Make an appointment with an experienced Buyer's Agent knowledgeable about the towns in which you are looking. You only need one Buyer's Agent in each market area since most properties are multiple listed and can be viewed by any broker. If your town search expands as you look, your primary agent can direct you to other top agents in those areas. Your Buyer's Agent will also explain how your best interests are represented and the NJ laws on Agency Representation
Upon finding the "right" home, the next step will be to make an offer to purchase in writing (generally done electronically). You will e-sign a Contract Of Sale that stipulates your offer price, deposit/down payment money, financing terms, your preferred closing date, the time period in which you will complete your home inspections, and any other specific information that you wish to include as part of your offer.
Your written offer should include the following:
- A signed Contract Of Sale with your specific terms as described above.
- Financial qualification document such as a Mortgage Pre-Approval Letter from a lender (not just a Pre-Qualification letter) or a bank statement indicating sufficient liquid funds for a cash purchase. A mortgage Pre-Approval Letter should include a review of your credit and financial ability to pay as well as a specific reference as to whether your purchase is contingent or not contingent upon the sale of any currently owned real estate.
- Signed Seller’s Property Disclosure Statement and Lead Paint Addendum when available.
- Optional - A letter about yourselves to provide to a Seller.
Your signed offer will be presented to the seller's Listing Agent to provide to the Sellers. A negotiation process begins. Negotiations typically are verbal after presenting the intial offer. If you come to terms at an agreed upon Purchase Price, revised contracts are sent to you for e-signing. Then the Sellers sign with the contract becoming fully executed. A copy of the fully executed contract is provided to both your attorney and that of the Sellers to begin Attorney Review.
Attorney Review is the process by which your real estate attorney and that of the sellers, review the contract, make any changes necessary and ultimately come to a legal agreement ending Attorney Review. Once Attorney Review is complete, the contract is binding and considered "Under Contract". In a competitive marketplace, it is good to complete Attorney Review in a timely manner. If neither attorney disapproves the contract i.e. makes changes to the contract, attorney review will end after 3 days and the contract becomes binding. During attorney review, either party may cancel the contract for any reason.
Meeting your contract Contingencies is the next step. Each contract varies with the contingencies specified. The following are examples of typical contract contingencies:
- Deposit Money – your deposit is typically due 7-10 days after the end of attorney review and customarily will sit in the Seller's attorney escrow account until closing. This is usually 10% of your purchase price. However, each contract varies as to the deposit specified.
- Mortgage Contingency – your contract will likely have a mortgage commitment date specifying when you must have a document confirming that your mortgage is approved for your home purchase. This averages 30-45 days from the end of attorney review but also varies. In some competitive bidding situations, a buyer will remove their mortgage contingency to entice the seller to take their offer over another buyer with a contingency. Inquire about the pros and cons of this with your real estate agent and attorney.
- Home Inspection Contingency – Your contract will specify the number of days after attorney review by which you must complete your home inspections: structural, termite, radon, oil, lead, mold, etc. It will also specify the number of days you have to make requests from a seller for repairs and/or credits. When significant home inspection issues arise, you and the seller will negotiate a settlement of such issues. This may include a request of the seller to make repairs, a request of a dollar credit at closing for you to make repairs, and in instances where the issues is so significant, termination of your contract.
- Closing Date – Your contract will indicate a specific date on which you are to close. Closing dates do change as the result of unforeseen circumstances.
Preparing For Closing Day:
Items that you will need to do prior to closing are:
- Obtaining Homeowner’s Insurance on your home. This must be in place and is usually required by your mortgage lender to close.
- Utilities should be changed into your name to take effect the day of closing.
- Confirmation with your attorney the funds necessary to bring to closing as part of your final down payment and closing costs.
- Confirmation of the closing time and location and then set up a final walk-thru of your new home on or just before the day of closing.
This is an exciting day on which you will receive the keys to your new home. You will sign the mortgage paperwork and deed documents. You are officially a homeowner after closing of title with your attorney and/or settlement company!
A FINAL NOTE:
All of the information above is intended to be a guide to help you prepare for the purchase of a property. Every home purchase is unique and specific to your personal situation and contract specifications. Communication of your needs and expectations to your real estate agent and your attorney needs to be ongoing and open during your home purchase process. The above is not intended to be legal advice but merely a description of a typical real estate home purchase. You should always consult your attorney for review and guidance related to a contract to purchase a home.