What Professionals Are Involved in the Home Buying Process?
The home buying process involves many layers of parties to get the job done. The number of real estate professionals depends on the property and/or borrower complexity. Most home purchases include the first 9 professionals listed below. Although, some transactions require additional help to clarify information, provide supporting documentation, or make repairs.
12 Real Estate Professionals in the Home Buying Process
- Loan officer
- Buyers agent
- Listing agent
- Real estate attorney
- Title insurance company
- Insurance agent
- Home inspector
- Pest inspection company
- Tax adviser
Home Buying Process Timeline
For best results in the purchase and mortgage process, it is vital to choose a top-level loan officer and realtor. Top professionals use their experience and communication to orchestrate the process and lead buyers through the purchase maze. Another home buying process timeline influencer includes the buyer’s responsiveness and/or scenario. When a buyer provides required documentation up-front, lenders are able to provide a quicker, more accurate loan decision. Then, a lender with up-front underwriting approvals shortens the purchase closing timeline to as little as 1 – 2 weeks.
Conversely, there are scenarios which delay or lengthen the home buying process timeline. Examples of scenarios which require a longer closing timeline include the following:
- Buyer delay in providing documentation or making decisions
- Renovation loans
- Complicated borrower scenarios
- Complicated properties
To prevent or reduce delays from the above, it helps to understand these circumstances. Buyers are an essential part of the process, and a buyer’s delay will back up the process. Renovation loans require extra steps including a renovation bid from a contractor and possibly involving a HUD consultant. Often, receiving the contractor bid takes a while. Reasons include complications, improvement decisions, and the contractor’s turnaround time.
Complicated borrower scenarios can certainly cause a delay in the timeline. Self-employed buyers with complicated income scenarios may require additional documentation or even time to file a tax return. Occasionally, buyers are working on their credit, retrieving their down payment, or paying off debts to qualify. Therefore, the longer these items take, the further the closing is moved out.
Then, there are complicated properties that require additional time. These include properties in disrepair, condos (condo questionnaire and documentation may take longer), or commercial properties. In these cases, it is always best to do your homework up-front when considering properties like these.
What Does the Real Estate Attorney Do in the Home Buying Process?
Depending on the state you’re buying in and the lender being used, there are different requirements for how a mortgage loan is closed. In most scenarios, in some way, a real estate attorney is involved. Sometimes the attorney works in the background of a title or settlement company. In these cases, the buyers often meet a notary or settlement agent for the actual closing, but in attorney closing states such as North Carolina and South Carolina, a real estate law firm usually conducts the closing.
The real estate attorney and/or staff conduct a search on the subject property which means searching for potential liens, judgments, ownership history, bankruptcies, and more. Understanding the history and current status of a property is key. Obviously, a buyer wants to buy a home free and clear of any issues. Additionally, the lender wants the same, so their mortgage is secured correctly to the property.
Finally, the real estate attorney represents the buyer at closing. Therefore, the attorney explains the closing documents and will answer any questions related to them. Hopefully, by closing, buyers are fully aware of their terms, and if working with a good loan officer, there should not be any surprises. Yet, there will be questions as these are legal documents and they can be confusing. Therefore, buyers should lean on your attorney to ensure everything is understood and that the rules of the loan and property are followed.
Make Sure Your Closing Questions are Answered by Qualified Professionals
Exceptions to this usually include larger mortgage lenders or banks which choose to hire settlement or title companies which send notaries to handle the closing. If this is the case, remember that the notary is not allowed to answer any loan related questions. The notary is there strictly to verify the buyer’s identity and ensure the documents are signed and notarized. So, if there are legal or mortgage related questions, request to speak to the company’s real estate attorney. This is not the time to be quiet and just sign or e-sign legal documents which you must follow.
What Does a Title Insurance Company Do in the Home Buying Process?
A title insurance company is typically in the background of a home purchase process. Yet, they play an important role in protecting the buyer and the lender. At some point, a real estate attorney, paralegal, or title company performs a title search on the desired property. As mentioned above, this is performed to ensure all encumbrances are known including mortgages, liens, judgments, and more.
Once the research is complete, the company performing the search submits the findings to a title insurance company. At this point, the title insurance company reviews the search and if satisfied with the results, issues a title insurance policy. There are 2 types of title insurance policies: Owners title insurance and lenders title insurance. It is pretty obvious which one protects who.
Title insurance is key because if something was overlooked or some long lost relative appears with claims to the title, the insurance company is there to make things right. Therefore, they protect the lender and/or owner against these issues. A great article to learn more about this topic is actually on our site called, “Title insurance – why lenders require it and buyers want it.” Please read it as it has key tips and even cost saving tips!
What is the Appraiser Role in the Home Buying Process?
Practically every home purchase requires an appraisal. The appraisal determines the value and overall condition of the property. Remember, it is for the buyer as well as the lender. In most cases, buyers do not want to pay over the market value for a home. Plus, lenders always want to verify sufficient value because it affects their loan and equity position. Typically during the home purchase, the buyer does not see or communicate with the appraiser. So, this is a behind the scenes process for the buyer.
In some manner, appraisers are chosen at random by the lender. That’s right; buyers may not select the appraiser. A few years back, the HVCC or Home Valuation Code of Conduct rules were implemented which requires lenders to follow an appraisal process.
There are three main components performed by an appraiser. These include property research, property inspection, and completing the appraisal report. So, appraisers do not just walk through a house snapping pictures. Appraisers perform one of the most critical steps in the mortgage process. Lenders count on appraisers to be their eyes on the property and to provide accurate data on the property value and condition.
Although buyers have very little control of the appraisal process, it does help the buyer and real estate agent to understand the appraisal. Additionally, it is always good to have appraisal tips. Fortunately, we have some great appraisal articles which share a multitude of appraisal tips.
Choosing an Insurance Agent for the Home Buying Process
Usually, a home is a person’s largest asset. To protect against losing the asset, insuring it is important. In addition to homeowners desiring protection, mortgage lenders require insurance coverage on the home. At a minimum, lenders require hazard insurance. Otherwise known as homeowners insurance, it normally protects against issues like fire, theft, rain, and wind. Although, homes in higher risk areas require additional insurance. For instance, flood insurance is always required for properties in a special flood zone. Additionally, properties in high wind zones may require additional wind & hail insurance. Choosing an experienced insurance agent is key for obtaining appropriate coverage.
An insurance agent helps determine the appropriate insurance coverage, explains options, and provides the cost. Believe it or not, available options and costs vary widely. Just as the policies vary, insurance agents do as well. So, have a detailed conversation about protecting your home. Once the home is insured, be sure to investigate other coverage such as life, disability, and auto insurance.
Am I Required to Hire a Home Inspector?
Most real estate professionals recommend purchasing a home inspection. First of all, home inspections are not required. Some buyers believe the appraiser performs a home inspection. Although, an appraiser does more of a cursory review of the home condition. Conversely, a home inspector crawls underneath and all around a home. The home inspector’s purpose is to test all major systems like the roof, plumbing, electrical, crawl space, HVAC, foundation, and more. All in all, this is not an area to try and save a few hundred dollars. Hiring a home inspector should be treated as an insurance policy and an investment.
Pest Inspection Company Role in the Home Buying Process
Like the home inspection, pest inspection or termite inspection plays a key role in a home purchase. Primarily, a pest inspection company looks for wood destroying insects and moisture issues. Either could promote wood rot. Furthermore, rotten wood erodes a home foundation and compromises the stability. So, the small price of a pest inspection could protect against buying a home with severe issues. Or, it could identify potential areas of concern which could be fixed.
If high levels of moisture are detected, discussion with a crawl space encapsulation expert would be smart. Crawl space enclosures limit ground and outside humidity from damaging the foundation and flooring. Additionally, moisture attracts various wood destroying insects.
Typically, a pest inspection costs $55 – $100. So, the peace of mind is well worth this small fee.
Do I Have to Hire a Surveyor When Buying a Home?
In some states, property surveys are customary, but most purchases do not require one. Although, some property scenarios come up that need clarification. Sometimes minor, but occasionally there are potentially large issues which require verification or fixing.
Reasons for a Property Survey
- Confirm property lines
- Determine if structures encroach another property
- Subdivide a property
- Locate easements or right of way
- Create a legal description for a deed
- Elevation certificate for a flood insurance quote
The decision to hire a surveyor is usually up to the buyer. Although, the recommendation may come from an appraiser, real estate attorney, or realtor. Surveyor prices vary based on the market as well as the size and complexity of the land. A good guess would be $400 – $1,000. Again, it depends.
Using a Tax Adviser During Home Buying Process
Many do not think of a tax adviser when involved in the home buying process. There are many instances to consult with a tax adviser. Much too often, buyers and sellers do not have this conversation. The result could be a mistake that cannot be corrected. Here are reasons to have a conversation with a CPA.
Reasons to Speak with a Tax Adviser
- Selling a home and using the capital gains home tax exclusion rule
- Withdrawing funds from retirement
- Buying a home with gift funds
- Providing a gift to a buyer
- Selling an investment property
- Buying an investment property
- Using business funds for down payment
- Gifting a home or equity to a family member
- Setting up a retirement income distribution
So, don’t leave out your tax adviser on these types of decisions. If you do not have a CPA or similar adviser, ask for a referral from a trusted person.
Using a Contractor During the Home Buying Process
Unless purchasing a brand new home, there is almost always something to repair or improve. Examples may include minor items like replacing rotten boards, carpet, or a window. Conversely, a home may need more significant renovations such as a bathroom addition, roof, or structural repairs. Either way, a buyer needs an experienced contractor representing him/her.
Even if a home appears in perfect shape, having a reputable contractor within a phone call’s distance is key. At any point of the home buying process, an appraiser, home inspector, or termite inspector could require a repair. Additionally, once moved in, buyers find overlooked issues or decide to make some changes.
When considering a renovation purchase, a licensed contractor is not only preferred. It is required.
Before choosing a real estate professional, always look for a referral, check references & reviews, and have a conversation with the person.
Apply online now with our easy Mortgage App or talk to a licensed
Mortgage Loan Officer to review which loan is the best option for you.