While you’re looking for a home you like, whether you’re browsing listings online yourself or you’re working with a real estate agent, the initial part of the real estate transaction feels like a nice leisure walk, browsing the options available to you.

Once you’ve got an offer accepted, however, things start getting crazy and emails from people you’ve never heard of start popping up in your inbox.

It can start feeling out of your control, so we are here to break down who is involved in your house purchase and what they are doing for you.

Buyer & Seller

In just about any transaction, we have a buyer and a seller. In our situation, the seller is the current owner of the property, and the buyer is looking to purchase the property.

Ultimately, the buyer and seller are in complete control of the process, as they sign the purchase agreement and their approval is required for the transaction to move through all the critical steps.

Agent & Broker

Real estate agents are licensed professionals that the buyer and seller optionally can leverage to represent them in the transaction. Agents work for a broker, who oversees the transaction and is ultimately responsible for ensuring it is executed legally. When a seller or buyer signs a contract with an agent, they are actually signing with the brokerage.

If the seller does not have an agent, the property is considered “For Sale By Owner”, or FSBO.

If either the buyer or seller does not have an agent, in some states it is legal for a single agent to represent both the buyer and seller. This is called dual agency.

Some agents & brokers are called Realtors. Realtors are simply agents or brokers that are also registered with the National Association of Realtors and are paying them fees. This gives them access to a suite of exclusive benefits.

What do they do?

For the seller, they:

• Advertise the listing on a multiple listing service (MLS).
• Run open houses & set up showings for potential buyers.
• Recommend sale price based on comparable properties.
• Complete paperwork for offers & purchase agreements.
• Coordinate the transaction.

For the buyer, they:

• Schedule viewings.
• Provide information about the locale and its market.
• Schedule home inspections.
• Recommend buy price based on comparable properties.
• Complete paperwork for offers & purchase agreements.
• Coordinate the transaction.

How do they get paid?

• Today, the seller pays the buyer & seller agent commissions, which are usually 5-6% total and are often split 50/50.
• After the NAR settlement, the seller will only pay their agent’s commission. The buyer will negotiate a contract with their own agent and pay their commission separately.
• Agents split their commissions with the broker they work for.

Transaction Coordinator

A transaction coordinator is often used to assist with the administrative tasks from contract signing to close.

What do they do?

• Scheduling property inspections.
• Managing closing timelines.
• Ensuring due dates are met.
• Keeping track of submitted documents.
• Managing communication between parties.

How do they get paid?

• They are usually employed by brokerages to support agents with their functions.

Lender

When the buyer is using a loan to purchase the property, a mortgage lender provides this loan. Banks are often lenders, but not all lenders are banks.

What do they do?

• Provide different mortgage options.
• Schedule an appraisal.
• Work with the mortgage broker/buyer and underwriter to approve the loan.
• Schedule closing with title company and buyer.

How do they get paid?

• The buyer pays the lender loan origination fees, such as fees to lower their interest rate, known as “buying points".
• The buyer pays the lender mortgage interest over time.
• The lender can resell the loan to another lender for a profit.

Mortgage Broker

A mortgage broker serves the purpose of providing additional convenience to the buyer in figuring out their financing. They work with multiple lenders to offer more options to buyers and provide guidance to the buyer in figuring out their financing. They are usually experts in the local market and well-connected with local professionals, which can be especially important when finding a local appraiser that can provide an accurate estimate. Buyers do not have to use a mortgage broker, as they may find a lower rate with their own bank, trading off the convenience and local expertise mortgage brokers offer.

What do they do?

• Provide different mortgage options from different lenders.
• Provide general assistance for the buyer to work out financial scenarios.
• Coordinate with the buyer, underwriter, and lender to get the loan approved.
• Schedule closing with title company and buyer.

How do they get paid?

• The lender pays them a commission for bringing them the loan. Some lenders offer slightly inflated interest rates through mortgage brokers to compensate for this.

Underwriter

A buyer’s mortgage needs to get approved, even if they have a pre-approval letter. To do so, the lender requests an underwriter to verify the buyer’s ability to pay for the loan, known as underwriting the loan.

What do they do?

• Work with the buyer, lender, and mortgage broker, if one is involved, to underwrite the mortgage.
• Request documents from the buyer to evaluate their ability to pay the mortgage and down-payment, such as bank statements, tax returns, and pay stubs.
• Validate the mortgage value against the appraisal.

How do they get paid?

• The buyer pays them an underwriting fee.

Appraiser

An essential part of getting a mortgage approved by the lender is the appraisal, which verifies the value of the property. An appraisal is usually requested by the lender as part of the underwriting process.

What do they do?

• Assess the property’s value based on its condition, key features, and comparable properties in the area.

How do they get paid?

• The buyer pays them an appraisal fee.

Home Inspector

The buyer can order an inspection from a home inspector to evaluate the condition of the property and code violations.

What do they do?

• Inspect the property and provide an inspection report outlining issues that should be fixed.

How do they get paid?

• The buyer pays them a home inspection fee.

Insurance Agent or Company

Homeowners insurance is usually required by lenders. As part of the closing process, you’ll need to secure homeowners insurance with an insurance company or through an insurance agent.

What do they do?

• Provide the buyer with different options for insurance on your property.
• Provide documents proving insurance coverage to the lender.

How do they get paid?

• The buyer pays the insurance agent or company a recurring premium.

Title Company

A property’s title is the ownership record of a property. When the buyer purchases a property, the new mortgage is added to the lien. Before this happens, a title company serves the purpose of verifying there are no other claims and providing title insurance to the lender and owner’s title insurance to the buyer to protect them in the future.

What do they do?

• Conduct a title search to find existing ownership claims on the title, such as tax or mechanic liens.
• Provide protection against claims that may resurface in the future.

How do they get paid?

• The buyer pays for the lender’s title insurance
• The buyer pays for owner’s title insurance, if they choose to buy it.

Escrow Officer

An escrow officer is appointed to oversee a transaction as a neutral third party. They generally either are an attorney or work for a title company. Lenders and agents may appoint escrow officers they usually work with, but the ultimate decision on which escrow officer to use is up to the buyer.

What do they do?

• Open an escrow account.
• Handle deposits to and disbursements from the account.
• Work with the title company on title-related documents and addressing title issues.
• Communicate closing timelines and issues with closing, such as title issues.
• Preparing closing documents and overseeing closing.
• Submitting signed documents to the county recorder’s office.

How do they get paid?

• The buyer pays them an escrow fee.

Notary Public

A notary public is used to validate the signed closing documents, such as the transfer of the deed.

What do they do?

• Be present at closing to witness the signing.
• Stamp the documents with an official notary seal.

How do they get paid?

• The buyer pays them a notary fee.

Real Estate Attorney

In some states an attorney is required for various parts of the closing process, effectively serving as the escrow officer. The buyer and seller could also employ an attorney to represent them throughout the process. This could include involvement from drafting the initial offer letter to being at closing.

What do they do?

• Serve as the escrow officer, if required.
• Draft all paperwork.
• Be present at closing.
• Provide the buyer or seller with legal advice on the transaction.

How do they get paid?

• If they are the escrow officer, the buyer pays them an escrow fee.
• If they are representing the buyer or seller, their services are paid for by whom they are representing.