I'm considering buying a home from a friend without the aid of a real estate agent in the hopes of saving everyone the unnecessary 6% commission (since the property didn't need to be marketed).

However, the other benefit of using a real estate agent is that the guidance they give you in putting together the transaction and the enormous amount of paperwork. I assume the title company can do some of that, but in previous real-estate deals I never paid that much attention to who was organizing the whole transaction. I just signed the papers they said I needed to.

So assuming we do this deal without an agent, do I need to hire someone to manage the transaction? If so whom and how much is reasonable to pay for this service (ballpark)?

  • Most of the paperwork is done by the lawyers. From what i recall, the realtor actually did very little of it. Compare the 6% to your total legal bill. Mar 3, 2013 at 4:58
  • @Joe that depends were. In none of my purchases were lawyers involved. Generally, there's usually no need in a lawyer in a real-estate transaction in the US. Some jurisdictions require it, though
    – littleadv
    Mar 3, 2013 at 5:32

4 Answers 4


Generally, the paperwork realtors use is pre-written and pre-approved by the relevant State and real-estate organizations. The offers, contracts, etc etc a pretty straightforward and standard. You can ask a realtor for a small fee to arrange the documents for you (smaller than the usual 5% sellers' fee they charge, I would say 0.5% or a couple of hundreds of dollars flat fee would be enough for the work).

You can try and get these forms yourself, sometimes you can buy them in the neighborhood Staples, or from various law firms and legal plans that sell standard docs.

You can get a lawyer to go over it with you for almost nothing: I used the LegalZoom plan for documentation review, and it cost me $30 (business plan, individual is cheaper) to go over several purchase contracts ($30 is a monthly subscription, but you don't have to pay it for more than one month). But these are standard, so you do it once and you know how to read them all. If you have a legal plan from work, this may cover document review and preparation. Preparing a contract that is not a standard template can otherwise cost you hundreds of dollars.

Title company will not do any paperwork for you except for the deed itself. They can arrange the deed and the recording, escrow and title insurance, but they will not write a contract for the parties to use. You have to come with the contract already in place, and with escrow instructions already agreed upon.

Some jurisdictions require using a lawyer in a real-estate transaction. If you're in a jurisdiction (usually on a county level) that requires the transaction to go through a lawyer - then the costs will be higher.


Whether or not you use a real estate agent, at some stage most people use a lawyer to do the actual buying and selling and set up the agreements. If you've never dealt with a lawyer directly before it's probably because your agent has acted as a front-person for the lawyer. If you go to a lawyer and tell them what you want to do they will sort it out, and should tell you in advance how much it will cost. You and your friend will probably need one each.

  • 1
    I disagree entirely with the proposition that a lawyer is a must.
    – littleadv
    Mar 3, 2013 at 5:39
  • 1
    It's not 100% essential but most people use one. The fees are relatively cheap and the cost of screwing it up might be very large. Mar 4, 2013 at 14:49
  • not in California or Arizona, apparently
    – littleadv
    Mar 4, 2013 at 17:54

For a real estate transaction there are multiple stages:

From the sellers viewpoint:

  1. Preparing for sale: this involves evaluating the property before putting it on the market. Making minor and major repairs to get it ready.
  2. Pricing - Setting realistic price that can be expected to sell withing an expected time frame.
  3. Marketing - Getting the property in to the multiple listing service. Open Houses, buyer tours, advertising.
  4. Negotiating a price and the terms. This includes time to get financing, inspections, buyer requirement to sell their current property.
  5. managing the transaction process to make sure that all parties are moving forward.
  6. Required paperwork. what needs to be filed where. The buyer wants to make sure they have no more obligations at the end of the transaction.

From the buyers viewpoint:

  1. Finding acceptable properties. Access the the multiple listing service is a key.
  2. Negotiating the price and terms. Knowing how to protect the buyer, without adding too many contingencies to scare the seller. Knowing what is good price.
  3. Managing the transaction process.
  4. Required paperwork. -what needs to be filed where.

If both parties are comfortable skipping some of the steps the role of the agent can be minimized. How will a fair price be determined? Some realism might be needed, to make sure that the loan appraisal will not be a problem. Will an inspection still be needed? What warranty will exist if the A/C dies this summer?

If you still want help from an agent one should be able to help for far less than the normal commission. The seller normally interviews three agents before selecting one, do the same in this situation. Ask how much they would charge for a sale between friends. They can complete their task in just a couple of hours. If the home inspection comes back relatively clean, the transaction should be very easy.

The paperwork is the biggest hurdle. You should jointly identify a local settlement company. They will be the ones actually filing the paperwork. They have lawyers. They will check the county records office for existing liens, plats, mortgages and address all the issues. They can send the proper paperwork to the existing mortgage companies and arrange for mortgage insurance. The cost will be the same regardless of the presence of real estate agents and other lawyers.

When they say a lawyer is required, it is only because of the paperwork.


Save yourself a lot of trouble you both agree on a Real Estate Attorney to prepare all the paperwork (ie. contract) and conduct the closing for or with the Title Company. Then you both split the normal costs of the transaction. (Real simple professionally handled and you both save the 6%)

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