When entering a real estate transaction, every seller and buyer should know who they will communicate with and the role they play in the transaction. Use this quick reference guide to assist you in knowing who will be involved in your real estate transaction.
Real estate appraiser
A licensed real estate appraiser provides an unbiased estimated value of a property being sold. For a loan to be approved, the home must meet or exceed its fair market value.
Real estate attorney
In some states, real estate attorneys manage the transaction from start to finish However, there are some states where the real estate agent and title company oversee the transaction unless a legal matter arises.
City construction/building office
If any electrical, plumbing, or structural renovations have been made in the home, the seller must supply proof to the buyer that the permits were properly opened and closed through the city construction or building office before closing. If these permits are not readily available, the city construction office can provide them to the buyer upon request.
Certificate of occupancy (CO)
Many towns and counties require a CO to close on a property. This usually involves someone from the fire or code safety department who visits the home before settlement. Their job is to make sure everything in the home is up-to-code, as well as having working smoke and fire alarms, carbon monoxide detectors, and operational fire extinguishers.
Contractors
There may be items that need to be serviced, repaired, or replaced before closing. Generally, the seller is responsible for hiring the contractor to complete any necessary work and to have ongoing communication with the contractor to be sure everything is being completed properly and on time for closing.
Escrow/closing agent
Once the contract of sale has been signed by both parties, the buyer’s deposit is placed with an escrow agent—a third party, person, or entity who holds the money, usually in an interest-bearing account. The money is released at closing as long as both parties have fulfilled their contractual requirements.
Home inspector
At the buyer’s discretion, they will hire a home inspector to do a comprehensive inspection of the home once the contract of sale has been fully executed. A formal report is typically provided to the buyer within one or two days. This report outlines the condition of the interior and exterior of the home, as well as the major systems and any repairs or red flags the buyer will need to know and address.
Homeowners association (HOA)
Many neighborhoods have an HOA, that requires buyers to complete an application and pay dues before settlement, the buyer must complete an application packet including their personal information and be aware of the fees that need to be paid ahead of closing. The HOA will often require the buyer to have an in-personal or virtual interview with the HOA board before acceptance.
Insurance company
Homeowners insurance, usually part of the closing costs, is insurance that covers losses to the home in the event of a fire, storm, or water damage. Depending on the location, additional insurance flood or earthquake insurance may be required.
Mortgage lender representative
A mortgage representative is usually the first line of communication for a buyer who is seeking a mortgage. They’re responsible for the initial intake of information, including income, credit score, debts, and the amount being borrowed. A mortgage representative can give a preapproval, but the underwriter approves the loan.
Closing agent/notary
At closing, both buyer and seller are required to sign several documents, such as the deed, bill of sale, statement of closing costs, the mortgage note for the buyer, and payoff statement for the seller. The notary or closing agent notarizes these documents, making them legal and binding.
Property surveyor
Before a home can go to closing, the property lines and boundaries need to be confirmed and notarized by a property surveyor. If, for example, the neighbor erected a fence, the surveyor can detect if it is encroaching on the property of the home being sold. This knowledge can allow the buyer to address the issue ahead of the closing, avoiding costly reparations.
Termite/mold/radon inspector
A termite inspection is generally required to obtain final loan approval from the mortgage company. The homeowner is required to treat and repair any termite damage to get the green light to close. The termite inspector can also perform mold and radon testing if the buyer so desires, though not necessarily required for loan approval.
Title company
A title company is a third-party entity that insures the title to a home and records its ownership. It also assures the buyer that the property is free and clear of all encumbrances which protects the buyer in the event something emerges, later putting the home ownership in jeopardy. In addition, closings often take place at the title company’s location unless the buyer has opted for an attorney.
Underwriter
After the mortgage representative has completed an initial intake of the buyer’s information, they will submit it to the lender’s underwriter who reviews the information in its entirety to be sure the buyer meets all the requirements to obtain a loan. At certain times during the process, they may ask the buyer for more information to gain a better understanding of their financial portfolio. The underwriter approves or denies the loan.
Other professionals of note
Structural engineer
During the standard home inspection, results may indicate that there are some structural issues in the home requiring a second opinion from a structural engineer. This specialist can either confirm or reject that there is a problem and have the problem addressed if needed.
Geologist
Homes in certain regions of the US are susceptible to earthquakes, landslides, and land liquefication (land that softens due to earthquakes). Although it can be expensive, hiring a geologist can help determine if the home has suffered any past damage and needs remediation, or if it is in a high-risk area.
Well inspector
A general home inspector can perform a basic well-water inspection, but because many rural homes use well water, it may be necessary to have a certified well inspector ascertain the safety and quality of the water and equipment, and determine if it meets state regulations.
Underground tank inspector
Many older homes use underground oil tanks to fuel their homes, however, due to their age, the oil can start leaching into the soil. Before purchasing a home with an underground oil tank, a tank inspector should obtain soil samples to test for any contamination. If contamination is present, the inspector will recommend a course of action.
Septic tank inspector
Areas without access to public sewer systems, especially in more rural areas, need to depend on a septic system to dispose of and treat wastewater. When purchasing a home with a septic system, the buyer will need to have a septic tank inspector conduct an inspection to make sure the system is in good working order and is not producing groundwater pollution.
Whether you’re a buyer or seller, be sure to ask your real estate agent for a list of the various people involved in your real estate transaction. Also, keep a list of their contact information at your fingertips for easy access.
