Want to Buy a Home Unrepresented? What You Should Know, Plus 5 Questions to Ask the Listing Agent

Redfin recently announced the launch of Redfin Direct, an online tool that allows homebuyers to make an offer on a Redfin-listed home without an agent, directly through the Redfin website.

Currently available in the Boston area, Redfin Direct helps buyers make more competitive offers by saving the seller money on agent commissions. Additionally, the online tool makes the option to go it alone more convenient for some people. Just 7 percent of homebuyers nationwide purchased a home unrepresented, according to the National Association of RealtorsⓇ 2018 buyer and seller survey, up slightly from 6 percent in 2017. That portion will likely continue to grow, and the technology Redfin is introducing will make that process easier and more accessible.

“Redfin Direct is intended for people who are looking to save money with competitive offers, and for those who want to take the process into their own hands, on their own terms,” said Boston-based Redfin agent David Pollack. “Redfin Direct makes creating an offer on a home a lot more convenient, because the process is now much more intuitive for an unrepresented buyer. Almost everything you need to submit an offer on a home is a click away,” he said. “Buyers who choose to go unrepresented tend to be experienced and well-informed, such as investors, people who have bought and sold several homes, and former real estate agents or attorneys. Or, it could be any modern, tech-savvy homebuyer who is most comfortable making purchases online, from the comfort of their couch. But even buyers who prefer to do everything online may find they ultimately want the help of an agent to guide them through the offer and purchase process, especially if it’s their a first-time homebuyer, and we have lots of fantastic Redfin buyers’ agents in the area to help out.”

How Redfin Direct works

The process is aided by a 55 question Redfin Direct offer tool, available exclusively on Redfin listings. The tool details how to prepare your offer, with definitions of the various terms and data on the market and other Redfin buyer offers. It’s important to note that while the Redfin Direct tool includes links to resources on inspectors, lenders and other service providers you may need to hire, it does not provide advice on how to handle inspections, or any advice from an agent on negotiations. You won’t have access to advice on questions to ask your lender to keep the transaction moving forward in a timely manner. While Redfin Direct empowers the consumer to take the process of submitting an offer into their own hands, the decision to make an offer without an agent to represent you is not one to be taken lightly.

Working alone when you lack the experience, simply to save money, could backfire. Not only might the process take longer, but you may misinterpret the contract, which could put you at risk of losing the house and your earnest money deposit,” David said. “The majority of buyers today want help navigating the offer negotiation process. These buyers have the opportunity to work with a Redfin buyers’ agent who will guide them every step of the way.”

To understand if purchasing a home unrepresented is right for you, read on for David’s insight in the process, questions to ask, and potential risks.

1. How much money does an unrepresented offer save?

“An offer from an unrepresented buyer saves the seller money by eliminating the buyer’s agent commission. The seller of a Redfin Direct home in Boston pays a total commission of 2 percent (1 percent listing fee plus a 1 percent Redfin Direct fee), compared with a total of 3 to 4 percent when selling with Redfin to a represented buyer (1 percent to the Redfin listing agent and 2 to 3 percent to the buyer’s agent). By saving the seller money on commissions, submitting a Redfin Direct offer can help your offer stand out in a bidding war or help you negotiate a lower price for a home that’s been sitting on the market.”

2. What should you know about the negotiation process?

“If you make a Redfin Direct offer know that the Redfin agents you’ll interact with represent the seller’s interests. They can’t help you negotiate. Redfin support agents are on hand to help answer questions about the offer tool, and to connect you with the listing agent who represents the seller of the home you want to submit an offer on. The listing agent’s fiduciary duty is to the seller, always, so while they can answer factual questions about the home, and may be willing to share some information about what the seller is looking for, they won’t reveal anything that might hurt the seller’s chance of getting the best or highest offer. The listing agent can answer questions about the home and set up an appointment for you to see it. Neither the support agent nor the listing agent will help you write your offer or give you advice or guidance on how to negotiate.

However, it can never hurt to make a personal connection. A casual conversation with the listing agent can offer insight that will translate into writing a more competitive offer. One way to do this is by sending a cover letter to go with your offer, explaining why you love the home. Be observant when you’re touring the home to pick up any clues that might form a connection or pull at the seller’s heartstrings. I recently helped a home-buying customer with a cover letter that focused on his love for dogs, specifically Boston Terriers, after he noticed the seller had photos of them all over the home. In his offer letter, my customer shared pictures of his own Boston Terrier, as well as his tattoo of his dog. This created a unique personal bond between the buyer and seller, who accepted my buyer’s offer even though we didn’t have the highest bid.”

3. What questions should I ask when preparing an offer?

“You’ll find a vast amount of information on Redfin.com about any property or neighborhood, such as total number of pageviews from other interested buyers, offer insights from local Redfin agents, or if a home is ‘hot,’ but to make sure you’re fully informed, it’s crucial you ask the right questions. Here are the five that I recommend asking the listing agent to help get a sense of what it will take to win over a particular seller. Do note that markets change, and these questions are appropriate for the market at this particular moment:

  1. Do you have a preferred lender? Choosing a lender you know the listing agent trusts and already has a working rapport with can help your offer appear more solid compared to ones with a lender who is unknown to the listing agent.
  2. How many offers are on the table? You may find out yours is the only offer, in which case it’s more likely you’ll have some room to negotiate, and can likely keep standard protections like the inspection and financing contingencies in your offer. On the other hand, if you know you’re up against a dozen other buyers, you may decide to waive those contingencies to make your offer more competitive, or even choose to work with an agent to make sure you’re doing everything you can to compete.
  3. What is the seller’s preferred time frame to move? If you’re flexible and can work your schedule around the seller’s, targeting the seller’s preferred closing date can make your offer more appealing.
  4. Are there any specific terms the seller wants to see in the offer? If the seller still needs to find her next home, she may be looking for an offer with a rentback to give her time and flexibility in her own home search. Offering this as part of negotiations, if that’s the case, could give you an edge. If the home has tenants, the seller may be looking for a buyer who is willing to take on the current leases. That way, she doesn’t have to worry about asking the tenants to leave and can continue to collect rent until closing.
  5. Is there anything about my offer that concerns you? Posing this simple question to the listing agent can be the start to having a more open conversation and discussion around negotiations.

Know that the listing agent is not obligated to answer these questions. You can ask, and sometimes you’ll find out enough information to give yourself an edge. Most inexperienced buyers won’t know to ask these questions, and many won’t understand what they mean. If you feel overwhelmed by these terms, it is probably best to work with an agent.”

4. What are the risks of purchasing a home unrepresented?

“While Redfin Direct helps make your offer more competitive, and software makes the process easier, you still must handle everything yourself without someone to negotiate for you, or handle the following potentially risky scenarios:

  • Unusual or unexpected situations. Agents do this full-time and have the knowledge and relationships to navigate tricky situations that the average homebuyer not only won’t know, but won’t know to ask about. This includes: faulty appraisals, missing a financing deadline, or how to handle negotiations if the inspector finds flaws in a major home system.
  • Legal problems. Going unrepresented and drafting your own offer has legal implications. Some buyers have lost deposits, or were taken to court for unintentionally failing to meet obligations they signed up for in the contract. If a buyer does not fulfill their end of the deal, such as backing out for no apparent reason, failing to find financing within the commitment deadline, or missing a contingency date, they may have to forfeit the deposit and lose the house. The same goes for the seller. A contract isn’t a game. If you feel like you don’t understand it, review it with an attorney first. If further guidance is necessary, hire an agent to represent you.”

5. Need more help? Hire an agent.

“It has already been said, but if you want professional guidance, hire an agent to represent you. Once you are negotiating a contract it may be too late, but if you start the process unrepresented and it’s not working (before you get to the contract stage), opt out and start the agent interview process. Work with an agent who wants to get to know you, asks questions about what you’re looking for in a home, as well as what you’re looking for in a relationship with an agent and the search process; and feel confident that the agent will negotiate fiercely for you while keeping your best interests at heart.”

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