How The Real Estate Industry Works In the USA
In the USA, the real estate industry works through agents and brokers. These licensed salespeople assist during a real estate transaction by marketing homes, communicating with attorneys, and negotiating on behalf of their clients, though the rising use of the Internet and other technologies has changed their role in recent years.
In the USA, any two parties can exchange real estate, but the process to do so is fairly complicated. There are offers to negotiate, inspections to schedule, and legal steps to take. This is why the vast majority of people hire a real estate agent or broker. In fact, 87 percent of all homes are bought or sold using an agent or broker, according to statistics from the National Association of Realtors.
Once an agent or broker is involved, the process to exchange property is fairly predictable. Homeowners and buyers take a decision-making role, while the agents take the lead in negotiating and finalizing the sale. In the remainder of this article, we’ll explain the steps to buy or sell a home, so you know what to expect working with agents or brokers.
What Are the Steps To Buy/Sell a Home In the USA?
Step 1: Sign Contract
The real estate process formally begins when a homeowner decides he or she is ready to sell. The homeowner seeks out a real estate agent, usually though recommendation or Internet research. The homeowner and agent then negotiate terms of the agent commission. Once they come to an agreement, they typically sign an exclusive right to sell contract. This binds the homeowner and agent in the property sale and guarantees compensation to the agent should the home sell in the allotted time period.
Step 2: List on the MLS
Once under contract, the agent will publish the home on the local MLS. This makes the home available to other agents and brokers in the area. The agent will also market the home on his or her website and hold open houses to announce to prospective buyers that the home is available for sale.
Step 3: Buyer Finds Home
At the same time steps 1 and 2 are happening, buyers are looking for homes. Traditionally, this was the work of the buyer’s agent. The agent would search the MLS for homes matching their client’s criteria then present the results. The client would review the available homes, attend a showing, and then decide to make an offer or send the agent back to search some more. This step has been largely influenced by the Internet, however. Today, many homebuyers look for homes directly online via a public MLS website or a real estate portal, such as realtor.com or zillow.
Step 4:Buyer Makes Offer
If the buyer likes what she sees, she will make an offer. This is crafted in conjunction with the agent who can advise on price, contingencies, and other factors. There may be several volleys between the buyer’s agent and the listing agent until a final sale price is agreed to.
Step 5: Inspection
The home may now go to inspection. The inspector will assess the home for damage and defects. The agents will negotiate the repair of any deficiencies found.
Step 6: Closing
Before the official transfer of the home, the buyer and seller must got through closing. Here the agents will present final documents for signature. These include a financial statement of settlement, a certificate of title demonstrating ownership, a deed, which allows for the transfer of the title, and a bill of sale. All closing costs, including the agent commission will be settled at this time as well.
Now you know how real estate works in the USA. Leave any questions or feedback in the comments below. Or for more content on how real estate works, check out: