Selecting Service Providers
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You and the Seller Must Agree
Buying a home does not occur in a vacuum, involving only you and the
seller. There are all kinds of people and services involved behind the
scenes to make it happen. Since some of these services affect both you
and the seller, there will have to be an agreement on which companies
you will use for them. When you make your offer, you should request your
favorites for these services. If you are unfamiliar with these service
providers, you can get recommendations from your agent.
Escrow and Settlement
For example, you are going to need an escrow or settlement company to
act as an "independent third party" between you and the seller.
Without having a third party involved, how do you know that when you fork
over the money, you are going to get the deed? This is the type of service
provided by escrow and settlement. They will hold your deposit and coordinate
much of the activity that goes on during the escrow period.
Since this third party is very important to both you and the seller and
both of you will pay fees to this company, it is important to agree on
which service to use. Therefore, your choice should be part of the offer.
Since you do not buy a home every other week or so, you are probably unfamiliar
with companies that provide this service. Your agent will make a recommendation.
You have the authority to accept this recommendation and include it in
your offer, or make your own choice.
Keep in mind that the seller will also have a preference and this may
be a point of negotiation in a counter-offer. It has become customary
that one side will choose the escrow/settlement agent and one side chooses
the title insurance company. Even so, everything in real estate is negotiable.
Title Insurance
Title insurance is important because, by providing you with an Owners
Policy, they insure that you have clear title to the property. If there
are any problems later, you can always go back to the title insurance
company and have them clear it up. Since it is customary for the seller
to pay for the owner’s policy, they have an interest in which company
is used.
However, you are going to pay a fee to the title insurance company, too.
This is for the Lender’s Policy. The lender’s policy insures
your mortgage lender that there are no liens or judgments against the
property and that the mortgage will be in first position. In other words,
should you sell the property or refinance it, their mortgage gets paid
first, before any other claims against the property.
The lender’s policy is less expensive than the owner’s policy.
Termite and Pest Inspection
As part of your offer, you may require a termite and pest inspection.
This company not only inspects for termite damage and pest infestations,
but also inspects for dry rot and water damage, among other things. The
company that performs the inspection is important to you as a buyer, because
you want to be sure they do a good job. It is important to the seller
because it is customary that they pay for the inspection and some types
of repairs that may be required.
You should determine which company you want to perform this inspection
and make it a part of your offer. Otherwise the seller will choose. If
you do not know which company to hire, your agent will make a recommendation.
