Transaction Coordinator: The Real Estate Transaction Process
Real estate transactions are complicated.
There are a lot of parties involved and it is a strenuous process to organize them, schedule the tasks of each, ensure communication between each at every step, and complete the transaction process within the traditional thirty-day period from offer to close.
The complexities, subtleties, and human interaction and intervention are largely the reason this facet of real estate has remained subject to human control and has yet to be effectively replaced by any kind of automated program or AI.
Generally, whether it’s the real estate agent or a licensed coordinator, this means a person is responsible for handling the transaction coordination role in every real estate transaction.
So, what happens in this thirty-day period?
What does a transaction coordinator do, and how do they do it?
Here are the 33 required steps for successfully completing a real estate transaction from offer to close:
- The escrow is opened.
- Contact escrow company, hire escrow agent, and deliver all necessary documentation for the agent to open a third-party account for funds.
- Arrange scheduling details.
- Schedule dates for inspections, transfers, and notifications for all parties for required actions.
- Communicate with all parties to determine scheduling that is conducive to the fastest and most effective completion of transfer of funds and title.
- Review the purchase agreement for completeness.
- Make sure all parties have signed and initialed wherever appropriate.
- Review purchase contract to ensure all necessary documents are attached.
- If there are documents missing, contact responsible party/parties that completed documents must be delivered (and signed if necessary) with regard to scheduling dates.
- Ensure the buyer’s earnest money deposit is in escrow on time.
- Make sure the buyer’s earnest money deposit is subject to forfeiture if the buyer fails to perform.
- Review the escrow instructions for errors.
- Grammatical, spelling, signatures, and scheduling.
- Draft the Seller’s Disclosure Packet.
- Work with seller’s agent and inspectors to determine necessary disclosures.
- Manage delivery and ensure buyer’s acknowledgement of said disclosures.
- Draft addendums.
- Maintain contact with all parties and make adjustments to purchase contract pursuant to any counters, or necessary disclosures upon inspection.
- Monitor deadlines during the contingency period and provide a demand notice to the buyer if timing isn’t met.
- Keep all parties informed and set reminder notifications of deadlines.
- Ensure the loan contingency removal is tracking on time.
- Ensure the loan underwriter has the various certificates and clearances needed.
- Obtain the contingency removal form by the contingency removal date, or serve the buyer a notice to perform.
- Deal with the request for repair process or waivers.
- Work with all parties to determine responsibility and dates for costs and repairs.
- Obtain other waivers where applicable.
- Coordinate the final walk-through.
- Document communications among the parties.
- Audit the file prior to close of escrow to ensure all paperwork is complete.
- Ensure tax withholding exemptions, such as Foreign Investment in Real Property Tax Act (FIRPTA), are completed.
- Contact parties and deliver appropriate documentation if/where applicable.
- Create a complete file for the client, typically in electronic format, which will help with your IRS filings the following April.
- Ensure all documents and communications are held with in allotted time period pursuant to potential legal complications.
As you can see, there’s good reason this presents difficulty taking a transaction to completion.
To resolve this, traditionally brokers provide in-house coordinators for their agents, or real estate agents can elect to take on these roles themselves and maintain contact with each party throughout the process to ensure its closing.
This presents a lot of difficulty for the agent, a role which tends to be better suited to their lead generation and marketing talents than paper work and scheduling expertise. Not only does this open the agent to legal scrutiny and potential loss of license, it actually hurts their business from both a monetary and time management stand point.
Similarly, some sellers who choose to list their home as a FSBO likewise may believe it’s a good idea to handle their own real estate transaction paperwork in the interest of saving money. This too exposes the seller legally, along with a litany of additional problems.
They will definitely have to employ some technology or service that walks them through the steps since several hundred hours of training are typically required to receive proper licensing.
This path will likely require even more labor time from the seller, as they will have no prior experience in real estate transactions. It takes license professionals twelve to fifteen hours on average during the thirty-day period, so you can imagine what the work load will look like for someone not even working in the real estate industry.
This is why so many brokers, agents, and sellers choose to hire transaction coordinators, whether employed by the brokerage as in-house coordinators, or who work as independent contractors for an outsourced real estate transaction service. The cost of legal exposure and time spent on a transaction far outweighs the cost of hiring a licensed professional.
So, how does a transaction coordinator actually carry out the listed roles above? It is the responsibility of the coordinator to ensure that all appropriate places in the purchase contract as well as any counter offers or addendum have been properly dated and signed by all corresponding parties.
It is also on them to ensure that all appropriate documentation is properly assigned an accounted for so the purchase contract is completely void of missing documents, dates, or signatures. If there is anything missing, it is their responsibility to contact necessary parties and provide a timeline for when these actions must take place.
They then must contact all parties involved in each step of the transaction with instructed scheduling and roles for each.
Eg: if a particular inspector is to provide service before the close of escrow and the buyer is to pay for the inspection per the purchase contract, the coordinator must notify the inspector, the buyer, the seller, the buyer’s agent, and the seller’s agent with appropriate instructions for each as to where, when, and how the inspection will be carried out and paid for.
This applies frequently throughout the process between several different parties involved including those listed above, as well as any brokers, lenders, escrow companies, moving companies, HOA’s, etc.
They do this until all necessary transactions have taken place, the title has been signed over to the buyer, and the escrow company has allocated funds to the seller’s account.
The coordinator does this by using a transaction coordination platform like TransactionPoint, Lonewolf, Brokermint, etc. to organize their responsibilities. These are software that facilitate the organization and scheduling tasks of coordinators. Often, brokers provide a software like these to their in-house coordinators, or are provided to the brokers or agents by NAR as a member benefit. However, coordinators each have their own techniques and practices for carrying out their roles, and aren’t necessarily adept at the provided software. To combat this issue, transaction managers are sometimes employed to ease the transition for coordinators from purchase contract to transaction management software.
Generally speaking, transaction management differentiates its roles from transaction coordinators in the a few ways.
Real estate transaction managers are responsible for:
- Developing and implementing investment and facility procedures
- Creating and managing transaction platforms and designs for coordinators to carry out their coordinator work in a regulated and measurable fashion.
- Initiating real estate lease and owned property agreements by transitioning purchase contract data from documentation to transaction coordination software platforms.
- Managing external service providers, such as consultants, brokers, bankers, and facility owners.
- Reviewing critical dates, evaluating contract options, and determining strategic direction in cooperation with transaction coordinator to ensure a seamless coordination flow and transaction completion.
- Providing a workplace setting for administrators and agents that is conducive to productive work between departments.
- Monitoring performance metrics among agents and coordinators alike to optimize transaction procedures.
- Receiving and responding to approvals and notifications with regard to parties involved in the purchase contract.
So, while the roles of real estate transaction coordinators and real estate transaction managers can be muddied and there can be crossover depending on the traditional practices by brokerage, the transaction manager is typically responsible at least for the transfer of data from the purchase contract to these transaction management platforms.
For each event, party, and cost of service there is a dynamic factor attached to each in the form of names, dates, delivery, and prices. The transaction manager must go through the purchase contract, which is usually pulled from a template specific to the state in which the transaction is taking place, and dictate which dynamic factors are applicable, and the corresponding number, name, date, or delivery method for the factors that are.
This practice still doesn’t solve the issue of legal exposure and overhead for the broker however, which is why many brokers are better off turning to outsourced transaction coordination services for implementing their coordination needs. In fact, outsourcing real estate transaction coordination to specialized services carries benefits for both brokers and agents.
Traditionally, brokers who provide transaction coordination services to their agents do so by employing a transaction management software and hiring in-house transaction coordinators to adopt the software.
These in-house coordinators then use it for carrying out the scheduling, organization, and communication requirements for real estate transactions for each of their agents.
We’ve already mentioned This creates legal exposure and more overhead for the brokers, and they are often only trained to use a single transaction management platform, so there’s also no guarantee the coordinators will have any prior experience on the platform being provided, making mistakes and legal risk even greater for the broker.
Agents who choose to do their own transaction coordination also run into similar issues. They’re responsible for doing their own transaction coordination paperwork from offer to close. When they elect to do this, their real estate business isn’t generating as much income as it could be.
It may seem that they would be saving money by doing their own transaction coordination since this technically costs you nothing, but there is an opportunity cost that comes along with this that demonstrates lower revenue and more work time for these agents.
If agents who do their own transaction coordination spent the time they currently spend on transaction coordination on their business instead, the net gain in volume from spending more time on their business would be greater than the cost of hiring an outsourced transaction coordinator service.
Additionally, transaction coordinators see supplementary benefits by working as independent contractors for outsourced transaction coordination services as opposed to being salaried employees at a brokerage.
Given the employment availability, flexible hours, and a national average salary just under $40,000 a year, many coordinators are seduced by the safety of the occupation and modest, yet comfortable living wage yielded by being a salaried employee.
But considering how crucial the role of a coordinator is to what is for most people the biggest financial decision they’ll ever make, doesn’t $40,000 a year seem like a gross underpayment?
Shouldn’t the gurus of the intricacies of the most monumentally important individual transaction in a person’s life be more highly regarded for their contributions, and payed to reflect that worth?
The current employer-employee standards between coordinators and their brokers is fundamentally flawed, and the culprit responsible for the undervaluation of coordinators. By administering a per/transaction payment of $150, coordinators on average make a lot more money, even when salaries are loaded by taking benefits into account. Coordinators could be making more money, securing more freedom by dictating the amount and the time of reception of their workload, and simultaneously saving on transportation expenses on account of REBO’s remote work system by switching from a salaried coordinator to a REBO contractor.
As you can see, what goes on behind the scenes of a real estate transaction is tedious and better left to the professionals for good reason. Brokerages are burdened by the difficult task of creating a symbiotic relationship between the transaction managers, the transaction platform, and the transaction coordinators to create a seamless process that is so fine-tuned, it goes unnoticed by anyone not directly involved. They must determine whether to hire each as salaried employees or independent contractors, ensure proper licensing, see to it that they are not only experienced in their past real estate transaction work, but that each is comfortable with a singular transaction software platform, and that there is team chemistry between them. This is a costly undertaking in terms of both finances and time.
Agents who do their own transaction coordination waste unnecessary time on these tasks and open themselves up to legal issues. They actually make more money and have more leisure time by outsourcing transaction coordination duties to a service that specializes in real estate transaction coordination.
Transaction coordinators make more money and recognize the value they deserve by becoming independently contracted coordinators for an outsourced service, instead of driving to their thankless, underpaid salaried jobs at brokerages.
When a service improves the work and lives of brokers, agents, and transaction coordinators by instituting a streamlined transaction process, the lives of the clients they serve also improve. Each is better able to do the job they’re good at and minimize error during the transaction process, which can be stressful and costly for the client.
So, instead of hiring salaried transaction coordinators for whom the agent is legally responsible, or trying to force these coordinators to learn a new transaction management software, brokers and agents can simply outsource all their transaction coordination needs to a white-glove concierge transaction coordination service like REBO.
REBO’s coordinators follow strict regulations and hold all necessary certification requirements, so there’s less chance of a mistake being made, no legal exposure to the broker, and a better experience for the agent and client.
REBO accomplishes this by streamlining the transaction process through our well-formulated, regulatory system. This means no error and no lapses in communication no matter how complicated the transaction.
And, since REBO charges a flat per/transaction fee, there’s no need to worry about how brokers are going to pay salaried transaction coordinators during slow months.
We at REBO, recognize the issues involved with the transaction process, and consequently determined an outsourced transaction coordination platform is the best option. REBO is more cost effective, less time consuming, and successfully dispatches any legal overhead the brokerage and agents might have by electing to travel the traditional route. We believe so strongly of the benefits our services provide to brokers, agents, and coordinators that we provide the first two transactions FREE of charge to agents upon signing up.
Real estate agents and brokers help other people achieve their dreams by getting them into the home they desire and deserve. It’s time the favor was returned, and real estate agents were provided the means to achieve their dreams as well.
Sign up with REBO today, and bridge the gap between your work and your dreams.