The Real Estate Transaction | TLDR Version
THERE ARE MANY, MANY, MANY STEPS INVOLVED IN BUYING A HOME.
The steps vary depending on the type of transaction AND the state in which you are closing. Before the closing can take place and before the title of the property transfers to the buyer, there are so many things happening behind the scenes to make sure closing happens on time.
Who are the parties involved in a transaction and what are their roles?
Real Estate Agent
Title Company
Mortgage Lender
REAL ESTATE AGENT
A real estate agent is a licensed professional who assists buyers and sellers in real estate transactions. A buyer’s agent is someone who guides a buyer through the process of purchasing a home. A listing agent represents the seller during a real estate transaction. They are responsible for listing the home and selling it for the best price possible.
There are many reasons to hire a real estate agent when selling or buying a home. For one thing, you get to benefit from that person’s expertise and years of experience in the real estate industry! If you’ve been considering buying a home without an agent, you may wonder if working with a real estate agent is worth it. After all, you don’t technically need a real estate agent to buy or sell a home. However, most people find that real estate agents are well worth the small commission fee. Here are a few of the many ways real estate agents can help you:
Research homes and neighborhoods that match your budget and lifestyle.
Share inside information about a particular home or neighborhood.
If you’re buying, your agent will negotiate an offer with the seller and help you get the best deal possible.
If you’re selling, your agent will list your home and market it, so it reaches many potential buyers.
Decipher the legal paperwork and help you understand what everything means.
MORTGAGE LENDER
Aside from that, a mortgage lender is the financial institution or mortgage bank that offers and underwrites home loans. Lenders have specific borrowing guidelines to verify your creditworthiness and ability to repay a loan. They set the terms, interest rate, repayment schedule, and other key aspects of your mortgage.
A mortgage lender assists the buyer with all of the paperwork necessary to apply and get approved for a mortgage. It is best to get in touch with a lender before looking at any homes with a real estate agent! The lender will pre-approve the buyer for the amount of money they are financially qualified to borrow and supply the pre-approval letter to submit with your offer to the seller(s).
title company
The title company is a third party that works on behalf of both the lender and the buyer. You hire them to research and insure the title of the home you’re buying. It’s important to work with your title company to make sure that the wording on your title accurately describes who has the right to transfer ownership. Your title phrasing may also affect how you pay property taxes and fees if you sell your home in the future.
Though title companies primarily benefit buyers, they help sellers by handling all paperwork, coordinating the closing process with the buyers, and negotiating any settlements or lien payouts to help the closing proceed.
Who picks the title company? The buyer and seller each have representation from a title company. Neither the buyer or seller is obligated to use one recommended by the other. You’re free to ask for recommendations from your real estate agent or lender if you’re not sure which company to use!
DAY OF CLOSING | BUYING PROCESS
After a successful final walkthrough, it’s time for closing.
You will be required to bring a driver’s license, passport (if applicable), and social security card to closing along with any necessary funds.
At closing, you will sign all your title and loan documents. The title closer will explain all your documents to you, direct where to sign on the document, and notarize your signature if applicable.
After signing, your closer will make copies of the documents for you, scan them over to your lender for review, and disburse the necessary funds.
The lender will give funding approval AFTER reviewing the signed documents.
You are now new homeowners and the moving can begin.
The entire process at the closing table typically takes 20-40 minutes to complete.
DAY OF CLOSING | SELLING PROCESS
You will sign your documents days in advance of the closing date. Due to COVID, sellers and buyers no longer meet at the closing table. Sellers sign first at a pre-closing and the original documents are provided to buyers closer before closing.
After the buyers are done signing, you will be notified by your closer that the closing is complete and you no longer have access to the property.
If you requested a wire for proceeds, the buyers’ title company will call to verify account information before sending funds.
THE BOTTOM LINE
Regardless if you are purchasing or selling a property, the amount of parties involved to cross that finish line is not few. But don’t worry, thousands of real estate transactions occur on a day-to-day basis!
Even though the process may seem tedious, the process is easier the more informed all parties are and the better the transaction will flow. This is why it is so important to make an informed decision when selecting your team of real estate professionals, your future self will thank you!
Happy closing!
Jen
Investor // Landlord and DIYer // Realtor // Business Consultant // Globe Trotter // Converting Vegan.
