Assembling your homebuying dream team? Here’s who does what.
Considering purchasing a home in 2023? You'll need to form a team — a real estate agent and a loan officer to help you get into your new home as quickly as possible.
But the last thing you want is to waste time duplicating effort — or worse — skipping essential steps in the home buying process. So, this blog post will cover some of the most important responsibilities and who on your team should handle them.
It's not a complete list by any means, so make sure to speak with your loan officer and real estate agent to see what other items and steps they'll be working on and what they'll need from you.
What are you (the buyer) responsible for?
SELECTING A REAL ESTATE AGENT AND LENDER
First things first: it's entirely your choice who you use to help you with your househunting and help negotiate a purchase. It's also your choice of who you ask to loan you the money to complete the purchase.
Your real estate agent may recommend a particular lender. Or the opposite could happen where a mortgage loan officer has a short list of reputable real estate professionals they may have had good experiences with.
Our suggestion? Start by choosing a lender and getting pre-approved for a home loan. This sets a homebuying budget to work within, saving you a lot of time when house hunting. Then go find a good realtor.
Read more about how lenders and real estate agents work together.
SECURING HOMEOWNERS INSURANCE
Homeowners insurance is meant to protect your property, the structure and the belongings inside the home against loss from fire and other hazards. And since your lender will have skin in the game (potentially owning more of the home than you do at the start), they'll require you to take out a homeowners insurance policy to protect their interest. Think of it as collateral against the property.
Your lender probably won't suggest which insurance firm you get your policy from, but they may require a minimum coverage amount. Remember, you'll need to secure your homeowner's insurance before closing. You won't get the keys to your new place without it.
Read more about homeowners insurance.
DETERMINING IF YOU NEED FLOOD INSURANCE
While most homeowner insurance policies don't cover flooding, lenders may require it even if your property is in a moderate-to-low-risk area. That's because climate issues are changing rain patterns, and the possibility of new flood zones being added to flood insurance maps is more common.
As with homeowners insurance, if you're required to get flood insurance, do it before the closing date. And be sure to send proof of coverage to your loan officer.
Read more about flood insurance.
TURNING ON THE LIGHTS (AND EVERYTHING ELSE)
Just before closing, transfer utilities from the seller's name to yours. If you're moving from one home to another in the same community, this should be simple. But if you're moving to an area with different service providers, establishing new accounts might require more paperwork and time.
It might be wise to ask the seller about average costs for utilities so that you can anticipate additional monthly expenses. Utility providers and other services you'll want to hook up can include:
- Your landline phone (if you still use one)
- An internet/cable provider
- Electricity services
- Natural gas company
- Water services
- Landscaping
- Dogwalkers
- Cleaning services
- Pest control
What is the real estate agent responsible for?
GETTING THE HOME INSPECTED
You can avoid — or at least prepare for — potentially costly issues by having a home inspection set up by the real estate agent you're working with. A home inspector will assess the structure, electrical wiring, venting, heating/air, appliances and roofing.
Typically, your real estate agent will set up the home inspection on your behalf after you make an offer, sign the contract and put down your escrow deposit. Ask them to schedule it early to allow for any repairs or price renegotiations that might be needed. You'll want to be present, so make yourself available.
LOOKING FOR INTRUDERS
To determine the possibility of damage from bugs, mildew or dry rot, inspect the place for termites and moisture — especially if it's not new construction. Licensed inspectors can check the foundation, doors, windows, roof, etc., to ensure there's nothing present that could make the underlying wood unstable.
Your sales contract will state who pays for these inspections, and the real estate agent will likely schedule the appointment. If not, they will at least be able to refer you to reputable companies.
Read more about exterminators and other professionals to contact.
ORGANIZING A FINAL 'WALK-THROUGH'
Buying a home is a big purchase, and you'll want it to be as close to perfect as possible. So, just before closing, you and your agent will request to take a final walk-through of the home.
This is your last opportunity to make sure that all agreed-upon repairs have been made, so you may want your home inspector to join you. And ask that it be cleaned professionally before closing. That's one last thing when you move in.
Read more about what to expect just before closing.
What is the lender and loan officer responsible for?
SECURING AN APPRAISAL
A new home appraisal is needed to help you and your lender confirm you're not overpaying for your home. The appraisal is a written estimate of the value of the home you're looking to own.
The lender will retain an appraiser, but the appraisal cost will come out of your pocket — usually paid as a fee due at closing.
ORDER THE TITLE SEARCH AND TITLE INSURANCE
In real estate, searching public records that affect the title — a legal document proving property ownership — is called a title search. Once you sign a contract to buy a home, your loan officer will hire a third-party title company to search records in the county the property sits in.
Documents are analyzed to ensure the seller is the verified homeowner and that the title has no “defects” in the form of liens or outstanding debt against the property. They'll also make sure that nobody else can claim ownership after the transfer of sale and that the property didn't change hands in events like a divorce settlement or a will. Once completed, your loan officer will order title insurance, which will protect both you and the lender if uncovered issues pop up down the road.
Read more about property titles.
MANAGING THE CLOSING
Before you're officially a new homeowner, you must go through a meeting called a closing — the final step in the home buying process. The timing will be negotiated during the sale. Usually, it's 30-60 days after your offer is formally accepted. That gives you, your real estate agent and your lender enough time to handle all the above steps, but there can be delays out of your control.
Appraisal issues, title hiccups or home inspection discoveries can all put the breaks on a smooth purchase process. If all goes well — even if there's a slight delay — the ownership of the property is transferred from seller to buyer and the keys are handed off to you!
Ready to get started?
We hope we've addressed some of your questions about your relationship with your real estate agent and loan officer. Remember, real estate agents love working with pre-approved buyers — their motivation and your confidence in your budget gives you a competitive edge over other homebuyers.A Movement Mortgage loan officer can help you decide what you can afford and determine if you're pre-approved for that amount. Find one here.
