Most people can count on one (or both) hands the amount of times they have bought or sold real estate in their lifetime. Given the amount of money typically involved, it is easy to see why real estate demands research, skill and industry experience to close with advantageous terms and, in a reasonable amount of time.
Below are brief descriptions of the key players who participate in a necessary process – if you are to meet your objectives. Be smart, take advantage of each player’s specialties as you begin to traverse the often-tricky real estate transaction landscape.
The Real Estate Agent
A real estate agent is an appropriately licensed professional available to assist both buyers and sellers entering the perplexing world of real estate. Real estate agents are trained to negotiate the sale or purchase of a property. However, they do so under the direction of a licensed real estate broker in accordance with state law.
A real estate agent’s responsibility varies from simply showing a property, to preparing contracts, to holding open houses and finalizing listing agreements, among others. Real estate is a nuanced business which varies from state to state (i.e. the laws of the state) and even from town to town within the same county. A seasoned real estate agent can be a wealth of knowledge about real estate law and local customs.
A REALTOR® is a licensed real estate agent, however, more specifically, they are members of the National Association of REALTORS® (NAR), a most influential industry trade group.
REALTORS® differ from real estate agents because their NAR membership requires that they hold themselves to more elevated ethical standards. They must comply with the NAR’s Code of Ethics when working the real estate industry.
An appraiser’s job is to determine the current, actual value of a property. Most of the work is done on-site by doing walk-throughs to determine the interior & exterior of the property conditions, and note any safety code violations. However, off-site work may be done to evaluate the current real estate market in the neighborhood to help determine the value of the property. Usually, the lender or financing organization will hire the appraiser. Because it’s in the best interest for the lender to get a good appraisal, the lender will have a list of reputable appraisers whom they have hired in the past.
The Title Company
A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for that property. Title insurance protects the lender and/or owner against lawsuits or claims against the property that result from disputes over the title. Title companies also often maintain escrow accounts — these contain the funds needed to close on the home — to ensure that this money is used only for settlement and closing costs, and may conduct the formal closing on the home. At the closing, a settlement agent from the title company will bring all the necessary documentation, explain it to the parties, collect closing costs and distribute monies. Finally, the title company will ensure that the new titles, deeds and other documents are filed with the appropriate entities.
The Mortgage Representative, or Loan Officer
A mortgage representative may work for a direct lender or a mortgage broker. Either way, a mortgage representative is responsible for helping buyers determine how much money they can afford to borrow and to advise them about suitable mortgage products for their situation. This is also the person a borrower would be in direct contact with, and who would facilitate the loan application and other paperwork that is required for the loan at their institution.
A Mortgage Broker
Mortgage brokers are licensed and regulated financial professionals who act as the bridge between borrowers and lenders. A mortgage broker doesn’t represent one institution, but works with many to “shop” for a loan and help you connect with a variety of lenders who best fit your financial situation and rate requirements. A mortgage broker represents the borrower more than the lender; His responsibility is to get the borrower the best deal possible, regardless of the institution. A broker can compare loans from a bank and a credit union, for example; a banker cannot.
Mortgage Lender, or Direct Lender
A mortgage banker works for a bank or similar lending institution in the loan department of a financial institution, a bank, savings and loan association or credit union which actually provides you the money for the loan; the mortgage banker is a direct lender. He works with the loan applicants to complete the mortgage process, from evaluating the property to gathering financial information and putting all the pieces together. He advises borrowers of the various loan options within that institution. A direct lender’s first responsibility is to the institution, to make sure loans are properly secured and the borrower is totally qualified and will make the loan payments. The banker can only make loans from his institution.
Whether you are in the market to buy a home or sell your current one, it is in your best interest to educate yourself on the buying/selling process and to know who you will be working with. Take this as a resource to begin the process of educating yourself and doing your own research; A well-informed homeowner is a prepared one!