In U.S. real estate transactions, who do you need to deal with? This question is bound to cause headaches for those unfamiliar with the American property market. According to WorldWay's U.S. immigration experts, the United States is a nation governed by the rule of law with comprehensive regulations. It is also a society based on private ownership; real estate property rights are clearly defined, and once purchased, you own both the house and the land (provided, of course, that taxes are paid). Through a century of continuous refinement, relevant laws have become clear and strict, with transparent industry standards and operations.
To comply with legal requirements and protect the rights and interests of both parties, the U.S. real estate transaction process is relatively complex and involves a clear division of professional labor. Typically, about a dozen companies collaborate to provide services during a single property transaction. This may sound daunting, but for both buyers and sellers, these professionals actually simplify the process significantly.
The professionals with whom buyers and sellers have direct contact are primarily their own real estate agents. They entrust their opinions and requirements to their agents, and all other matters are essentially coordinated and handled by these professionals.
Below is an introduction to the various roles involved in a U.S. real estate transaction:
1. Buyer's Agent
2. Seller's Agent
3. Attorney
4. Accountant
5. Home Inspector
6. Real Estate Appraiser
7. Lending Bank and Mortgage Broker
8. Credit Reporting Agency
9. Title Company
10. Insurance Company
11. Government Inspector
12. Government Property Recorder
13. Homeowners Association (HOA)
Buyer's Agent
The buyer's agent holds a broker's license issued by the state government. Their responsibility is to faithfully follow the buyer's instructions, represent the buyer, search for properties, and coordinate every stage of the transaction. This includes assisting in arranging all matters related to the property purchase and negotiating or coordinating with all parties involved in the transaction. Typically, the buyer's agent receives their commission from the seller upon a successful transaction.
Seller's Agent
The seller's agent holds a broker's license issued by the state government. Their duty is to faithfully follow the seller's instructions, represent the seller, find a buyer, and coordinate every stage of the transaction. This includes arranging all matters related to the property sale and negotiating or coordinating with all parties involved. Generally, the seller primarily communicates directly with their own agent and does not have direct contact with other parties. Typically, the seller's agent receives their commission from the sale proceeds upon a successful transaction.
Attorney
Attorneys generally serve three primary functions:
1. Before the transaction, they help explain how to handle escrow accounts and the most advantageous form of ownership. They also assist in setting up investor escrow accounts and property entities. For investors intending to pursue investment immigration, an immigration attorney will also be involved.
2. During the transaction, they may be granted power of attorney by the buyer or seller to sign documents on their behalf if they cannot be present in person.
3. They assist in handling disputes during or after the transaction.
Accountant
Accountants are responsible for tax consulting and providing tax filing services.
Home Inspector
The home inspector holds a home inspection license issued by the state government. The inspector is an independent third party hired by the buyer or required by the lending bank. Their duty is to inspect whether the land and the house's facilities meet government usage standards and recommend necessary specialized inspections, such as the roof, foundation, soil, etc. The inspector charges a service fee.
Real Estate Appraiser
The real estate appraiser holds an appraisal license issued by the state government. The appraiser is an independent third party hired by the buyer or required by the lending bank. They are responsible for providing a professional real estate valuation report. The property value used by the bank for the loan is the lower of this appraised value or the sale price. Impacted by the real estate loan crisis, the government has strengthened industry regulations to minimize the influence of transaction parties on the appraiser, thereby ensuring the objectivity of the valuation. The appraiser charges a service fee.
Lending Bank and Mortgage Broker
The lending bank and mortgage broker are responsible for investigating the applicant's financial and credit status and providing home loans to the applicant.
Credit Reporting Agency
There are three major credit reporting agencies in the United States. They collect credit records regarding borrowing and repayment from credit card companies, banks, and other related companies or institutions, and use different scoring models to assign a score. In the U.S., people place great importance on these credit scores because lenders use them to judge a person's willingness to repay debt, which in turn determines eligibility for loans and the specific terms of those loans. Landlords also use these scores to judge whether potential tenants are likely to pay their rent. The fee for checking credit records is borne by the party requesting it.
Title Company
Title companies operate under the jurisdiction of state or federal governments and hold escrow licenses, with their capital flow strictly regulated by the government. In addition, title companies are required to maintain a security deposit (similar to a bank reserve) to compensate clients in special circumstances. It can be said that the title company is the guardian of safety in U.S. real estate transactions.
The involvement of a title company solves two important aspects of real estate transactions:
1. Whether the property title is clear and marketable. If the title is forged, if there is an error in the title registration, or if the property is occupied by others, the buyer could become embroiled in endless disputes.
2. Whether the transaction funds are safe. If an unscrupulous agent runs off with the money, the buyer would suffer a significant loss.
Insurance Company
Insurance companies provide property insurance, such as fire insurance, for real estate.
Typically, the fee for a title search is $200-$300, while the title insurance premium is 0.3-0.5% of the total property value, with the coverage amount generally equal to the total price of the property. The party responsible for paying this insurance premium is usually determined by local regulations and customs.
Government Inspector
If structural changes that do not match government records are discovered during the sale of a property (such as a newly added balcony or a renovated basement), a government inspector will conduct an inspection. They will require the seller to either restore the property to its original state or obtain a "structural change" permit, followed by an inspection to ensure the changes comply with building codes.
Government Property Recorder
The government property recorder is handled by a third-party escrow or title search company. The new homeowner will receive a deed with their name on it.
Homeowners Association (HOA)
The association is composed of all homeowners and elects a board of directors periodically. It sets exterior standards for the community (e.g., the color and height of fences) and is responsible for hiring property management companies to maintain and manage common areas. Homeowners in such communities are required to pay association dues.
Through the roles of all parties involved in U.S. real estate transactions, we can see how the rights of U.S. homeowners are protected. Consequently, due to the protection of relatively sound legal regulations, buying a home in the United States is extremely safe.
