Purchasing a new house is a huge commitment. Putting in your cash savings and getting a mortgage loan can be a stressful and complicated process. Over the past few years, brokers and realtors have convinced new buyers and sellers that in order to get a fair deal their expertise is required. Moreover, there are various government regulations to be considered when buying a new home. Luckily, the mortgage experts at Rex Homes have provided some additional information to help you understand this process better.
In the 1970s, the RESPA law was passed that stopped the price gouging of new homes and kickbacks that existed between all the entities that were needed to buy a house such as agents and providers. However, this also gave rise to a complex procedure for people looking to buy a new home. Today, if you want to buy a new home, there are several parties that you have to work with that have been formed to protect you from any fraud. These parties include:
Escrow: This service holds onto the deposit until the contract has been settled.
Title Insurer: They check if the property has any ongoing boundary issues, or liens against it.
Mortgage Provider: They arrange the loan that most buyers need to pay for the home.
Insurance Provider: They arrange the insurance required to receive the mortgage and secure against any dangers, or catastrophes.
Home Warrant Provider: They provide a limited warranty against major items such as roof, water heater among others.
Each of these parties has separate fees that need to be paid and RESPA regulations do not allow these services to be bundled together.
The seller usually pays 6% of the transaction value for the services of their own broker, and the buyer’
s broker. It is important to understand that this amount is usually built into the list price of the house. As more online home buying resources such as Zillow or Homes.Com become available, buyers are only requiring agents to stage a viewing. In spite of very limited work on the side of the buyer’s agent, they still enjoy half of the commission paid by the seller. In terms of numbers, if the house is priced at $700,000, then the commission of 6% is $42,000 and the buyer’s agent will receive $21,000 from it.
Purchasing a house is not as simple as buying an item from the supermarket. As there are various entities involved in the home buying process, there are several procedures that you may need to follow and hefty commissions you may need to pay. If a realtor is not dedicated to assisting you in buying your new home, the purchase can often drag on for extended amounts of time. You can benefit by hiring a good real estate agent as they will take care of these tedious tasks for you and also help provide competitive pricing on mortgage and insurance. An experienced real estate agent will also have all the resources to ensure you receive the lowest prices on the title, warranty, and escrow. Thus, it is always recommended to get in touch with a knowledgeable and committed real estate agent who will simplify the home buying process and take away all your stress.