The key players to recruit before purchasing a home
Whether you want to win a basketball game, fight a serious disease or emerge victorious in the courtroom, it’s important to have the right team of experts in your corner. The same is true when you’re preparing to become a homeowner.
Without the right guidance and professionals, the effort can take longer, lead to more uncertainty, and possibly end up costing you more.
“The homebuying process is extensive, and many parties are usually involved. It’s easy for the buyer to get lost in the process if they are not well informed. Lack of understanding can also lead to misunderstandings, confusion and frustration,” says Lety Torres, a Realtor with Berkshire Hathaway HomeServices Central Washington Real Estate in Richland, Washington. “That’s why it’s smart to have a good understanding of who the key players are that you want to enlist so that you have the right help, know who is responsible for what and can set clear expectations.”
Prospective purchasers who take the time to learn which experts they may need and what these specialists offer “tend to have better outcomes and are more satisfied with their purchase decisions,” notes Philip Kranefuss, the Denver-based head of real estate for Homie.
Take a moment to better acquaint yourself* with the typical team players involved in a real estate transaction:
• Real estate agent/ Realtor: “This licensed professional guides you in your decision on which property to choose — especially if there are many choices — and helps you find a home that fits your needs,” says Warner Quiroga, president/ owner of Prestige Home Buyers in Brentwood, New York. Your agent/ Realtor will aid you in making an offer, negotiating with the seller or their agent and executing a purchase contract. They typically charge a commission, the rate for which can fluctuate depending on the brokerage, level of service and complexity of the purchase.
• Mortgage lender/ broker: “The lender is responsible for funding your loan. They will qualify you for a specified amount and loan type,” Torres explains. Your lender is often a bank, credit union or independent financial institution. They are compensated via the interest rate and fees paid on your mortgage loan, which may also include closing costs.
• Title or escrow company: “Your assigned representative at this organization, which is usually chosen by the seller, is responsible for making sure you are legitimately acquiring the rights to the property. They work for both the lender and the buyer to verify that the seller owns the title on the home and has proper authority to sell it, and they monitor the title transfer through closing,” says Mark Fraser, CEO/ co-founder of National Advisors Group in Malvern, Pennsylvania. The title or escrow company holds the earnest money and serves as the closing agent for your transaction, providing you with the necessary paperwork to review and sign; additionally, they keep records of the documents that need to be recorded in your local county records office. Their fees are paid as part of your closing costs.
• Real estate attorney: This expert’s main job is to ensure that the transaction is legally executed. “They review key documents to make sure every ‘T’ is crossed and every ‘I’ is dotted. They generally charge a onetime fee at closing, which can range from a couple of hundred dollars to over $2,000,” Fraser adds.
• Professional home inspector:
This skilled pro is responsible for physically examining the home for sale. “They will inspect all of the major facets of the home, from the roof, structure and appliances to the general condition,” Kranefuss says. “You will often be allowed to attend the home inspection, and the inspector will show you any problem areas they discover. They will also generate an inspection report that you can use to determine if the home is worth purchasing or to negotiate further with the seller.”
• Appraiser: The home appraiser is typically requested by your mortgage lender to determine the property’s valuation. Their appraisal report is often required for your loan to be approved.
“You’ll likely need at least a handful of these experts to complete your transaction,” Kranefuss says. “You don’t need to use a real estate agent, but it can be risky forgoing the expert guidance and representation that an experienced agent can provide. You’ll need a mortgage lender unless you are purchasing with cash, and a title or escrow company to handle the closing and settlement services unless you choose to close with an attorney.”