HOME PROCESS BUYING GUIDE
Overview of the Buying Process
Buyer’s Agent’s role and responsibility
While many Realtors both list homes for sale and represent buyers, many experienced Realtors learn over time which side of the transaction (listing vs. buyers) they really enjoy. In many cases successful Realtors develop teams who specialize on one side or the other because their special skill sets. We can provide referrals for Realtors who specialize in representing buyers.
Key Terms and Steps
Pre-Qualify for Loan – The first step is to understand how much of a house you can afford to buy. Not only do you need to know this, but your Realtor is going to want to know (and have it in writing) before they even start identifying possible homes in your price range. This is great first step for potential buyers because you learn current financing options available in the market, required down payments and estimates on your monthly payments. A lender will review your credit and can issue a statement providing preliminary loan approval up to a set amount.
Earnest Money Deposit
Most sellers will require an Earnest Money Deposit or “Down Payment” at the time the sale or purchase contract is signed. Market conditions and local customs drive the exact amount and your Realtor will be well versed in these requirements. The Earnest Money Deposit should be made payable to Sweet Settlements LLC and delivered to our office along with a copy of the contract. Please contact our office for wire transfer instructions if you prefer to send your EMD this way instead.
You will want to ensure the home you are purchasing does not have any major structural, electronic or plumbing flaws. Work closely with your Realtor and hire a professional inspector to identify any major problems or issues. If a reliable referral is needed, we would be happy to provide you some recommendations.
Because your new home will be used as collateral for your new loan, your lender will require that your home is insured against loss and damage. Be sure to coordinate this coverage early in the process and well in advance of the closing date. Your Insurance Agent will need to provide a proof of coverage and provide a binder for closing. A little Florida fun fact…if a hurricane is forecasted to make landfall, Insurance providers will suspend all new coverage’s until after the hurricane has passed and will require an inspection of the property. While very rare, closings have been delayed due to these powerful but infrequent summer storms. Please let us know too if you need a strong local Insurance Agent referral.
Within 24 hours before your closing, work with your Realtor to conduct a walk-through of the property to ensure that it is in good condition and that all issues and contract contingencies have been met. Basically, all inspections, repairs and anything that potentially impacts the buyer-seller agreements or pricing adjustments need to be completed and agreed to by an early date.
Typically in Florida, we see the Listing Agent; the sellers; the Buyer’s Agent the Buyer’s Lender; and the buyers attend the actual closing ceremony. All parties generally sit around a conference table, sign numerous documents to finalize the transaction, transfer of ownership and disburse funds. Because collected or wired funds are required, we can disburse funds and the Realtor can present the keys at closing.
Key Professionals in a Real Estate Transaction
Terms and Titles often overlap and can cause confusion in the real estate transaction process, especially if you are a first time buyer or you have been in your current home for a long time. First of all, let’s identify and review the key players in a typical real estate transaction:
Usually engaged by the local seller to market and sell an existing property. Generally assists in helping the seller get the highest possible price and best terms for their property. General market practice is for the seller to pay the total Realtor’s sales commissions which on average runs in the 6-8% of sales price with half the commissions going to the Buyer’s Agent if not one in the same. While these are customary local market pricing models, pricing can vary with each transaction.
Buyer’s Agent/ Realtor
Engaged by someone interested in purchasing a new home or property. Agent identifies prospective homes, engages the Listing Agent for showings and works with the buyer to get the best possible price and best terms. Typically, the sales commission to the Buyer’s Agent is paid by the Seller and generally ranges in the 3-4% of sales price. Again, while this is customary market pricing, pricing can vary.
Usually a bank or mortgage company that lends the money to the buyer.
Loan Officer/ Mortgage Broker
A representative of the lender, bank or mortgage company (sometimes referred to as the “LO”) who works directly with the buyer/borrower to pre-qualify the borrower, complete the loan application and assemble needed documents for loan approval.
The underwriter generally works in a separate lender department and provides detailed reviews of the borrower’s ability to repay the debt, reviews all assets and past credit history. The underwriter will also review property details, appraisal, survey and Title search reports before making the final loan approval.
In many cases, this will not be the same lender that you borrowed your money from to purchase the property. These institutions provide after-closing servicing to process your mortgage payments and manage your escrow accounts that go to paying your taxes, homeowner’s Insurance, etc.
Title Company or Closing Company
Our Company is the hub of the real estate transaction once the property is under contract. We work and communicate with all parties in the transaction and pull documents together to facilitate the transfer of Title and funding for the transaction.
Escrow Officer and/or Settlement Agent
Both Titles are commonly used interchangeably. Typically the role of the Escrow Officer is to disburse funds in accordance to the sales contract and lender instructions and the Settlement Agent facilitates the closing by preparing and recording all documents. In Florida, both functions are generally handled by one person with additional support from their treasury, accounting and Title departments.
Old Republic National Title
As the underwriter with the highest financial strength ratings in the Title Insurance industry, Old Republic National Title, after almost a century of insuring American households and commercial properties, continues to provide its customers with that sense of security and well-being they have every right to expect from an Insurance product. Locally, our company has served Florida residents since 1941. www.oldrepublicTitle.com