Finally, your closing date has arrived. Regardless of whether you are the seller or the buyer, a tremendous amount of work has gone on behind the scenes to bring you to “the closing table.” As Laura and I (Amy) were talking earlier this week, we both realized that one of the common questions we get from our clients when they get to the closing table is, “Who are all of these people?” From attorneys to brokers to title closers, a conference room can fill up pretty quickly on closing day. As a client, you may only interact directly with your broker, your attorney, your lender, and perhaps the home inspector. But, there are many other professionals whose services are key in getting you to that closing table. Here is a look at the 6 key players to your real estate transaction:
Real Estate Broker/Agent
If you are looking to sell or purchase a property, this may be the first professional you speak with – a real estate broker/agent. Real estate agents and brokers specialize in transactions relating to the purchase, sale, and lease of properties. Real estate is their craft – they work closely with their clients to gauge which property is suitable, which neighborhood is desirable, and serve as a conduit for the client to many of the other professionals we will review in this blog post. While you are not required to work with an agent or broker, clients can reap huge benefits by working with an agent or broker who specializes in the real estate area of their interest. For their service, real estate agents are typically paid at closing by a commission calculated as a percentage of the purchase price of the property.
Mortgage Lender
Unless you can purchase a property outright, a prospective buyer will work with a loan specialist from their mortgage lender in order to be approved for financing for their desired property. A buyer will need to supply financial information to the lender, such as the origin of down payment funds, proof of income, prior bank statements and financial documents, etc. The mortgage lender will determine whether a buyer is approved for funding and will also determine to what extent the lender will extend financing in consideration of the property to be purchased.
Attorney
From the contract stage through closing, an attorney will provide invaluable support, guidance, and legal perspectives to the seller and buyer of real property. An attorney is tasked with reviewing and/or drafting the contract of sale, preparing any riders to the contract to modify and revise the existing terms of the contract, act as escrow agent for deposit monies, and assist their client with inspection repair requests. An attorney will also review the title documents prepared for the subject property and help their client navigate any other issues that may arise between contract and closing. An attorney is typically paid at closing for their fees and disbursements relating to the transactions.
Title Company/Closer
Oftentimes, this professional is the most unfamiliar to our clients because, unless you are buying and selling real estate often, your interaction with a title company and/or title insurance carrier is extremely limited. However, a title company is crucial to get a transaction to the closing table. A title company is hired by the buyer to perform many tasks, but specifically, it conducts a title search, which is an examination of the records concerning a property to ascertain the current ownership of the property and whether there are outstanding liens, judgments, foreclosure or bankruptcy proceedings and/or other encumbrances on the property that could impede the sale of marketable title to a purchaser. The title company will also coordinate the performance of a survey for the property. Also, once a title commitment is issued, indicating that title to the property is available to be transferred pending the clearance of certain conditions, title insurance can be offered to the lender (if there is one) and the buyer. Lastly, the title company will oftentimes act as the escrow and settlement agent for a transaction, and so when you hear the phrase, “title closer” at the closing table, know that this individual is from the title company and helping you cross the transaction finish line.
Inspectors and Appraisers
These two professionals – inspectors and appraisers – offer distinctly different services in the course of a real estate transaction. However, these two roles are often confused. A property inspector inspects the subject property and improvements for specific defects, and the inspector is typically hired by a buyer, although it can also be hired by a seller to identify certain parts of the property that need improvement. An appraiser, on the other hand, is typically hired by a lender to ascertain what the fair market value is of the property so that the lender can feel comfortable and confident in extending financing to a purchaser for said property.
Other Notable Professionals
In addition to the foregoing main actors of the real estate transaction, certain other professionals may be crucial.
Land Surveyor
A land surveyor is typically hired by the buyer. A surveyor measures the physical boundaries of a property as described in a deed, and he or she will also examine maps and title documents to ascertain any other visible or invisible features of the property that a buyer (and any other professionals) would want to know about before the closing is consummated, such as easements, rights of way, utilities, driveways, or any other physical structures upon or near the property. While a survey is not always required for title and lending purposes, we always recommend that our clients (as buyers) obtain an updated survey of the property before closing to make sure that the survey accurately reflects and depicts the property as close to their closing as possible.
Contractors
If the home inspection reveals certain defects that the seller agrees to address before closing, various contractors may be hired to perform said repair work. This coordination will usually fall upon the seller and his or her agent. If there is an oil tank on the property, an excavating company and/or oil tank removal company may be hired to decommission, remove, or examine the oil tank.
Municipal/Government Officials
Additionally, municipal officials may have to approve the issuance of a Certificate of Occupancy before the property can be transferred from the current owner to the new owner. For example, in New Jersey, certain inspections will be performed by the municipal officials, such as to ensure that there are no known safety or health hazards or Code violations that would prohibit the issuance of a Certificate of Occupancy. In New York, the municipality will have to issue a notice as to whether there are any open violations that need to be addressed prior to closing.
Laura and I (Amy) have had the privilege of working with some incredible professionals from the foregoing categories in our representation of our clients as both sellers and buyers in New York and New Jersey. It is extremely satisfying to watch the team of professionals work in concert to obtain the same result, notwithstanding each of our individual capacities – that is, the closing of a real estate transaction for the benefit of the parties involved. When we find a great team of professionals to work with, we recommend them to our clients and to our colleagues with the aim of making the entire transaction as smooth as possible!
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.
