This is the fourth installment of our 7 part series attempting to familiarize first time homebuyers with the real estate purchase process. Even if you are not a first time homebuyer, and have purchased or sold a home before, you may find this series an informative refresher.
In our last three articles for First Time Homebuyers, we discussed, in general terms, the people you will work with, the significance of an inspection, and what you can expect while working with your lender or mortgage broker. In this installment, we will briefly review the roles played by your real estate agent and your attorney.
The Agent
Real Estate agents work for and with real estate brokerages. Most well sized brokerages represent both buyers and sellers. However, some specialize in one of the two. The real estate agent for the seller will work with a brokerage to list the property, advertise and market it, and show it to potential buyers. This can include an online listing, online remarketing, individual walk throughs, and open houses. With regard to the purchaser, the real estate agent will work with a brokerage to identify homes which you may be interested in purchasing. The real estate agent will represent you throughout the sale, from your initial search up until closing, but the primary job of the real estate agent is to get you to the point of contract, when the matter is typically handed over to an attorney. The real estate agent also works with the attorney to make sure the sale is moving forward as quickly as possible. Prior to referring the contract to the attorney, you will work with your agent to negotiate price, put in an offer, review the inspection and negotiate credits or remedial work. You may also want to purchase some of the items associated with or within the home, such as specific décor, furniture, or a patio set. Once the terms are agreed to, the agent will send what is commonly referred to as a “deal sheet” to the attorney you have selected. The attorney will use the deal sheet to negotiate a contract. The agent is paid after the closing out of the proceeds of the sale.
Buyers often wonder if obtaining their own agent will increase the cost of the transaction. They are typically concerned about the amorphous group of expenses referred to as “closing costs”, and whether having a second agent (other than the listing, or seller’s, agent), involved will increase the amount they ultimately have to pay. In the vast majority of cases it doe snot. Agents working with brokers for purchasers usually receive a portion of the selling broker’s fees. In most cases, because the seller often bakes the broker fee into the purchase price, you are paying the broker fee whether you have an agent or not. If you have any questions, you should clarify with your broker and agent how their fee is paid.
The Attorney
Your attorney is another professional you will work with throughout the transaction. If you are thinking of purchasing a home, it is never too early to hire an attorney. It is useful to have one available once it is time to negotiate and draft the contract, and having one quickly available ahead of time will help you quickly obtain a contract, taking the home you want to purchase off of the market. Many of the material terms, such as price, credits, closing date, and any potential repairs, are negotiated by the agent. The Attorney negotiates the finer points of the contract, such as timing to provide your commitment letter, any fees due to you in the event of a potential holdover, and rider provisions such as limiting the seller's exposure to repair costs. Your attorney will go through the contract with you, answer any of your questions, and instruct you on how to execute the document and transfer your down payment. Your legal rights and remedies under the contract may also be explained by your attorney, and your attorney will answer any specific questions you might have.
After the contract is signed, the attorney will work with a title company to ensure that the title is marketable on or before the closing date. The attorney will instruct you on any obligations you have under the contract, including how and when to make any payments, where the closing will take place, and will prepare the file for the closing. At the closing, the attorney will walk you through the paperwork, explaining each document, and making sure all of the documents are properly executed. You typically pay your attorney at the closing as well.
Our office would love to be part of this fantastic step, and to help guide you through one of the most important steps you can take to secure a bright future for you and your family. If you would like to discuss a potential home purchase, don’t hesitate to call us. You can reach us by phone by navigating to our contacts page, or by calling us a (914) 214 9032 or (718) 614 8739.
Some helpful links in researching real estate brokerages are: