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When looking for a new place to live, does it make financial sense to go solo or work with a real estate agent? We explore the pros and cons of each option and the potential real estate costs to help you make your decision.

Going It Alone

Pros

Once upon a time, homebuyers relied on real estate agents to access homes through a multiple listing service (MLS). But with real estate aggregator websites and apps such as Trulia, Zillow and Realtor.com, it's never been easier for homebuyers to take the reins of their home search.

In a typical homebuying transaction, the standard 6 percent sales commission is paid by the seller and split evenly between the buyer's and seller's brokers, with a portion of each going to the buyer's and seller's agents.

Buying a home without a buyer's agent potentially saves you 3 percent of the home's purchase price — the buyer's broker's portion of the commission. On a median home price of $236,400, you could save more than $7,000, provided the seller passes those savings onto you.

Cons

Working without a buyer's agent doesn't guarantee you'll save on commission costs. In fact, the contract between the seller and the seller's agent may stipulate that the seller's agent receive the full 6 percent commission if the homebuyer doesn't use a licensed buyer's agent. Bye-bye 3 percent savings.

Regardless of whether you use a buyer's agent, some states require that a real estate attorney be part of the homebuying transaction. Real estate attorneys normally charge an hourly rate, from $150 to $350, though some may charge a flat fee.

Buying a home without an agent is best for savvy negotiators who understand all the paperwork involved, including required disclosures and specific closing costs for a particular jurisdiction. In parts of the homebuying process, you simply can't take the place of a buyer's agent. Home inspections and appraisals require a licensed agent, usually the buyer's agent, be present. If you work solo, you'll have to convince the seller's agent to be there, and they may charge you for this service.

A buyer's agent also provides accurate market analysis to determine a fair price for the home and ensure it appraises for that value. Most lenders will only fund up to a percentage of the appraised value. If the appraisal falls short, you may need to bring cash at closing to pay the difference. An appraisal clause in any contract — something a buyer's agent would do — is necessary to cancel the deal should the home not appraise.

Working With an Agent

Pros

When you opt for professional help, you're in good company. According to the National Association of Realtors, 88 percent of recent homebuyers used a real estate agent or broker.

Remember, working with a buyer's agent gets you a lot — market expertise and paperwork assistance in making an offer and closing the deal. A buyer's agent also works on your behalf to negotiate the best price with the seller and seller's agent.

Real estate agents also attend exclusive open houses before listings go on the market. If your agent knows what you're looking for, you may be able to save in real estate costs by making the first offer.

Cons

While a buyer's agent can show you any MLS listing, they may only know one or two markets really well. If you're considering a wide spread of locations, you may need to work with a buyer's agent in each.

You might also run into the dilemma of finding your dream home only to discover that your agent is actually a dual agent also representing the home seller. Dual agents are still paid by the seller, so there's no little to no incentive for a dual agent to negotiate a better price for you, the homebuyer. When choosing a buyer's agent, insist on working with a buyer's agent only.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on www.Key.com, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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