Long Definition of "Buyer"
This is a "dig deeper" definition post. For more definitions, click here.
This post takes a deeper look at what a Buyer (in terms of Real Estate) is and what their role is in the transaction.
First, a dictionary definition: a person who makes a purchase. This is actually an important definition to consider when looking at a potential Real Estate deal. This is also one of those situations where a "Real Estate Word" can mean a lot of different things depending on context!
I'll try to go in order here:
The first time that the word "Buyer" is used is when a Realtor or Lender first meet with someone that is interested in buying a house. At this stage, that Buyer may be referred to as a "Potential Buyer" a "Possible Buyer" or just "Buyer". For instance, a Realtor might call a Lender and say, "I've got a potential Buyer that wants to know how much money he/she would be able to spend, can you help them get pre-approved?".
Once a "Buyer" is pre-approved (or pre-qualified), the "potential" or "possible" usually gets dropped. It is important to note here that technically this "Buyer" is still really just a "Shopper" - since a "Buyer" is "a person who makes a purchase." and at this point no purchase is being made! Nonetheless, at this phase, a Realtor will call the Realtor representing the house the Buyer is interested in and say, "I have a Buyer that is interested in your client's house, may we come take a look at it".
Once a house is identified that the Buyer would like to purchase, an Offer is written up. Here is where the official word "Buyer" comes into play. In the offer (Which is also called "Purchase and Sale Agreement - among other things), the Buyer is named and defined along with the other terms of the proposed contract. Even at this phase, the Buyer is not really a "Buyer" according to our earlier definition. At this phase, the Buyer is offering to begin the process of purchasing the home. The Purchase and Sale Agreement, in essence, says "I, the buyer, agree to pursue purchasing this home at this price and with these terms." We'll explore the terms part of that in more depth in other places, but there are a lot of contingencies in place that allow the Buyer to explore the home and make sure that they are getting what they signed up for.
The next step in this process would be "Mutual Acceptance" - or a "Signed Around Deal". Once both parties (The Buyer and the Seller) have signed an agreement about the terms of the Purchase and Sale Agreement, they are both considered "Under Contract" and begin the process of making the purchase a reality. At this phase, more than any before it, the Buyer is most accurately considered a Buyer. Note that the Buyer is still not "a person who makes a purchase." as the purchasing money has not exchanged hands and they have not made a purchase yet. This phase can take anywhere from a handful of days (cash deal) to (more commonly) 30-45 days while the Lender and the Buyer make sure that all terms of the deal are acceptable to everyone involved.
Finally, after all the details and particulars are sorted out, final paperwork is signed, money exchanges hands, and the Purchase is recorded, legally transferring the property from the Seller to the Buyer. At this particular moment in time, the Buyer is actually a Buyer as they are "making a purchase"!!
However, that is quite short lived as once the process is complete, they become a "home owner" (Congratulations!) and are no longer a Buyer! However, even at this phase, the Buyer will still be referred to as a Buyer in certain contexts. An appraiser might be appraising another property and call a Realtor, Lender or Closing Agent to ask about their "Buyer" in that transaction, or if you (the Buyer) have a question and your Realtor is calling around to get the answer, they may say, "My Buyer on xx23 S. xxth Ave. is wondering..."
In closing, a very important aspect of Real Estate, that I feel a great many professionals lose sight of (or just plain forget) is that a Real Estate transaction is between two parties only. The Buyer and the Seller. All of the other parties involved in a transaction (Lenders, Realtors, Closers, Insurers, Reps, etc) are there to provide services to either the Buyer, the Seller or both, but they are not the ones making the purchase and they are not the ones selling the property. It is very tempting and frighteningly easy to want to tell a Buyer or a Seller what they should do in a particular situation. While our role as advisers calls on us to offer insight and discuss options, at the end of the day, it is the Buyer that is buying and the Seller that is selling and they need to choose for themselves the best course of action for themselves.
Many times, I have thought for sure that my client would choose one option in a situation, but I checked with them anyway, "just to make sure", and was shocked that they chose the other option! There are a lot of details involved in making a Real Estate purchase. Make sure that you are working with an agent (and lender) that you trust and that can help you understand the decision you are making without making it for you!
Jon Biron is a Realtor with RE/MAX Inland Empire in Spokane, WA. When he's not helping buyers and sellers, blogging or doing other "Real Estate Things", he can be found exploring Spokane with his wife, Melissa and two boys. For more Real Estate insight, click around this blog or send an email to ASpokaneRealtor@gmail.com.
This post takes a deeper look at what a Buyer (in terms of Real Estate) is and what their role is in the transaction.
First, a dictionary definition: a person who makes a purchase. This is actually an important definition to consider when looking at a potential Real Estate deal. This is also one of those situations where a "Real Estate Word" can mean a lot of different things depending on context!
I'll try to go in order here:
The first time that the word "Buyer" is used is when a Realtor or Lender first meet with someone that is interested in buying a house. At this stage, that Buyer may be referred to as a "Potential Buyer" a "Possible Buyer" or just "Buyer". For instance, a Realtor might call a Lender and say, "I've got a potential Buyer that wants to know how much money he/she would be able to spend, can you help them get pre-approved?".
Once a "Buyer" is pre-approved (or pre-qualified), the "potential" or "possible" usually gets dropped. It is important to note here that technically this "Buyer" is still really just a "Shopper" - since a "Buyer" is "a person who makes a purchase." and at this point no purchase is being made! Nonetheless, at this phase, a Realtor will call the Realtor representing the house the Buyer is interested in and say, "I have a Buyer that is interested in your client's house, may we come take a look at it".
Once a house is identified that the Buyer would like to purchase, an Offer is written up. Here is where the official word "Buyer" comes into play. In the offer (Which is also called "Purchase and Sale Agreement - among other things), the Buyer is named and defined along with the other terms of the proposed contract. Even at this phase, the Buyer is not really a "Buyer" according to our earlier definition. At this phase, the Buyer is offering to begin the process of purchasing the home. The Purchase and Sale Agreement, in essence, says "I, the buyer, agree to pursue purchasing this home at this price and with these terms." We'll explore the terms part of that in more depth in other places, but there are a lot of contingencies in place that allow the Buyer to explore the home and make sure that they are getting what they signed up for.
The next step in this process would be "Mutual Acceptance" - or a "Signed Around Deal". Once both parties (The Buyer and the Seller) have signed an agreement about the terms of the Purchase and Sale Agreement, they are both considered "Under Contract" and begin the process of making the purchase a reality. At this phase, more than any before it, the Buyer is most accurately considered a Buyer. Note that the Buyer is still not "a person who makes a purchase." as the purchasing money has not exchanged hands and they have not made a purchase yet. This phase can take anywhere from a handful of days (cash deal) to (more commonly) 30-45 days while the Lender and the Buyer make sure that all terms of the deal are acceptable to everyone involved.
Finally, after all the details and particulars are sorted out, final paperwork is signed, money exchanges hands, and the Purchase is recorded, legally transferring the property from the Seller to the Buyer. At this particular moment in time, the Buyer is actually a Buyer as they are "making a purchase"!!
However, that is quite short lived as once the process is complete, they become a "home owner" (Congratulations!) and are no longer a Buyer! However, even at this phase, the Buyer will still be referred to as a Buyer in certain contexts. An appraiser might be appraising another property and call a Realtor, Lender or Closing Agent to ask about their "Buyer" in that transaction, or if you (the Buyer) have a question and your Realtor is calling around to get the answer, they may say, "My Buyer on xx23 S. xxth Ave. is wondering..."
In closing, a very important aspect of Real Estate, that I feel a great many professionals lose sight of (or just plain forget) is that a Real Estate transaction is between two parties only. The Buyer and the Seller. All of the other parties involved in a transaction (Lenders, Realtors, Closers, Insurers, Reps, etc) are there to provide services to either the Buyer, the Seller or both, but they are not the ones making the purchase and they are not the ones selling the property. It is very tempting and frighteningly easy to want to tell a Buyer or a Seller what they should do in a particular situation. While our role as advisers calls on us to offer insight and discuss options, at the end of the day, it is the Buyer that is buying and the Seller that is selling and they need to choose for themselves the best course of action for themselves.
Many times, I have thought for sure that my client would choose one option in a situation, but I checked with them anyway, "just to make sure", and was shocked that they chose the other option! There are a lot of details involved in making a Real Estate purchase. Make sure that you are working with an agent (and lender) that you trust and that can help you understand the decision you are making without making it for you!
Jon Biron is a Realtor with RE/MAX Inland Empire in Spokane, WA. When he's not helping buyers and sellers, blogging or doing other "Real Estate Things", he can be found exploring Spokane with his wife, Melissa and two boys. For more Real Estate insight, click around this blog or send an email to ASpokaneRealtor@gmail.com.
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