Who’s Involved in the Home Buying Process

By Mandy Menaker – Updated September 8, 2023

Buying a home is an enormously complex process that involves several steps and stakeholders. The good news is that you don’t have to navigate the process alone. From real estate agents to mortgage lenders, and attorneys to title companies, a diverse array of supportive professionals are available to guide you through the process, ensuring that you eventually hold the keys to your new home.

In this article, we’ll shed light on the different types of professionals available to support you throughout the process, while also distinguishing between those that are essential and those that are optional. Here are the key players we’ll introduce:

Real Estate Agent

Optional, though highly recommended

Your real estate agent plays a pivotal role as your primary guide throughout the home search. While you could technically manage without a licensed realtor, it’s highly recommended to prioritize finding a reputable agent who can double as your coach and cheerleader.

There are two main types of agents:

Selling agents represent property sellers by managing showings, marketing homes, and offering guidance.
Buying agents advocate for you as the buyer. A buying agent assists you in exploring properties and securing an accepted offer. Most often, their commission is covered by the seller, making their expertise a cost-free asset for you.

A good buying agent will help you pinpoint the best neighborhoods for your unique preferences, priorities, and budget. They can unveil hidden gems and upcoming listings, and help you to narrow your search. Your agent will also be able to advise you on local market trends, including whether a house has been appropriately priced based on factors including home condition, location, and size.

As you prepare to make an offer, your agent will help you determine a competitive offer price, draft the formal offer letter, and negotiate on your behalf. Your agent will also be there throughout the closing process, explaining each step of the process while ensuring the transaction reaches a successful conclusion.

Mortgage Broker or Lender

Optional, depending on your financial situation

Unless you’re prepared to make a cash payment or have a personal loan arrangement with a family member, securing a mortgage broker or lender is likely necessary to finance your home purchase. Though they are similar, mortgage brokers and lenders are not the same:

A mortgage broker acts as a middleman between you and various lending institutions. They assess your financial situation and chat with a network of lenders to find the best mortgage options that match your needs.
A lender is the financial institution directly providing you with the loan for your home purchase.

More often than not, your real estate agent can refer you to a great lender or broker in their network. Or, you can search on your own through references or online.

One of the most valuable aspects of involving a mortgage broker is their ability to identify a range of loan options that align with your financial profile. They tap into their network, which often includes traditional banks, credit unions, and online lenders, to present you with a variety of choices. This can save you considerable time and effort, as they streamline the process of finding competitive interest rates, favorable terms, and suitable loan products. Take the time to shop around and compare quotes from multiple lenders – even a small difference in interest rates can translate into significant savings over the life of your loan.

It’s recommended to get pre-approval from a lender prior to submitting an offer. Pre-approval not only gives you an estimate of your home-shopping budget and monthly expenses but also prevents you from becoming enamored with homes exceeding your financial reach. Additionally, pre-approval serves as a proactive measure to identify any potential financial hurdles at an early stage. Should complications arise during this phase, you have the opportunity to address them prior to presenting an offer. Moreover, pre-approval reinforces your credibility as a buyer and can influence sellers to regard your offer with increased seriousness. Keep in mind that you’ll still need to go through additional underwriting to receive full approval after having an offer accepted on a home.

Home Inspector

Critical and strongly recommended

Your home inspector is a critical part of your support team. Once an offer has been accepted, your home inspector will ensure your investment is a sound one by evaluating the property’s condition, structure, and potential pitfalls. They’re equipped to identify both visible and hidden issues that could impact your decision or require costly repairs. From hidden water leaks that could lead to mold growth to electrical wiring that’s not up to code, your home inspector will prevent future surprises and potentially save you from purchasing a home that requires more work than you are willing to take on. It’s common for your real estate agent or lender to have inspectors in their networks to whom they can refer you.

Your involvement during the inspection process is vital. You either can choose to attend the inspection and ask questions directly to the inspector, or spend time afterward doing a detailed review of the inspection report, a document that summarizes the findings and often includes photographs, providing a clear picture of the property’s strengths and weaknesses. Depending on what the inspector finds, you may be able to use that information to receive credits or concessions from the seller at closing in order to address the issues.

Real Estate Attorney

Required in some states

Real estate attorneys are required in some states, and may also be required by your lender. These professionals shoulder the responsibility of preparing, assessing, and finalizing all contracts and documents pertinent to your home sale. Your attorney will ensure that the property is free from liens, encumbrances, and disputes that could jeopardize the transfer of ownership. They will also help you navigate any unusual seller requests, such as lease-back agreements. Regardless of whether you’re the buyer or seller, your attorney will ensure that all terms and conditions uphold fairness, transparency, and your best interests. Moreover, they guarantee adherence to local and legal regulations, providing a comprehensive legal shield.

You will not need a real estate attorney until you have an accepted offer. Your agent should be able to recommend someone they trust who can represent you.

Appraiser

Required if financing your purchase through a mortgage

An appraiser’s core responsibility is to impartially assess the value of a property. Employing a combination of in-depth market analysis, property inspections, and comparisons to similar properties, they arrive at an informed estimate that reflects the property’s current market value. This evaluation extends beyond superficial appearances, considering factors like location, condition, recent sales, and market trends.

If you are financing your purchase through a mortgage, an accurate appraisal will be required. Your lender will generally be the one to order the appraisal, and may also have a preferred professional to send.

Lenders use this evaluation to ensure that the property’s value justifies the loan amount. If an appraisal falls short of the expected price, it could jeopardize your financing. Conversely, an overvaluation could lead to borrowers taking on more debt than a property is truly worth. The appraiser’s meticulous analysis ensures that your mortgage aligns with the property’s genuine market value.

Your appraisal will also serve as a critical safeguard against overpaying for a property. Their objective assessment will provide an unbiased assessment of what you should pay for the property, absent your own emotional connection to the home.

Title Company

Required in some states

A title company will delve into historical records, legal documents, and deeds to establish a clear and unbroken chain of ownership, and to confirm that the seller has the legal rights to transfer ownership of the property.

The role of a title company also extends beyond research and insurance. They play a pivotal part in the logistical side of property transactions, managing the financial aspects of the closing process and ensuring that all legal requirements are met. Their involvement facilitates a seamless transition of ownership from seller to buyer.

Insurance Agent

Optional, though highly recommended

An insurance agent’s expertise spans various types of coverage crucial in the home buying process, with homeowners insurance and title insurance being two of the most pivotal and widely recognized. Together, these insurances weave a sturdy safety net, guarding both your financial investment and your emotional well-being.

Homeowners insurance offers protection against damages to the property’s structure and personal belongings. This insurance provides more than just peace of mind; it grants financial resilience in the face of unexpected events. Natural disasters, theft, or accidents could otherwise result in significant financial setbacks. With the right coverage, you’re shielded from the burden of shouldering these costs alone.

Equally imperative, title insurance offers protection against potential legal conflicts and claims arising from property title disputes. While your title company will meticulously investigate a property’s history, discrepancies in public records, fraud, and ownership disputes may still arise. Title insurance acts as an umbrella, shielding you from all claims and related losses, and ensuring peace of mind.

One additional type of coverage that may be required is private mortgage insurance (PMI). Typically PMI is required for buyers who put down less than 20% of a home’s value when approved for a loan.

Much like exploring different homes, finding the right insurance coverage demands careful consideration. Shopping around will ensure that you receive optimal protection without overpaying, and empower you to make an informed choice that aligns with your specific circumstances.

Financial Advisor

Optional, depending on your financial situation

Though not obligatory, enlisting the services of a financial advisor is a strategic decision that can yield substantial benefits. These professionals assess your current financial situation, goals, and aspirations to support you in making well-informed choices. Financial advisors will help you understand the implications of mortgage payments, property taxes, insurance, and other associated costs, ensuring that your investment remains within your means. Furthermore, they will aid in creating a long-term financial plan that accommodates your new responsibilities as a homeowner.

Going beyond the immediate transaction, a financial advisor ensures that the purchase of a home is a well-calculated step toward your broader financial aspirations. They analyze the impact of the investment on your overall financial portfolio and make recommendations that complement your goals.

Contractors and Repair Professionals

Optional, though highly recommended

Based on the findings of the home inspection report, you may need to hire contractors and repair professionals to address any outstanding issues. From repairing leaky roofs to addressing plumbing concerns, these professionals ensure that your home is functional and well-maintained.

Alternatively, you may opt to hire contractors for cosmetic enhancements like kitchen remodeling or interior painting, adding a personalized touch to your living space.

The importance of hiring reputable contractors and repair professionals cannot be overstated. Their craftsmanship ensures that repairs are done to the highest standard, enhancing both safety and aesthetic appeal. By choosing professionals with a track record of excellence, you’re investing in the integrity of your property and setting the stage for a comfortable and worry-free homeownership experience.

Final Thoughts

There are a lot of individuals and companies who aid in the purchase of your home. Real estate agents provide guidance in your search, while mortgage brokers and appraisers assist with financing. Inspectors and contractors ensure your home’s readiness, title companies guarantee legality, and insurance agents offer protection against uncertainties. Each of these experts plays a critical role in ensuring your successful purchase. It’s crucial to invest time in assembling the right team by seeking out qualified, highly-rated professionals for every phase of the process.

Feeling uncertain about where to begin? Your real estate agent can offer recommendations for trustworthy companies and professionals to engage throughout the journey. Armed with their expertise, you can turn your aspirations into reality and close on your dream home.

Divvy’s Home Buying Team Has Your Back

If you’re dreaming of homeownership but can’t yet qualify for a mortgage, either due to low credit or savings, Divvy may be able to help. With Divvy, you can get into your dream home now and rent it while you save toward homeownership. While you’re renting and saving, you’ll have the option to purchase the home at a preset price throughout your lease, and you can walk away with your savings (less a surrender fee) if you change your mind.

And, our home buying team is no different than the professionals mentioned above. You’ll have the option to work with your own real estate agent or one of ours, and you’ll have a Divvy advisor with you along the way to answer any questions and help you make an offer on a home you love. Just like a traditional home purchase, you’ll still go through the inspection, appraisal, and closing processes and get the full home buying experience. See if you qualify and get started!