If you are a first-time homebuyer in California, you may not have any idea how the process works or who the people are that you'll encounter on your home buying journey. Here is a brief description of who the players are and how they provide you with service:
The Buyer's Agent - The buyer's agent will be YOUR real estate expert in the transaction and should be in a position to answer any questions that you may have in addition to helping you find your dream 1st home. Make sure to ask your agent about their certifications, affiliations and ask for references from recent clients. The custom in California is that your agent will be compensated by the seller (so no 'fee' to you) but you may be asked to sign a Buyer's Representation Agreement to formalize your relationship.
The Loan Officer - Next to your agent, this individual will arguably be the most important person during the purchase process. The loan officer (lender) will provide you with an initial pre-qualification when you first start the purchase process and then will collect the documents required to get your loan approved and funded once you have an accepted contract. When choosing a loan officer make sure to ask for an understanding of their fees. They will be required to provide you with a 'Good Faith Estimate' (GFE) during the loan process - make sure you ask them for this so you fully understand what costs you will be expected to pay.
The Escrow Officer - 'Escrow' coordinates the paperwork between the different parties involved in the sale. They are a neutral 3rd party to the transaction and typically they are chosen by the agent representing the sellers. During the early stages of the transaction you can expect to receive 'Escrow Instructions' which outlines the policies and duties of the escrow holder. The escrow instructions also capture the main points that were included in the purchase contract. Often you will sign your loan documents and related paperwork at the escrow office in the final days before your purchase is complete - however it is not unusual to have this handled by a mobile notary who will meet you at a location convenient for you.
The Title Officer - 'Title' is responsible for making sure that the actual transfer of the property is properly recorded and that anyone who had a lien (was owed money) by the prior homeowner is paid. As part of the purchase process, your lender will require 'title insurance' which is basically a guarantee that the people selling the property are the true owners. Any later problems with ownership are usually taken up with the title company as part of the insurance that they provide. Title companies will provide a 'Preliminary Title Report' early on in the purchase process so that you as the buyer will know what rights (if any) other parties may have. Typical things noted on the report will be utility easements and/or outstanding liens that the seller will need to have resolved (paid) for the sale to be completed.
The Seller's Agent - The agent representing the sellers (listing agent) represents the interests of the sellers and has a fiduciary (financial, money,etc.) duty to the seller. The listing agent will coordinate the required paperwork that needs to be completed by the sellers and will usually deal only with your agent, not with you the buyer directly. In some cases, the listing agent and the buyer's agent (your agent) may be the same person or work for the same broker. In this case you need to fully understand that the 'dual-agent' has a difficult job because they need to best represent your interests as well as the seller's interests which often conflict.
The Inspector - Shortly after having your purchase contract accepted by the sellers, you should plan to have the property inspected by a professional inspector. Your agent may have some recommendations for you as to who could perform the general inspection but you should be sure to check credentials yourself as well as ask for references. The general inspection will usually run from 1 - 3 hours and you should expect to have the inspector review with you the main findings at the home when finished. The fees vary (but you usually get what you pay for) and before beginning the inspection it is customary to sign an inspection contract covering what is included and excluded from the inspection scope. It is also customary to pay the inspection fee at the start of the inspection.
The Appraiser - Your lender will need to have an independent assessment of the the value of the property to make sure that the price is deemed 'fair'. It is unlikely that you will meet the person completing the review of the property but you will be expected to pay a fee which your lender may or may not ask you to pay for up front.
The Underwriter - Once your loan officer has received all of your documents and had reviewed everything your 'file' will move from the loan officer into underwriting. The responsibility of the underwriter is to scrutinize all the documents and make sure that everything truly is in order on the file and that your loan should be funded. The underwriter will often times provide a conditional approval with certain things that are needed prior to 'docs' and prior to 'funding'. Anything that is a condition for prior to 'docs' need to be resolved before the lender can have the mortgage documents written with your name. Anything that is conditioned as prior to funding just needs to be completed before the lender will release the money to escrow.
The Recorder - After all the documents in your purchase are signed, the escrow office will coordinate the recording of the deed via the title company. 'Recording' is the act of making public that you are the new owner of the property. Once the documents are stamped in and received by the County Recorder the escrow office will 'confirm' that the property is transferred and you are the new owner!
Keep in mind that YOUR agent will be a critical partner in your home-buying process. If you are contemplating a purchase in the Inland Empire and haven't already selected an agent to help you, please give me a call for a no-obligation interview!