Third party service providers when buying a home...

You and the Seller Must Agree Buying a home does not involve just you and the seller. There are many people and services working behind the scenes to make it happen. Some of these services will affect both you and the seller. In these cases, there should be an agreement on which companies to use. When you make your offer, you should request which companies you prefer for these services. If the service providers are unfamiliar to you, you can get recommendations from your agent. Escrow and Settlement For starters, an escrow or settlement company will be needed to act as an "independent third party" between you and the seller. They will hold your deposit and coordinate much of the activity that goes on during the closing/escrow period. Since this third party is very important to both you and the seller, both of you will pay fees to this company, so it is important to agree on which service to use. With this in mind, your choice should be part of the offer. Your agent should make a recommendation on this type of service. You have the authority to accept this recommendation and include it in your offer, or make your own choice. Remember that the seller will most likely have a preference, so this may be a point of negotiation in a counter-offer. Because these types of preferences come up, 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 Company Title insurance is important. Not only does it provide you with an Owners Policy, it insures that you have clear title to the property. If there are any problems later on, you can go back to the title insurance company and have them clear it up. It is customary for the seller to pay for the owner's policy during a cash sale or split the fee between buyer and seller when a buyer obtains a new first mortgage. This will be for the Lender's Policy. This policy insures your mortgage lender that there are no liens or judgments against the property and that the mortgage will be in first position. Simply, if you should sell the property or refinance it, their mortgage gets paid before any other claims against the property. Termite and Pest Inspection You may require a termite and pest inspection as part of your offer. The choosen company not only inspects for termite damage and pest infestations, but also inspects for water damage and dry rot. This company is important to both you and the seller. You will want them to do a good job, of course, but it is customary for the seller to pay for the inspection and some types of repairs that may be required (as you specify in your offer) in areas where these infestations are common. Determine which company you want to perform this inspection, and make it a part of your offer. If you do not know which company to hire, your agent will make a recommendation. Otherwise, the seller will choose.