Bungalo Blog

When there’s a house that’s caught your eye, but you’re not exactly sure how the whole home buying process works, what is the first professional organization that springs to mind as being a reliable source for assistance? We’d like to think that it’s Bungalo®; our all-in-one buying experience has helped thousands of people find the home of their dreams, making what is often the biggest financial decision of their lives a whole lot easier than they anticipated.

But if you have only a working knowledge of real estate, your first thought is probably the National Association of Realtors. Founded in 1908 in Chicago and originally known as the National Association of Real Estate Exchanges, the National Association of Realtors has accumulated a considerable amount of name recognition over the years; that has a tendency to happen when you’re over 100 years old. So much so, the terms “real estate agent” and “Realtor” are frequently used interchangeably (they’re actually different, but not quite as different as a Realtor might claim).

But what if we told you that you didn’t need a Realtor or buyer’s agent to become a home buyer? In fact, what if going through a real estate agent was a step that you didn’t need to take and could actually make the buying process longer, more expensive, and more stressful than it needed to be?

Bungalo’s helps to eliminate these stressors with home buying made easy. With transparent pricing and ultra-convenient self tours that you can schedule through the Bungalo app, you can buy and peruse a home on your schedule and without any pressure. That equals less stress and more satisfaction.

What is a Realtor?
A Realtor is a real estate agent who is a registered member of the National Association of Realtors. Among the largest trade associations in the United States and with a membership base of over 1.3 million, becoming a Realtor has a lot of prestige. In some ways, it’s considered to be the pinnacle of success as a listing agent; the National Association of Realtors has a tremendous amount of name recognition.

Realtors are also sworn to a certain code of ethics as they pertain to their home buyer clients. There are 17 in all, but more than anything else, they are required to “put the interest of buyers and sellers ahead of their own and treat all parties honestly.”

Additionally, a Realtor must pass a state licensing exam, attend continuing education courses throughout the year and pass a code of ethics test once every four years to keep their “Realtor” status.

But beyond that, being a Realtor is a lot of sizzle, very little in the way of steak. That’s because real estate agents are also required to become licensed in the state (or states) that they’re selling real estate, and even before that, they typically need to complete a certain number of hours of pre-licensing training. How many hours that actually is can vary — often significantly.

Another area where real estate agents and Realtors are a lot alike? What they charge. And in both cases, it isn’t chump change, especially in comparison to Bungalo (it doesn’t cost you anything when you buy through us).

How much does it cost to work with a real estate agent or Realtor?
Generally speaking, both real estate agents and Realtors — whether as a buyer’s agent or seller’s agent — make a living on a commission basis. This means that whatever a house winds up selling for, a portion of the amount goes to the listing agent. What that percentage is can vary, but it tends to hover right around between 3% and 6%. But if you’re hiring an agent with several years of experience, it may be more than this.

But let’s go with 6% for the sake of argument. According to the most recent figures available from the National Association of Realtors, the median price for a residential property these days is approximately $360,000. So, if a house were to sell for that amount, the listing agent would stand to earn $21,600. If there is both a seller’s agent and a buyer’s agent, they may split the difference to total 6%.

Not only that but a portion of the list price factors in the commissions of the respective agents involved. So, the $360,000 house you have your eye on may actually be $338,400. Think of what you could do with an additional $21,600. For that price, that’s enough to buy a preowned vehicle. Or to purchase a boat for summer getaways. That amount could also be used as a down payment since the typical down payment these days is between 3% and 5% of the list price. 

Now, some may contend that the buyer really has nothing to worry about in this respect since frequently, the real estate agent’s share is paid for by the seller. But this isn’t always the case. Sellers are under no obligation to pay for the time and expertise of the buyer’s agent, especially if you as the buyer are the one who hired them in the first place. That’s why they’re called a “buyer’s agent” — they work on behalf of the person purchasing.

Another potential rationale for working with a buyer’s agent is their willingness to negotiate. In other words, their 6% commission isn’t written in stone, so you may be able to talk them down to a smaller percentage. But seriously, who wants to deal with that? Broaching the subject alone is difficult, never mind the actual haggling process itself. And even if they agree to take less, it may not be by as much as you’d like.

While it is true that the seller is usually the one who winds up paying the Realtor for their services, that isn’t always the case. Buyers may be the ones who are ultimately on the hook, not even realizing that’s the case until later on, sometimes at the closing table.

This means there can be a lot of open-ended questions as to who pays for whom, how the list price was arrived at, and what all your closing costs will be should you move forward with the transaction.

Finally, there’s the stress factor of working with a Realtor. While a Realtor is obligated to abide by the NAR’s code of ethics and always be mindful of their client’s best interests, it’s common to feel a subtle (or obvious) pressure as a buyer since the agent stands to earn more money when a deal is struck. For such a consequential financial decision like buying a home, the last thing you want to feel is stress or intimidation. But that’s a common complaint among those who have had a negative experience with a Realtor, or any other real estate agent, and can manifest itself in a number of ways when working with you either before, during or in preparation for the buying process itself.

It’s a different story when you buy direct through Bungalo. When you buy direct, you’re the one who’s in charge, from the city you want to live in, to your price point and how you want to arrange to see the home, be it in person or entirely online. Plus, since Bungalo offers a “no-hassle” price, you won’t have to worry about negotiation, whether it’s with another buyer or a listing agent. Bungalo accepts the list price on a first-come, first-serve basis. And since you’re not using an agent, you’re saving thousands in fees. We even give you back 1.5% of your prospective home’s purchase price, which can be put toward closing costs.

So now that you know a little more as to why it pays to go it solo when you’re buying a home, here’s how to buy a house without a Realtor. Adhering to these steps will help ensure you perform your necessary due diligence, where all the t’s are crossed and i’s dotted.

Step 1: Seek out preapproval

Preapproval and the receipt of a preapproval letter from a lender accomplishes several things. It shows the seller that you have the financial means to buy a house and it establishes guard rails as to how much you can afford to spend, which will be dictated by your mortgage provider. But to adequately determine this amount, your mortgage lender will need a few things from you. Typically, they’ll request to see your W-2 tax forms from the previous two years, proof of employment, paychecks (two most recent previous pay periods), a copy of your credit report, and a statement of funds from your bank. This is in addition to the basics like your current home address, social security number, and the like. They may ask for more, but these are a few of the particulars you can expect they’ll request.

Step 2: Consider hiring an attorney
As their title suggests, a real estate attorney specializes in home buying. They can talk you through any questions you might have regarding paperwork, disclosure statements, title records, and more. You may need to hire them to assist with the closing process (some states require a real estate attorney to be at the closing table), but the cost will likely be a flat fee (as opposed to a commission, as in the case of a real estate agent). They may also be able to offer insight on additional research you may want to conduct regarding the home buying process or may do it on your behalf.

This is another reason why it can pay to buy through Bungalo. When you go with Bungalo’s preferred title company, you’ll spend less in closing costs and will have fewer papers to sign. But if you want to go through your own title company, that works for us, too. The ball is in your court.

Step 3: Research, research, and research some more
The internet is teeming with resources that can help you not only find hidden gems but find out everything about them, such as their square footage, number of rooms, when the home was built, and its public tax history. Listings will also tell you who’s selling the property, meaning if a listing agent is involved or if it’s for sale by owner (FSBO). If it’s a FSBO, it lets you know that the price isn’t inflated as a result of the agent’s fee and is coming directly from the seller.

You can be confident that when you shop through Bungalo, all the information that you’re hoping to see on the listing will be there. But if for some strange reason it’s not included, help is just one phone call away. Let us know, and we’ll get to the bottom of what you need to know before you commit to making an offer. Speaking of which, that brings us to the next step.

Step 4: Make an offer
When you go about the buying process on your own, this is traditionally the most complex part of it all. That’s because there are a bunch of components that need to be identified to ensure that the offer is genuine and that all the details are included in the letter, which is also frequently called a contract to purchase. This includes the home’s address, earnest money, a projected closing date, and for how long the offer is good for. Of all the steps, this may be the one in which it pays to consult with a real estate attorney.

When you buy directly through Bungalo, you may be surprised by how simple this portion of the buying process is, especially if this isn’t the first time you’ve been through it. Before you get to this stage, though, you will need to be preapproved. This is for the benefit of all parties involved, including yourself. Additionally, you won’t have to wait too long to get an answer as to whether your offer was accepted. You should receive word either way within a single business day. But you can always call us if you want to know where things are.

Step 5: Contact a home inspector

While a home inspection is typically done before you reach this stage, hiring a home inspector is appropriate because the home inspector can determine if anything needs to be fixed before reaching the finalization stage. This may ultimately affect what the final price will be at the closing table.

One thing you can be confident about by buying through Bungalo is we’ve done our legwork on the properties we advertise. The home inspector professionals we hand select go over each house with a fine-tooth comb. We don’t assign the “Bungalo Certified” seal until we know for certain it’s safe to own and it’s ready to dwell in. It’s all backed by our one-year home warranty.

Step 6: Finalization

Last but not least is the closing. Here, all closing costs are paid for, including who will pay for what (i.e. underwriting fees, title-related expenses), and issues relating to the home inspection are addressed. The mortgage lender or mortgage officer may be in attendance at closing, including the real estate attorney of the seller and/or yours as the buyer. A final walkthrough of the house is another important step before the keys are officially handed over.

Buying direct through Bungalo can not only reduce your closing costs but can also make the closing process more seamless. We also offer 90-day post-close protection, which means that if anything is not working as it should be — from a running toilet to a leaking faucet — we’ll cover it and fix whatever needs tightening or replacing quickly.

Buying a house is a process, with or without a Realtor or real estate agent. But it’s a simpler one when you choose Bungalo. Contact us today to get started and take a look at some of our previous articles for more insight on home buying and selling.

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.