9 Other Parties Involved In The Home Buying Process
Not all home buying processes look the same, but in general, you can expect the same key people to play a role. Some of these parties are mandated by your lender and the laws of your state, while others are optional but encouraged.
Next we’ll take a look at nine additional parties you’re likely to work with when you’re buying a home.
1. Buyer’s Agent
Your real estate agent, also referred to as a buyer’s agent, is the most important person you’ll interact with during your home buying journey. Your real estate agent is a source of knowledge who will help you find the right home at the best price, negotiate an offer on your behalf and walk you through the final steps to close on your home.
You’ll want to find a real estate agent as soon as you’re ready to begin the home buying process. It’s important to look around for the right real estate agent who will best represent your needs.
Around the same time you’re looking for a buyer’s agent, you’ll also want to apply for preapproval for a mortgage. This will allow sellers to know that you’re serious about buying a home and will also allow you to lock in an interest rate you’re happy with, that way you can make an offer quickly.
Working With A REALTOR®
There are many factors to consider as you look for a good buyer’s agent, but in general, you’ll want to find a professional with experience who knows the area and who is a good communicator. You can opt for a real estate agent, who will have passed licensing examinations to conduct business in your state.
REALTORS®, on the other hand, are real estate agents who are members of the National Association of REALTORS®. They're held to a strict code of ethics to protect the interests of clients, cooperation between brokers and more. REALTORS® must also hold a clean professional record.
2. Listing Agent
You may never actually meet the listing agent for the home you’re purchasing, but they’ll play a huge role in the buying process. Just as the buyer’s agent works on your behalf, the listing agent works for the seller and represents their interests.
Once you make an offer, your real estate agent will work with the listing agent to negotiate a fair price. The listing agent will also be involved in any post-inspection or repair request negotiations.
3. Homeowners Insurance Company
Your home will likely be your most valuable asset, so you’ll want to take your time finding the right homeowners insurance company. Search for several companies in your area and request detailed quotes to compare costs.
Other Types Of Insurance To Consider
If you live in an area prone to weather-related damage, like flooding or hail, you might want to find a company that offers additional insurance packages, which could include flood, hail, rain, wind or even theft coverage.
The type of insurance you’ll want to look for can be based on your home’s location, condition and age – do your research and compare quotes based on this information.
4. Title Company
Another party that stays in the background of the process is the title company. During the closing process, the title company will run a title search on your property to ensure there are no outstanding liens or mortgages against it. This is done to protect your investment.
Once this is complete, a title insurance policy will be issued for both the owner and the lender. This insurance will protect both parties if someone claims to have rights to the property down the line.
How To Find A Title Company
Lenders often defer to title agents and companies they’ve used in the past, but as the buyer, you can choose your own title company. It may be a good idea to partner with a local title company that knows your area and market.
5. Appraiser
Your lender will generally require a home appraisal to confirm the value of the home prior to closing. This is done to protect you and your lender from financing more than the home is worth. Your lender will select a third-party appraisal company, although you’ll ultimately be responsible for paying the appraiser in your closing costs.
Appraisers are typically local professionals who conduct research on your market and visit the home to assess its overall condition and value. Appraisers perform a general inspection and present their findings to cultivate an appraised value for the home.
The appraiser plays an important role in the closing process because they could uncover significant problems with the home that impact its value. If a home appraises for less than expected, your real estate agent might need to negotiate the price with the listing agent, or you might need to pull your offer if a deal can’t be made.
6. Home Inspector
A home inspector will also assess the condition of your home to determine if it’s a smart purchase. They are hired to help protect the buyer from purchasing a property with major problems.
Once hired, the home inspector will go through the house from top to bottom with you, pointing out any problems – from major foundational concerns to smaller, more easily repairable issues. From there, a home inspection report will be issued for you to review with your real estate agent to determine if further negotiating should happen with the seller.
How To Find A Home Inspector
Since the buyer is responsible for the home inspection, you’ll want to search for a credible inspection company. Your lender or real estate agent can likely make recommendations, but be sure to do your own research. Look for reviews online or ask companies for sample inspection reports so you can determine which company does the most comprehensive inspections.
7. Real Estate Attorney
A real estate attorney may be involved in your closing process. Their job is to protect you from making a fraudulent purchase during the final stages of the buying journey. A real estate attorney is not involved in every home purchase, but is required in several states – Connecticut, Delaware, Georgia, Massachusetts, New York, North Carolina, South Carolina, and West Virginia. Certain states only require a real estate attorney to be present at closing in select areas:
- Alabama
- Arkansas
- Illinois
- Iowa
- Kansas
- Louisiana
- Maine
- Mississippi
- Nebraska
- New Hampshire
- New Jersey
- Ohio
- Oklahoma
- Rhode Island
- Tennessee
- Vermont
- Virginia
Consult your lender regarding the requirements in your area.
What Does A Real Estate Attorney Do?
In some cases, the real estate attorney will handle the title search instead of the title company. Once they’re satisfied that there are no liens against a property, they’ll turn the results over to a title company to issue title insurance.
Your real estate attorney may also represent you during the closing, explain all legal paperwork to you and ensure that you have all of the knowledge and information you need to go through with the home purchase.
Let’s say you’re required to hire a real estate attorney, or you want additional legal protection during your purchase. Your real estate agent can help connect you with local real estate attorneys in your area.
8. Tax Advisor
A tax advisor might not be the first person who comes to mind when you think through the home buying process, but they can be a very helpful asset when buying a home. There are several smart reasons to consult a tax advisor when buying a home, including:
- Understanding any tax implications or penalties if you’re considering withdrawing funds from your 401(k) for a down payment
- Purchasing an investment property
- Using business funds to pay for a down payment
- Purchasing a home with gifted funds
Your real estate agent can answer some of your tax questions, but it’s always best to seek professional legal advice. Do you already have a CPA or tax advisor you use for your personal or business taxes? They’re a great resource to start with. You can also ask your real estate agent or colleagues to recommend someone trustworthy.
9. Notary Signing Agent
A notary signing agent is an impartial person who acts as a witness during the signing of your closing documents. This person’s main job is to ensure you’re completely aware of what you’re signing and notarize the documents by adding their signature, seal and notary commission (license) so your state will accept them for proper recording.
The notary signing agent is responsible for mailing the completed documents for official recording. A remote online notarization may be an option for your remote closing. Check with your agent or REALTOR® for the most current guidelines and procedures.
