Who is Involved in Buying a Home in California

There are a lot of moving parts involved in purchasing a home in California. 

Sure, scrolling through available listings is easier than ever for buyers, but there are still a myriad of steps to face before grabbing the keys to your new home. Buyers have to interact with agents, inspectors, and other qualified real estate industry experts throughout the home buying process. 

To help buyers make sense of all these players, the team at Prevu Real Estate compiled an essential list explaining the roles of each person you are likely to meet when you buy a home in California. 

People involved in the home buying process in California

• Listing agent
• Buyer’s agent
• Mortgage lender or broker
• Escrow agent
• Title officer
• Property inspector
• Appraiser

Listing agent

If a California homeowner decides they want to sell their home, they will likely contract the services of a listing agent. These real estate agents advise on home price, market the home to buyers and share it with other agents via multiple listing services. A buyer will want to have an agent represent them and interact with the listing agent on their behalf.

The listing agent is in the employ of the seller, and has a fiduciary responsibility to share any material information about a buyer to the homeowner. This is why all buyers should employ a buyer’s agent, to focus conversations around the property. For instance, if a buyer discloses their highest offer or other material information, the agent must tell the seller. 

There are deals where the listing agent can represent both parties, but it is best for California buyers to secure their own buyer's agent. 

Buyer's agent

Buying a house is one of the most expensive purchases a person will make, so buyers will want to interview multiple agents to see which one best fits their search. 

While many searches begin on the internet, almost all real estate transactions close through the face-to-face service of agents. Having a seasoned and dedicated buyer’s agent gives buyers peace of mind when searching, narrowing down properties in your price range, learning about closing costs, making offers, and navigating the transaction process. 

Qualified real estate professionals bring years of experience to the table, a rolodex of home inspectors and experts, and guide buyers through the final mile of the negotiating process. Many agents can help you buy a new home, but savvy buyers should interview multiple agents to find one that offers a commission rebate. 

By providing a portion of their commission to buyers at closing, agents that offer rebates can pass significant savings back to new homeowners.

Mortgage lender or broker

Unless you purchase a house in California as an all-cash buy, most homebuyers will need financing from a mortgage. Experienced home buyers may have a lender they trust, but newcomers taking their first steps on the property ownership ladder will need to source a home loan. 

Real estate agents are connected to various mortgage brokers and lenders with a variety of loan programs, so buyers can be introduced to and partner with one that offers attractive interest rates and competitive fees. Make sure your mortgage broker is communicative and educational, and ask them to explain each step of the lending process. California is experiencing a seller's market, and the best way to get your offer noticed is through a pre-approval. 

Loan officers will comb through your W-2s, debt to income ratio, credit score, and assets to determine the amount of money they are willing to lend you, then provide buyers with a letter informing sellers that you are pre-approved. Some buyers accelerate this due diligence by pursuing a fully underwritten approval, thus removing the need to include financing contingency language in their offer. 

Once an offer gets accepted, buyers should prepare for a flurry of activity, starting with the escrow process. 

Escrow agent

Once a seller accepts an offer, your broker then reaches out to an escrow agent. Listing agents in California customarily choose what escrow agent to use.

Some brokerages even offer escrow services for clients to be able to use. As soon as your bid is in contract, the escrow agent safeguards essential documents needed for closing, the 3% earnest money deposit, and keeps your down payment under lock and key. 

In California, buyers and sellers usually negotiate over escrow fees, but some counties like Napa require the buyer to cover this cost. The listing agent, your mortgage lender, and the escrow agent are in constant contact to ensure the distribution of down payments and other funds at closing.

Title officer 

Once your buyer’s agent engages the escrow agent, they will reach out to the title officer to start the title investigation process. 

After passing through multiple owners, some homes have old contracts or liens on the property, and a title officer will sniff out these wrinkles. By analyzing documents of purchase and sale, the title officer can locate fraudulent ownership transfers. 

Even a newly built home in California could have errors in the public filing that hold up a closing. For instance, it could look like there is a lien on the property if the old homeowner did not file a property release notification. The title officers reach out to prior owners to procure releases and even clear unenforceable deeds. 

Listing agents organize the title officer, and it is customary for sellers to cover the $1,500 - $2,200 fee. If a disputing claim arises, buyers can protect themselves with title insurance to cover investigation and litigation costs. 

Property inspector

Once an offer is accepted, buyers in California generally have a 17 day contingency period to conduct property investigations. 

While a condo requires a general assessment, buyers purchasing a single family home in California must consider additional checks. Buyers purchasing a storied hillside Victorian home in Pasadena should consider a property inspector, a drainage expert, and an exterminator to learn more about the property. Luckily, sellers must provide a Natural Hazard Disclosure form, so buyers know where to start their investigation.  

In this seller’s market, buyers in the Greater Los Angeles area for example usually need to whittle the time down to 7-10 days to get an offer accepted. But inspection costs add up quickly, and buyers are responsible for paying the fees for a home inspection.

Appraiser

After a seller accepts your offer, your mortgage broker will request an appraisal of the property. 

Appraisers will look at appliances, pools, renovations and do a comparative market analysis of sales prices in the area to determine a home's fair market value. If a buyer made a purchase offer higher than the appraisal, they are responsible for making the difference with their funds. 

But just because the lender schedules an assessment, buyers also have the option to hire an independent appraiser for peace of mind. 

​​Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.