There are many actors involved in any real estate transaction. They each have their role to play and responsibilities for the home buying and selling process to go smoothly.
The Real Estate Agent (s):
Real estate agents are licensed professionals who help facilitate the process of selling or buying real estate. They represent whoever hires them – the buyer or the seller – and are typically paid by commission, equivalent to a percentage of the property’s purchase price. They have the legal obligation of acting in their clients’ best interests. If you are wondering how to find a real estate agent, your local contacts may be your best chance to get honest reviews. Make sure that whoever you choose to represent you has extensive experience in the area you are considering.
The buyer is the party who intends to buy a home. They must do their due diligence by ensuring that they have the necessary paperwork – financing included – and arrange for any required inspections in time.
The seller is the party selling a home. It could be an individual, but also a bank (if the sale is a foreclosure), an estate, etc. Depending on your location, they may have different legal obligations towards the buyer. Some states have a “duty to disclose” any known defect or potential hazards.
The Mortgage Lender
The mortgage lender is typically an institution – bank or credit union – where borrowers can obtain a mortgage. The amount borrowers are approved for, the interest rate, and the type of loan they can qualify for depend on the borrower’s credit score, debt-to-income ratio, credit history, down payment, employment history, etc. It may be in the buyers’ best interest to shop around to find the best deal.
The Home Inspector
Once the property is under contract, the buyer may hire a home inspector to provide a thorough report of the property’s condition. The contract may be contingent upon a satisfactory home inspection, and buyers may be able to renegotiate, back out, or ask the seller to fix some problems if any issues come up. However, keep in mind that home inspectors can only do a visual inspection (they cannot tear down walls to inspect the insulation, for example.) They may recommend further inspections by a certified specialist if they notice some red flags. Sellers may choose to hire a home inspector before selling their home to avoid any nasty surprises down the road.
The mortgage lender usually hires the appraiser to determine the market value of the property. Financing approval is typically dependent on the property appraising at or above the contract price. Appraisers are licensed professionals and provide an educated opinion of value based on comparable sales in the area. Sellers may also hire an appraiser to determine the best listing price for their property.
The Title Company
The title company verifies that the seller is allowed to sell the property and that there is no lien against it by checking that the title is clean and free of potential ownership claims. Once they establish that legitimacy, they provide title insurance to both the buyer and the lender. They also take an active part in the closing by holding and managing the money in escrow.
The Mortgage Servicer
A mortgage servicer is a third-party company hired by the mortgage lender to process the loan payments. They keep track of the loan payments and ensure that the borrower uses the funds received to finance the approved purchase. They are also in charge of handling late-payments and the foreclosure process if the borrower defaults on the loan.
We hope you found this “who is who” of the home buying and selling process helpful.