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Who are the Major Players in a Real Estate Transaction?
The process of buying a home, especially for the first-time can be a little daunting.Adding to the challenge is trying to understand the role of all the parties involved in getting your transaction to the settlement table.We have compiled a glossary of main players for you to know who does what and when.
Buyer’s agent – The buyer’s agent is legally the representative of the buyer, however the buyer’s agents commission is generally paid for from the proceeds of the sale of the home to be purchased. In other words the seller pays for the buyer’s representation.The buyer’s agent shows homes, writes offers, negotiates the terms of the sales, helps you manage the details of getting the loan and inspections wrapped up, and attends settlement.It is a fantastic deal for buyers, especially first-time buyers who may not be able to afford paying a commission on top of all the other closing fees.
Listing agent – The listing agent represents the seller and is also paid at closing from the proceeds of the sale based on the seller’s agreement at the time of signing a listing agreement.The standard commission is considered 3% for the listing agent and 3% for the buyer’s agent.A good listing agent will help a seller prepare a home for sale, market the property, show and hold open houses, accept offers and negotiate on behalf of the seller, and help manage all the fine details involved in closing the deal and getting to settlement.
Title company – This is the legal and neutral entity that helps close the transaction. They research the title to make sure it is clear for transfer, review tax transfers, manage financial document and funds transfers for the transaction, get all supporting documentation for closing, and work with the buyer’s lender to finalize the details of the sale.
Appraiser – If a lender is involved for the buyer, often an appraisal is required by the lender in order for the loan to be fully approved.The appraiser assesses a homes value based on local comparable homes that have sold as well as considering some basic features of the home, its location, etc.The appraiser is paid for by the buyer and charged to them at the closing.
Home inspector – A home inspection is usually optional for a buyer, but it is highly recommended.Considering the amount of money you will invest in a home, the amount of money you pay to a home inspector is invaluable for peace of mind.If the home inspection reveals that there are problems with the home, the buyer can (depending on the contract with the seller) usually walk-away from the contract or require that those items be fixed by the seller before settlement.A home inspector is usually paid for by the buyer and is paid at the time the inspection is done.
Termite inspector – Lenders often require the home to be checked for termites and pests that can destroy and devalue a property.This inspector is paid for by the buyer, but if there is any evidence of these pests or if there are any damages, the seller is required to make those adjustments or repairs before settlement.
Radon Inspector – This is an optional test, however in areas that are highly concentrated with radon it is highly recommended.Radon inspector is paid for by the buyer, but any remediation that needs to be done is paid for by the seller.
Lender – There are usually two lenders - the buyer’s lender will approve the loan to purchase (unless buyer is paying cash) and possibly a seller’s lender who will be paid off with what is remaining on the existing loan.The title company coordinates with both lenders for transferring of funds appropriately.
Broker – The broker is the real estate company name in which a Realtor works.Some buyer and listing agents are licensed associate brokers as well, which means that they are able to be a broker, but chose to work under another broker label.This enables the Realtor to better manage the details of buying and selling homes and working with clients rather than dealing with legalities and administration of running a real estate brokerage.
Homeowner’s or condo association – In some areas, homes are managed or maintained by associations.There is usually a list of policies for a standard level of care that you provide as well as maintenance that they assume.Depending on the association, there are fees for the maintenance that are paid on a regular schedule.Many people enjoy the associations attention to maintenance as well as the attention to keeping residents adhering to the policies that will help keep neighborhood property values the best they can be.
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