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Most people you know who have bought a home have probably done so with the help of a Realtor® or real estate agent. In fact, a 2023 report shows that 89% of home purchases involve a Realtor or broker. (Realtors, by the way, are real estate agents who belong to the National Association of Realtors, requiring them to adhere to a certain code of ethics; we’ll use the terms interchangeably here.)

But agents may charge a fee, so you might be asking yourself, “Do I need a Realtor or real estate agent to buy a house?” The answer is no — you aren’t required to go through a professional to complete the transaction.

That said, doing without an agent is not a decision to make lightly. Buying a house is likely the biggest investment you’ll ever make. So if you make a mistake in the home-buying process, there’s a lot of money and possibly other risks on the line. Let’s take a look at the pros and cons of going solo as a home shopper.

What Does a Real Estate Agent Do?

Before you decide whether or not to forgo a real estate agent, it can be a good idea to brush up on what they actually do.

Real estate agents are licensed to help clients buy and sell real estate. Realtors, as mentioned, have to follow an ethics code, which includes putting their clients’ interests first.

Among the work that real estate agents do for buyers is:

•   Look for property listings that fit their clients’ goals

•   Check out listings in person

•   Write offers and counteroffers

•   Be present for inspections

•   Help negotiate with the seller

•   Troubleshoot any roadblocks that come up

They can also often help with a variety of referrals, whether to a mortgage broker, a home stager, a real estate lawyer, or a contractor.

How to Buy a House Without a Real Estate Agent

If you want to join the few buyers who forge ahead and buy a house without a Realtor, it’s important to prepare yourself to take on the tasks agents normally do.

Especially if you’re green, it’s essential to learn how you can prepare to buy a home. Here’s a rundown of some of the key responsibilities you will likely need to manage.

Step 1. Consider Your Mortgage Options

Unless you are an all-cash buyer, you’ll need to explore the different types of mortgage loans. You could get prequalified for a mortgage with several lenders so you have a sense of what size mortgage loan you might qualify for.

Step 2. Research Neighborhoods

As you zero in on neighborhoods that meet your criteria, then it’s a good idea to do your research and learn the price of recent sales. This will help you understand if the homes you tour are priced correctly — and if they fit within your budget.

Step 3. Get Preapproved For a Home Loan

As your house search starts to heat up, you’ll probably want to get preapproved for a mortgage. Once your application is processed, you’ll have a preapproval letter to share with sellers to reassure them that you’re serious about buying. The lender will consider your income, your debt-to-income ratio, credit scores, and ability to make a down payment and meet closing costs.

Step 4. Hire a Home Inspector

When you find a home you’re interested in, it’s recommended that you hire a home inspector. This professional will issue a report that lets you know the ins and outs of a home’s condition and may lead to further negotiation.

Step 5. Request a Seller’s Disclosure

Ask for a seller’s disclosure, a document that can contain information about repairs and upgrades the seller did on the home as well as problems they’re aware of. You can ask them about any structural problems; condition of the HVAC, plumbing, and electrical systems; mold and mildew; termite damage; the presence of lead paint, radon, and asbestos, and so forth.

Step 6. Make An Offer

The offer will include the amount you’re offering, what you’d like to stay in the home (such as appliances), and closing dates. Including an appraisal contingency in the offer means you can cancel the contract if something goes wrong without losing your deposit.

Recommended: How to Make An Offer On a House

Step 7. Hire a Real Estate Lawyer

It’s usually a good idea to hire a real estate lawyer to prepare documents and look over your contract before you sign it.

Step 8. Negotiate

Sellers, meanwhile, will likely include a loan contingency. During this part of the process, there may be counteroffers and negotiations between you and the seller about the price of the home or repairs you might want the seller to make. The appraiser will also file a report on the home, so that you and your lender can feel confident the home’s value matches its price. Keep copies of all communications as negotiations progress.

Step 9. Finalize Documentation and Close On Your Property

At the closing of the loan, you’ll need to sign documents and handle other aspects that a Realtor might typically help you with.

It is typically recommended that the buyer obtain owner’s title insurance, which protects the buyer against title defects such as mechanic’s liens and other after-closing problems. It usually costs about $1,000, but will vary with the price of your home and from state to state.

Recommended: How Long Does It Take to Close On a House?

Benefits of Buying a House Without a Realtor

Buying a home without a real estate professional can have some upsides. Here’s a closer look at the benefits you might reap.

1. Saving Money

Historically, there wasn’t much incentive for a homebuyer to work without a real estate agent because the agent’s commission fees were paid by the seller. But starting in mid-2024, the landscape changed. Now real estate commission fees are changing, and there is no guarantee that the seller will pay the buyer’s agent. Instead, the buyer and agent need to discuss a fee structure before they begin working together. You might find that an agent is paid an hourly fee, or perhaps charges a flat rate. Some agents may request a percentage of the home price.

While working without an agent may save you money, how much is up in the air. The only thing you can be certain of is that if you don’t use an agent, you will work harder to find a home and close the deal.

2. Info Galore

If you’re planning on buying a house without a Realtor, you likely have access to some of the same information that the pros do. Historically, agents had lots of insider tidbits about listings.

Now, you can instantly find out about new properties and neighborhood demographics with the click of a button online. That means taking the buying process into one’s own hands is considered by some as increasingly feasible. Plus, there are an array of great tools to help you with calculations, like a home affordability calculator.

And since no one knows what you are looking for as well as you do, the search process can sometimes be more efficient.

3. A Familiar Real Estate Deal

One situation where it might make sense to eschew an agent is if a friend or family member is selling you the property.

Although risks may still be involved, the transaction may be more straightforward if you are buying a house from a relative or someone you know well. You still want to make sure you and the seller are clear on the price, closing date, what furniture or fixtures will be included, contingencies, and more.

It is typically recommended that a buyer review and approve home inspections and obtain full loan approval in writing before lifting certain contingencies.

If it is known that a contingency date cannot be met or another material change takes place after the contract is written, such as a seller credit for closing costs, a contract addendum executed by all parties outlining the change is usually obtained.

Drawbacks of Buying Without a Realtor

Not hiring a real estate agent or Realtor to assist you with your home search comes with disadvantages and risks.

1. All the Work

You have to be constantly on the ball, keeping a lookout for properties and arranging a time with sellers to visit them.

The process can be exhausting and time consuming, and if you aren’t attentive, you could let great homes slip by or make the hunt longer than it might have been with a real estate agent.

You’ll also have to navigate the world of mortgages (from the mortgage basics to possibly buying points to bring down your rate) without an agent to serve as a sounding board or offer a second opinion.

2. All the Risk

You’ll be on the hook for all the details of the transaction. Without an agent, you’ll need to determine the correct bid price and terms, watch the contract contingency dates, and know the ins and outs of the purchase contract.

Agents are experienced in helping to point to hidden flaws in the property or transaction.

If you don’t have a real estate agent in your corner to help research the proper bid price, you may risk paying more than you need to on the home — which may work out to more money spent.

3. Your Pool of Knowledge May Not Be That Deep

Agents have access to information that’s not necessarily online, thanks to their connections with other real estate agents, inspectors, etc.

Then there’s the experience factor. Most agents operate under a seasoned broker who oversees and consults on various transactions.

It could take a lot of effort to figure out what a Realtor has learned through years on the job and ongoing education. That learning curve may not be worth your time.

Factors to Consider When You Buy Without an Agent

So now that you have read about how to buy a home without a Realtor, as well as the pros and cons, perhaps you are still thinking that flying solo is right for you. If so, do one more check-in and consider these factors:

Market Knowledge

You will not have in-depth, ongoing insight into housing prices in the area where you are searching. A Realtor can help you understand pricing history, potential upcoming property-tax hikes, local drainage or flood potential, and more. They are often skilled at pointing out distinctive features as well as potential problem areas with homes.

Negotiation Strategy

Real estate agents typically have years of experience knowing when a home seller is negotiable and by how much. They can guide you through offers and counteroffers, as well as bidding wars. They also know next steps if a home inspection points out significant problem areas or if there are hitches as you work through your mortgage contingencies. This can save you time and stress, as well as keep your deal in play.

Red Tape and Paperwork

Bidding on and purchasing a home involves all kinds of paperwork, including mortgage applications, offers, contracts, title searches, and more. For someone who is not familiar with the process (you, quite possibly), this can be a steep, time-consuming, and possibly frustrating learning curve. A Realtor can help alleviate a chunk of this burden.

Professional Connections

As noted above, it can take a village of professionals to finalize a home sale. Some of the people who may be involved include mortgage brokers, home inspectors, roof inspectors, real estate lawyers, contractors, and more. Most real estate agents have an extensive network to quickly get you the connections you need to qualified professionals.

The Takeaway

Do you need a real estate agent to buy a house? No, you don’t. It’s entirely possible to learn how to buy a home without a Realtor and perhaps avoid paying for the agent’s time and expertise. Just realize all of the work and risk involved in finding a home, making an offer, handling contingencies, and closing the deal.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Can you make an offer on a house without a real estate agent?

A buyer is not required to be represented by a real estate agent in order to make an offer on a house, but unless the house is for sale by owner, you’ll need to work with the seller’s agent to communicate your offer to the owner.

Does buying a house without a real estate agent reduce the price?

Not necessarily. Even if you, as the buyer, are not represented by a real estate agent, the seller may use an agent to list and show the home and process offers.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOHL-Q324-048

Buying a home with a significant other is a big investment and commitment, but having two incomes can more easily open the door to homeownership.

If you’re buying a house with a lover (or with a friend, parent, or sibling), here are a few things to know.

What You Should Know When Buying a House Unmarried

Before sharing a mortgage and house, a few heart-to-hearts about your purchase partner’s financial health and yours are in order. Being frank about debts, income, and projected job security is important. It’s a good idea to explore what-ifs as well.

Here’s a list of suggested questions to answer before sharing a deed or a home mortgage loan:

•   Is the down payment to be evenly divided?

•   Will mortgage payments, insurance, property taxes, any mortgage insurance and homeowners association dues, repairs, and utilities be split evenly? If not, how will they be divided up?

•   What will happen if one person is unable to make their portion of the mortgage payments for a while?

•   What will happen if one homeowner dies?

•   If one person leaves and the mortgage is refinanced to remove one of the signers, who pays for the refinancing?

Most lenders underwrite each individual on the home loan. The weaker link will most likely determine the rate at which you can borrow money as a duo — or whether you can get a loan at all. When lenders pull credit scores from the three main credit reporting agencies, they usually focus on the middle score. Let’s say your middle score is 720, and your co-borrower’s is 650. Lenders will use the lower of the two for the application. Even a small change in interest rate can result in significantly more money paid over time. (See for yourself with this online mortgage calculator.)

Loans underwritten by Fannie Mae do have one exception to this rule. To determine whether an unmarried couple is eligible for a loan underwritten by Fannie Mae, a lender will look at the average of their credit scores. As long as the average tops 620, the loan will be considered even if one borrower’s credit score is below 620 (in the past, if either borrower had a score below 620 they would not have been considered for the loan).

Buying a Home Married vs Unmarried

Married couples often merge their finances and operate as a single unit. If spouses are pulling from the same pool of money, they don’t generally mind shortages from a partner when the mortgage payment is due.

Unmarried co-borrowers going in on a house together may need each party to pull its weight each and every month.

Then there’s this: What if a co-owner dies?

For the most part, a spouse has the legal right to inherit property from their partner whether or not the deceased spouse had a will. Domestic couples may have no automatic right to inheritance if a co-owner dies without a will in place (this is known as dying intestate).

Additionally, depending on the state and the way the married couple holds title, the surviving spouse will receive a partial or full step-up in basis upon the first title owner’s death, meaning the property’s cost basis will be reset to fair market value when one spouse dies. If the inheriting spouse decides to sell the property, the stepped-up basis will greatly minimize capital gains taxes owed or translate to none owed at all.

The step-up in basis is one way that some families harness generational wealth through homeownership. Unmarried co-owners should be clear about how they hold title and what that means in case one partner dies.

How to Handle the Title

Two or more unmarried people can take title to a house. The main two forms are:

Tenancy in common. This arrangement allows equal or unequal ownership; that is, one person may own 60% of the property and the other person, 40%. If one owner dies, their share of the property passes to their heirs. It does not pass automatically to the surviving co-owner.

Tenancy in common allows one owner to transfer their interest to another buyer or use their share as collateral for financial transactions. And creditors may place liens on that person’s share of the property.

Joint tenancy with right of survivorship. Each person owns 50% of the house. Upon the death of one of the joint tenants, the property passes automatically to the surviving owner.

If you want to sell your share, you don’t have to ask for permission to do so. Any financing involving the property must be approved by both parties. Creditors trying to collect a debt from one of the homeowners may petition the court to force a sale in order to collect.

A third option is sole ownership, when only one person is on the title. The person left off the title risks walking away with nothing if the relationship sours.

Preparing for the Mortgage Application

The mortgage process is mostly the same whether applying solo or with a co-borrower.

It begins by getting a feel for how much house both of you can afford. Getting prequalified and using a home affordability calculator are quick ways to estimate your maximum budget. Then talk about these questions:

Are you aware of each other’s credit scores, incomes, and debt burdens?

Is each of your debt-to-income ratios around 36%, max? If so, good, because this is a team effort.

Have you agreed on the type of loan that fits your needs? If not, a mortgage broker or direct lender can guide you.

Do you want the standard 30-year mortgage term, or is it in the budget to seek a shorter term, which will mean higher monthly payments but less interest paid?

Combining forces can make homeownership possible, especially for first-time homebuyers and anyone in a hot market. That’s exciting.

How to Make the Property Purchase 50/50

When each co-owner has a 50% share of the property, the status is joint tenants with right of survivorship.

Your real estate agent or attorney will need to be careful about the wording in the deed. It should reflect the desire to create joint tenancy, not tenancy in common.

What Happens If You Part Ways?

It’s a good idea to go into the deal with a written buyout agreement, just in case.

But if a pact is not in place, here are steps you could take to acquire the co-borrower’s share:

1.    Hire an independent appraiser to determine the property value.

2.    Find the difference between the mortgage balance and appraised value. That’s the equity in the house. If you each have a 50% share in the house, divide equity by two.

3.    Negotiate the buyout price. If you can’t come up with cash, take any refinancing costs into consideration and …

4.    Apply for a cash-out refinance. You’ll need to qualify on your own.

5.    Have a real estate agent create a detailed purchase agreement. You are the buyer, and the co-owner is the seller.

6.    If your refinance is approved, you will sign a deed transferring the seller’s interest in the property to you. The cash-out refi loan will pay off the original loan and, with luck, will provide the cash you need to pay your former co-borrower.

7.    The former co-owner signs a certificate of title, deed of sale, loan payoff, and statement of closing costs to make you the sole owner.

If that route is not viable, you may need to get the co-borrower to agree to sell the house. If yours is an assumable mortgage, good. They’re in demand.

The Takeaway

Buying a house with someone you are not married to works similarly to purchasing a property when married, but there are some important conversations to have about how ownership is structured and what might happen if one of you dies or wants to sell. The more solid each buyer is financially, the better the chances of a good mortgage rate.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What happens if one of us is not on the mortgage?

If two people’s names are on the deed but just one is on the mortgage, both are owners of the home but only one is liable for repaying the mortgage loan.

What needs to change if I get married?

If co-borrowers marry, the deed will need to be updated.

To add a spouse’s name to the deed, you must file a quitclaim deed. You can transfer the ownership rights from yourself to yourself as well as other people. Once a couple marries, they may want to hold title with rights of survivorship if they do not already.

Can I add my partner’s name to the mortgage after buying the house?

No. You’ll need to refinance your mortgage.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

This article is not intended to be legal advice. Please consult an attorney for advice.

SOHL-Q324-055

The Presidential Election Cycle Theory suggests that the stock market follows a pattern that correlates with a U.S. president’s four-year term.

The first two years of a term tend to be the weakest for stocks, according to the theory, as the president focuses on fulfilling campaign promises, but the market improves in the latter half of a term as the president pumps up the economy ahead of a new election.

Some historical stock market data does tend to sync up with the Presidential Election Cycle Theory, but past performance is not indicative of future results.

And market researchers and investors tend to be doubtful of the strategy, chalking it up to statistical coincidence as opposed to a real sign of a U.S. president’s power over the market.

They argue that company earnings, global economic data, and Federal Reserve monetary policy tend to be bigger influences on stock prices.

What Is the Election Cycle Theory?

Yale Hirsch’s Stock Trader’s Almanac has data going back to 1833 in order to study the Presidential Election Cycle Theory. Below are the average stock market percentage gains in the four calendar years after a presidential election, according to the almanac’s 2020 edition.

Hirsch used the Dow Jones Industrial Average to track stock market performance after 1896 and other stock gauges for the years prior:

Postelection year: 3%
Midterm year: 4%
Preelection year: 10.2%
Election year: 6%

In a Wall Street Journal interview in November 2019, however, Jeffrey Hirsch, the son of Yale Hirsch, said that not all the historical data is relevant. Market observers have argued that going further back in history, U.S. presidents had even less sway over the stock market than in current times.

But according to Hirsch, the theory that the stock market is strongest in the third year of a presidential term has held up.

The almanac states that since 1943, in the third year of the presidential election cycle, both the Dow and S&P 500 have been up 15% on average. Meanwhile, since 1971, the Nasdaq indices have climbed 28.8% on average in the third year.

That’s because “incumbent administrations shamelessly attempt to massage the economy so voters will keep them in power,” the almanac states.

Stimulative fiscal measures designed to increase disposable income and a sense of well-being in the voting public have included:

•   Increases in federal budget deficits, government spending, and Social Security benefits

•   Interest rate cuts on government loans

•   Speedups of projected funding

Other points in the Presidential Election Cycle Theory:

•   Wars, recessions, and bear markets tend to occur in first two years; prosperity and bull markets in the second two years

•   The market performed better in election years when a sitting president is running. Since 1949, the Dow climbed 10.1% during election years when the incumbent is up for reelection vs. 5.3% in all election years and 1.6% in years with an open field

•   Times when the stock market rose between August and October in a presidential election year, the incumbent political party has retained power 85% of the time since 1936

•   Markets tend to be stronger when the incumbent party in power wins

Does History Back Up the Presidential Election Cycle Theory?

The Presidential Election Cycle Theory hasn’t held up well in recent presidential administrations. The S&P 500 posted a strong gain of 19% in 2017, the first year of President Donald Trump’s term. The market also surged 29% in 2019, Trump’s third year and the best annual performance of his administration.

In each of President Barack Obama’s two terms, the first year saw the best annual performance, with the S&P 500 rallying 23% in 2009 and 30% in 2013.

Separately, the stock market has tended to rise more than fall, making the case that charting patterns with the election cycle may have more to do with coincidence. Since 1833, equity prices have risen in 115 calendar years and fallen in 70, data from the Stock Trader’s Almanac shows.

Barron’s also noted in November 2019, citing data from Ned Davis Research, that the weakest time in a four-year presidential cycle has historically actually been September of the pre-election year to May of the election year. Once the winner is determined, the market tends to rally regardless of political party.

Other political factors could also be in play, such as midterm elections. Barron’s also wrote in 2018 that the stock market’s performance during midterm election years hasn’t been stellar. Since 1942, the S&P 500 has gained 6% on average in midterm years, compared with 9.1% during the average year, the article stated, citing Ned Davis Research.

What About This Time Around?

Election Day is November 5, 2024, and the new four-year presidential term will start on January 20, 2025.

In the past, uncertainty over the outcome of a presidential election has led to declines in the stock market. In 2000, confusion over hanging chads in the Florida ballot count meant the race between George W. Bush and Al Gore didn’t come to a swift conclusion.

Investor uncertainty over the outcome caused the stock market to plummet. Markets rebounded after the Supreme Court decision that ultimately resulted in a Bush win.

The conventional wisdom on Wall Street has been that a split government usually leads to strength in the stock market, as the division in power will lead to less ambitious policy changes.

So the potential outcome of a Democrat in the White House and both parties splitting Congress could lead to gains for the Dow and S&P 500. That said, business publications have reported that there is little evidence to back this idea up.

In the 45 years that the same party controlled Congress and the presidency, the S&P 500’s average return was 7.45%, the Wall Street Journal found. In the 46 years power was split, the average return was 7.26%. The index actually slightly outperformed when control of the presidency and Congress was unified under one party.

💡 Quick Tip: Automated investing can be a smart choice for those who want to invest but may not have the knowledge or time to do so. An automated investing platform can offer portfolio options that may suit your risk tolerance and goals (but investors have little or no say over the individual securities in the portfolio).

What Does The Presidential Election Cycle Mean for Investors?

The history of U.S. presidential elections may not be a big enough sample set for making investment decisions.

An array of factors beyond presidential election cycles influences share prices. Investors typically monitor company earnings, global and U.S. economic data, events like natural disasters and pandemics, and Federal Reserve monetary policy. Separately, periods of uncertainty—whether in monetary or fiscal policy—can also shape market performance.

Annual returns also don’t capture the stock volatility that could have happened during the year. For instance, the stock market rallied in 2020, but it also entered into a bear market, a drop of 20% or more, in the first half amid investor worries over the COVID-19 pandemic’s impact on the global economy.

The Takeaway

The Presidential Election Cycle Theory states that the stock market’s performance improves in the four-year terms of US presidents as they gear up for reelection. Some investors say, however, that other factors, like corporate earnings and central bank policy, are bigger influences on share prices.

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