Am I Dumb to Buy a Home WITHOUT a Buyer's Agent?| Ep. 21

Why You Don't Need a Buyer's Agent: The Smart Move in Real Estate

Recently, Sean Puri, co-host of the My First Million podcast and a prominent voice on X (formerly Twitter), posed an intriguing question: "Am I dumb to buy a home without an agent?" His reasoning was straightforward - while he sees value in having an agent when selling, he questioned the necessity when buying, especially given tools like Zillow and the significant commission costs involved.

As the host of the DIY Home Buyer podcast, I want to tackle this question head-on. Not only are you not dumb to buy a home without a buyer's agent, it might be one of the smartest financial decisions you can make. Here's why.

1. Misaligned Incentive Structures

The traditional buyer's agency model has an inherently flawed incentive structure. As a home buyer, you want someone to find you the perfect home at the best possible price, ensuring it's a solid investment without major issues. However, buyer's agents typically get paid a percentage of the purchase price - and only when you actually buy a home.

This creates two problematic incentives:

First, the more you spend, the more they make. If you're looking in the $900,000 to $1.4 million range, which properties do you think they'll prioritize showing you? Human nature suggests they'll lean toward the higher end of your budget.

Second, they only get paid when you close on a home. This incentivizes quick decisions rather than patient, thorough searches. The more houses they show you, the less they make per hour, and the less time they have for other clients or marketing efforts.

2. The "Seller Pays" Myth

Many agents argue that you might as well use their services since "the seller pays the commission." While this arrangement is changing following the 2024 NAR settlement, it's still common for sellers to offer buyer agent compensation.

But here's the catch: whoever pays for a service is the real employer. When sellers compensate buyer's agents, it creates confused loyalties. I've experienced this firsthand as a realtor - listing agents often pressure buyer's agents with various tactics, leveraging the fact that they're the ones offering compensation.

More importantly, if a seller is willing to offer a 3% credit for a buyer's agent, a savvy buyer could negotiate to receive that amount as a discount or closing cost credit instead. This is especially significant on higher-priced homes - the difference could be tens or even hundreds of thousands of dollars.

3. The True Cost-to-Value Proposition

Recent Bankrate analysis suggests buyer's agents save their clients roughly 2.5-3% on average - ironically, about the same amount as their typical commission. This means a DIY buyer could achieve the same savings simply by negotiating the buyer's agent commission as a price reduction or credit.

Most of what buyer's agents do during negotiations isn't magical - it's about leveraging market knowledge, comparable sales data, and understanding seller motivation. An educated buyer can do this just as effectively. During inspection periods, most sellers are motivated to close rather than return to market, giving buyers natural negotiating power regardless of representation.

The real value a buyer's agent provides is convenience - saving you time on coordinating showings, streamlining communications, and handling paperwork. But is that convenience worth $21,000 on a $700,000 home? For most people, the answer is no.

Beyond the Financial Impact

There's another fascinating aspect to DIY home buying that often goes unmentioned - its impact on relationships. One couple who went through our DIY homebuyer curriculum shared how removing their buyer's agent actually improved their marriage. In many relationships, one partner is comfortable spending the maximum budget while the other is more conservative. Buyer's agents typically side with the bigger spender, creating a "two against one" dynamic that can strain relationships.

The Smart Move Forward

The smarter, safer way to buy a home is learning to represent yourself. Nobody will look out for your interests better than you will. While there may still be situations where buyer's agents make sense (like out-of-state moves), most buyers have the competence to represent themselves - they just need the confidence and knowledge to do so.

If you're interested in learning more about DIY home buying, join our community at school.com/DIYhomebuyer, where you can access our essentials course and connect with others on the same journey. You can also reach out to me directly at nick@diyhomebuyer.com for personalized support in your house hunt.

Remember, making informed decisions about real estate representation isn't just about saving money - it's about taking control of one of life's most significant investments.