Professionals Involved in the Purchase of a Home

With the purchase of your new home you will be involved with a number of professionals in addition your realtor.  The following descriptions explain the services they may provide.

APPRAISER:

Your lender will require an appraisal of your home to make sure the house will be adequate security for the amount of the loan you have requested.  Generally, when you apply for a mortgage, you pay for the appraisal up front, and the lender selects the appraiser.  The charge is based on local price ranges, typically upwards from about $200.

HOME INSPECTOR:

Although the your real estate associates involved in the purchase will disclose to you any known defects or adverse matters of material significance affecting the property, they are not expert in these matters.   The property inspection will accomplish the following:   Provide a detailed report on the conditions of the structure and the mechanical systems that re not visible or may be unknown to the purchaser or the purchaser’s representatives. After receiving the inspection report, you can either bring these conditions to the attention of the seller as further negotiations, or go ahead with the purchase as the offer stands with a better idea of what the actual condition of the home. You will be able to plan ahead and budget for future maintenance or purchases as a part of your home-maintenance planning.  If your Offer-to-Purchase contract is prepared prior to inspection, be sure to include a clause that the sale is contingent upon structural and/or mechanical, or other inspections, and specify when the inspection is to be carried out.  Most real estate associates will recommend this procedure as a standard course of action.

A reputable inspector will provide you with an evaluation of the major systems in the house, including foundation and general structure, condition of the roof, condition of the heating and cooling systems, condition of the plumbing and electrical systems, and any other specific inspection that you may require.  In addition, the inspection may provide you with the age, anticipated life expectancy, and estimated replacement costs of items in the home.  You should be present during the inspection.  Come prepared with a list of questions and concerns that you have about the property.  It usually takes about two to three hours, and the conversation between the buyer and the inspector can be invaluable.  If your questions are limited to specific areas of a house, most inspection firms will be happy to assist you in evaluating only one or two systems.

In addition to the oral report that will be given during the inspection, you should also receive a detailed, typewritten report within a few days.  The fee for an inspection varies from area to area and usually depends on the size of the building.  Inspections typically cost between $200 and $300.  It is a good idea to shop for a competitive price and determine what kind of reports will be provided to you.  The inspector should be licensed in a building-related field: architects, contractors, and structural engineers are good examples.  Ask how long they have been in business, if they are insured or bonded, and ask for references from previous customers.

BUILDING CONTRACTOR:

You may need to make changes to your new home to make it suit your family’s lifestyle.  If you are planning to hire professional assistance for any remodeling projects, choose your contractor carefully.  Ask for recommendations from several sources; then check each company out with the Better Business Bureau and other references.

INSURANCE AGENT:

In order to obtain a mortgage, home purchasers are required to have hazard insurance, or fire and extended coverage, as well as title insurance.  You may also be required to have private mortgage insurance, depending on the size of your down payment.  These types of insurance are required for the lender’s protection.  Private mortgage insurance, which is necessary for low-down payment loans, covers the lender’s loss should you default on your loan for any reason.  If there’s a defect in the title to the house, the title policy will cover the lender’s losses and legal fees.  And in the event of loss due to fire, and you elect not to rebuild, the fire policy will pay the lender first, before you.  Of course, you may want to have this type of coverage for personal protection as well.

Your lender will inform you of whether or not you need mortgage insurance, and how much it will cost.  The closing/settlement agent will tell you what the lender’s title policy will cost and give you the option of buying the same policy for yourself.  Except for the private mortgage insurance, you are free to consult your own insurance agent for the proper coverages.

ATTORNEY:

All real estate transactions can potentially have problems.  If you are at all concerned about any part of your real estate transaction, obtain legal advice from an attorney.  Most attorneys charge by the hour for this service, and attorneys, like doctors, specialize, so it is wise to consult a real estate attorney.

The proper time to consult an attorney is after you’ve negotiated a contract, but well before you sign it at close of escrow which signifies your full acceptance of the contractual terms as written.   It is advisable to do this as soon as possible after your offer-to-purchase is accepted by the seller:  a delay could allow other purchasers time to present their offers on the home.  After your escrow is closed and you have an executed contract, there’s little an attorney can do but tell you where you went wrong.  One option is to write the contract contingent upon your attorney’s review within a reasonable period of time.

LENDER:

This is a universal term for any organization that makes home loans.  Such entities include banks, savings and loans, commercial banks, credit unions, and insurance companies, and private mortgage companies.   A good lender will be able to help you decide which type of mortgage is the best for you.

In addition, a good real estate agent will be capable to helping you find a quality lender, a good rate, or the right loan – or all three.

Escrow Officer

Also known as an escrow or settlement agent, this person is usually a title attorney who not only handles the paperwork of the transaction, but also searches the property’s title to make sure it’s unencumbered and can be transferred without problems.

Although both you and the seller will pay the settlement agent a fee, he or she is neutral and does not represent either of you in the transaction.  He or she represents the lender and must follow the lender’s instructions, as well as the terms of the sales contract between you and the seller.