Residential real estate transactions can be highly complex deals under the hood. Buyers and sellers rarely know just how complicated it is. Keeping everything straight requires hard work and dedication from an entire team of individuals who, while they may work separately as legal entities, all have to work together to get a deal done.
CityHome Collective, a Salt Lake City real estate brokerage and design firm, says there are five key players in every residential real estate deal. It is incumbent upon both buyers and sellers to understand these players and what each one brings to the table.
1. Real Estate Agent
The most visible player is the real estate agent or broker. Know right from the start that there is a difference between agent and broker. A real estate broker is a person who is not only licensed to buy and sell real estate, but also licensed to own and operate an agency. Agents are sales professionals who work under the umbrella of a real estate broker.
As you probably know, there are both buyer’s and seller’s agents. Each one has a fiduciary responsibility to the client. A buyer’s agent must always represent the buyer’s best interests: the seller’s agent always represents the seller’s interests. Dual agents can represent both buyer and seller.
2. The Lender
Next up is the lender. The lender ultimately provides financing for the transaction. Its role is incredibly important, given that any deal could be scuttled entirely by a lender who decides to back out for whatever reason. Lenders can be retail banks, credit unions, private mortgage lenders, etc. It is wise to work with a trusted lender with a verifiable reputation.
3. Home Inspector
Once an offer has been both tendered and accepted, the buyer typically brings in a home inspector to give the property the real looking over. It is the inspector’s job to let the buyer know of any structural, mechanical, or cosmetic issues that could pose problems. Nearly all sales offers are submitted on a contingency basis, meaning they can be withdrawn if a home inspection reveals serious deficiencies.
4. Real Estate Appraiser
While the buyer brings in a home inspector, the lender sends an appraiser to look at the property as well. A real estate appraiser is not necessarily looking for deficiencies. Rather, their job is to determine the value of the property based on its condition and in comparison to similar properties in the general area. An appraisal must exceed the amount being borrowed or the lender will likely back out.
5. Real Estate Attorney
Perhaps the most important player is the real estate attorney. This is an attorney who handles all of the legal aspects of the transaction. Most real estate attorneys are highly specialized, focusing only on this one area of law. The attorney’s job is to look over all the paperwork, put together any additional documents necessary to complete the transaction, and facilitate closing.
Real estate attorneys also work with title companies prior to closing. A title company researches the history of the property to ensure that the seller is the legal owner and has a legal right to dispose of it. Title searches reveal any outstanding claims that have to be settled at, or prior to, closing.
There may be other professionals involved in the sale of residential property. For example, a seller may want to have a survey done. In the end though, the five key players listed here are the most important. They do the bulk of the work on your typical residential real estate deal.
