. I made an offer at the appraised value, with a stipulation that the seller would credit 2% of the purchase price to the buyer at closing. This made it easily comparable to other offers that would ask for 3% to cover a buyer’s agent’s commission. I attached proof of funds.

My formally written offer, which was above the listing price right out of the gate, with full terms and proof of funds, indicated to the seller that I was a serious buyer and I knew the value of the home. The seller also received several competing offers. The prospect of earning a 4% commission instead of 3% motivated the seller’s agent to advocate on my behalf. The seller accepted my offer on Friday after a round of “best and final offers.” It took only four days from listing to contract, before we returned from our travel and physically toured the home. We couldn’t have pulled it off if we weren’t well prepared.

Here’s how my offer came down against the next highest bid (I indexed the purchase price to $500,000 to make the math easier):

The competing buyer and their agent lost because they were weighed down by the 3% commission to the buyer’s agent. With a 3% headroom to play with, my offer basically split it three ways among the seller, the seller’s agent, and me. The seller received $4,700 more in net proceeds. The seller’s agent earned $5,200 more in commissions. I paid $4,700 less. Win-win-win.

If the seller didn’t receive competing offers, I wouldn’t have offered the extra 1% to the seller, and I would’ve saved even more.

I sent in my inspector after we went under contract. The inspection report came back without major issues. We closed on the purchase.

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The real estate industry class action settlement created opportunities for prepared buyers to purchase a home without a buyer’s agent. The seller, the seller’s agent, and the buyer all benefit when there’s one less mouth to feed.