Real Estate Explained

Helpful explanations of acronyms, real estate speak and about the people involved in typical transactions.

  • Who Does What?
  • Who Pays What?
  • What Is a CMA and Why Do You Need One?

Who Does What?

Lender and/or Mortgage Broker

  • Defines loan amount for borrower
  • Qualifies borrower
  • Orders appraisal on subject property
  • Submit borrower’s information to underwriter for approval
  • Orders loan documents to be sent to escrow for borrowers’ signature
  • Documents returned to underwriter for final inspection (correct signatures/dates)
  • Funds (loan amount) ordered sent to escrow trust account for agreed to disbursement by escrow officer
  • Escrow records documents from seller to buyer’s name and Deeds of Trust for Lender
  • Escrow usually takes 30-60 days of which 3 weeks is the average loan process time at this time

Escrow Officer

  • Coordinates all principals of purchase and sales contract
  • Orders preliminary Title Report on subject property to confirm legal information on subject property, owners of record, current taxes, deed/lien information and CC&R’s of record
  • Makes certain that all “conditions” are met as per instructions, agreed to by Buyer and Seller
  • Coordinates all information between both agents, title department, lender and inspectors, etc.
  • Gathers all documentation regarding new and old loans, inspection reports, repairs and title requirements, etc.
  • Arranges for buyer and seller to sign all Escrow and Title papers
  • Record all documents required to transfer title from seller to buyer including a Grant Deed, Deed of Reconveyance and Trust Deeds
  • Disburses all funds necessary for old loan payoff, inspections, demands of payments for repairs, etc.
  • Arranges for seller to receive proceeds of sale

Buyer’s Agent

  • Represents buyer with purchase of property, loan and escrow process
  • Helps buyer locate lender who tells buyer the price of property they qualify to buy
  • Helps buyer find suitable property
  • Advises buyer and helps negotiate the price and term through sellers agent
  • Reviews all property information from Preliminary Title Reports and liens.
  • Coordinates all information between buyer, lender, escrow, inspections and other agent
  • Guides buyer through process, loan, required insurance, escrow and closing
  • Takes buyer on “walk through” inspection of property to note any problems that need to addressed during escrow period
  • Arranges to meet with any inspectors or property (with or without buyer present)
  • Usually accompanies buyer to escrow for loan and escrow signing
  • Delivers all keys to property after the property records from seller to buyer

Seller’s Agent

  • Represents seller of property
  • Orders property profile from title company to determine ownership, liens, legal description, square footage, bedrooms, baths, roof, heat/air, or special amenities such as a pool, workshop, etc.
  • Does market research and tells seller the market value of property from recent sales
  • Lists property on Multiple Listing Service, reaching almost every Realtor® in the community
  • Markets to Realtors®, advertises, holds open houses, introduces to Multiple Listing Service
  • Oversees necessary repairs of property and maintenance during listing period
  • Negotiates price and terms of purchase contract with buyers agent on behalf of the seller
  • Opens escrow with the title company
  • Coordinates and disseminates information between buyers’ agent, seller, escrow, property inspections and any other involved in sale
  • Oversees inspections and any other repairs agreed to in contract
  • Usually meets with seller to sign escrow/loan documents
  • Arranges pickup and deliver all keys to property and instructional information on any equipment, warranties, etc.

Who Pays What?

The Seller’s Will Generally be Expected to Pay For:

  • Real Estate Commission
  • Title and Escrow Fees
  • Document preparation fee for Deed
  • Document recording charges that effect the seller
  • County Transfer Tax ($1.10 per $1,000 of sales price) This varies with county and city
  • Any loan fees required by buyer’s lender
  • Notary fees – Sellers Documents
  • Termite inspection and repairs according to contract
  • Any city transfer/reconveyance tax
  • Special delivery/courier fees
  • Payoff of all loans in seller’s name
  • Interest accrued to old lender, Statement Fees, Reconveyance Fees and any prepayment penalties
  • Homeowner’s association transfer fee and prorate dues (negotiable)
  • Bonds of assessments according to contract
  • Home warranty according to the contract
  • All delinquent taxes
  • Any judgments, tax liens, etc. against the seller
  • Tax proration
  • Recording charges to clear all documents of record against seller

The Buyer’s Will Generally Be Expected to Pay For:

  • Title insurance premium covering loan policy (ALTA)
  • Notary Fees – Buyer Documents
  • Document preparation fees – Buyer Documents
  • Tax proration
  • Inspection fees (roofing, geological, property, etc.)
  • Homeowner’s transfer fees
  • Special delivery/courier fees
  • All new loan charges (except those required by the lender for the seller to pay)
  • Interest on new loan from date of funding to 30 days prior to first payment date
  • Fire insurance premium for the first year
  • City transfer/reconveyance tax according to the contract
  • Preliminary change of ownership fee
  • Assumption/change of records fees for takeover of existing loan
  • Beneficiary statement fee for assumption of existing loan
  • Other proration if applicable

The above items are negotiable between buyer and seller, as agreed upon in your individual sales contract. This is for informational purposes only and reflects typical charges.

What is a CMA and Why Do You Need One?

CMA is a real estate term for “Comparative Market Analysis.” A CMA is a report prepared by a real estate agent providing data comparing your property to similar properties in the same area.

The first thing an agent will need to do is physically to inspect your property. The home should be in such a condition that the agent will be able to make an accurate assessment of its condition and worth. If you plan to make changes before selling, inform the agent at this time.

The next step is for the agent to search for data about comparable properties. This data is usually available through NWMLS (North West Multiple Listing Service), but a qualified agent will also know of properties that are on the market or have sold without being part of the MLS this will involve researching the country records. This will give the agent an idea how much your property is worth in the current market.

The CMA process takes place before your home is listed for sale. This is a good starting point for knowing what your home could potentially sell for taking into account other conditions such as interest rates, market conditions and local economy.

CMAs are not only for prospective sellers. Buyers should consider requesting a CMA for properties they are seriously looking at to determine whether the asking price is a true reflection of the current market.