There are a lot of people involved in your home purchase. It makes sense; it’s one of the largest (if not the largest) purchase you’ll make, and it requires input from a variety of stakeholders. To add a few more people to the mix, the seller has a full team, as well. While your team is working on your behalf, the seller’s team is working on theirs. But who are all these people, and what do they do? Let’s break it down.
Your Real Estate Agent
This is your team’s star quarterback. This is likely the first person you’ll meet with when you are ready to purchase a home. At this first meeting, you’ll discuss your goals and what you are looking for in a home. Your agent will weigh your desires against current trends in the market. A good real estate agent is knowledgeable in your desired market’s prices, they know the neighborhoods, and they can help you determine what is realistic based on your budget. Your agent will show you homes and use their experience to point out features and flaws in the houses you might otherwise have missed. Once you are ready to make an offer, your agent will negotiate on your behalf to make sure you get the best possible price. They will assist with inspections and negotiate any repairs. At the closing, your agent is there as your advocate to make sure the process goes smoothly. Once it is all over, the agent may even be the one to hand you the keys to your new home.
Not only is your agent your advocate during the home buying process, but they also handle all the paperwork, and there’s a lot of it. Some of the documents involved in a home purchase include disclosure statements, offer letters, inspection reports, purchase agreements, the home deed, the bill of sale, and title documents. Having an expert in your corner who knows the legal jargon, as well as which documents are needed and when, will make home buying a much less stressful process.
Finally, your agent will likely recommend all the other members you’ll need on your team. As a real estate professional, your agent can help you find a mortgage lender, a home inspector, a title company, a real estate attorney, and even a contractor if you need one. They may even be able to recommend a moving company. If you’re new to the area in which you’re planning to purchase, an agent who lives and works there will become a valuable resource.
The Mortgage Lender
Your lender provides the funds you need to purchase your home. The lender plays a key role in the home buying process and will likely continue to play a role for years after your home is purchased. At the beginning of the home buying process, you’ll want to apply for pre-approval from at least three mortgage companies. After you’re pre-approved, the mortgage lender will work with you and your agent to hire the appraiser, orchestrate the escrow, and finalize the closing costs. After the sale, your lender will handle things like property taxes and insurance payments from an escrow account (this account is different from the escrow account set up during the sale) until your mortgage is paid off.
Standing between what the seller thinks their property is worth and what you end up paying for it is the appraiser. The appraiser’s role is to determine the value of the property for sale. The appraiser will do an on-site walk-through of the home and evaluate the condition of the interior and exterior. The appraiser will document the house’s compliance with property standards and will compare similar houses in the area to determine the home’s value. The lender typically has an appraiser who is paid through the lender as part of the loan agreement.
The Home Inspector
After your offer is accepted and before the final price is negotiated, it’s time for the home inspector to step in. Unlike the appraiser, who determines the overall value of the property, the home inspector will go over every inch of the home, inside and out, looking for issues. They will list all the issues and estimate the cost of repairs. Once you have the inspection report, your agent will ask the seller (or more likely, the seller’s agent) on your behalf to complete the repairs, lower the purchase price, or terminate the sale, depending on the severity of the repairs and what you are comfortable with. The home inspection is a critical part of the home buying process.
The Insurance Agent
After the home inspection is completed, it’s time to meet with your insurance agent. Many lenders won’t close the sale of the house until the buyer has purchased homeowner’s insurance. There are two types of homeowner’s insurance: a replacement-cost policy and a cash-value policy. A replacement-cost policy is more expensive than a cash-value policy, but it’s a good idea for older homes where the cost to replace might be higher than the value of the property itself. A cash-value policy protects the home from depreciation in the market and makes sure the home is insured for the amount you purchased it.
The Title Company
The title company plays a very important role in your home purchase. First, they will research the history of the property and everyone who has owned the home. This protects you from any outstanding claims over the ownership of the property. Meaning, the title company makes sure the person selling the property has the right to do so, that someone else can’t claim ownership or part ownership of the property, and that there aren’t any liens on the property (a claim usually made against the home by a contractor who didn’t get paid or by an HOA for unpaid fees). They will make sure all the property taxes have been paid, and they’ll do a property survey to make sure the home occupies the space the title claims it does. The title company may also handle the escrow account, the trust that holds the money and important documents until the purchase agreement is closed.
Where to Start When Building Your Real Estate Team
Now that you know who does what on your real estate team, you may be wondering where to start. First, talk to agents. You can find one through friends, relatives, or you can connect with an agent through Homes.com. It doesn’t hurt to talk to several agents to make sure you find someone you connect with. Just like any professional, you’ll want someone you trust.
Now that you know what an agent does, you may have other questions, such as, how does a real estate agent get paid? In most cases, there will be a seller’s agent and a buyer’s agent. The seller pays both commissions, which is typically around six percent (the agents will split this). Since the seller is paying for both agents anyway, it’s in your best interest to have an agent in your corner.
Here’s something to keep in mind: buyer’s agents and seller’s agents are often referred to as selling agents and listing agents. If you hear these terms, you’ll want to know who’s who. The selling agent represents you, the buyer. The listing agent represents the seller. Knowing these terms could save you some confusion during the process. Speaking of the process, once you’ve assembled your real estate team, it’s time to get pre-approved. Learn all about that process in step five.