| Disclaimer: The primary state that this | | | | of "kick-back" from such a party. We are |
| article covers is New Jersey. Though | | | | prohibited from doing this. We recommend |
| licensed in New Jersey and New York, the | | | | them because we have established |
| author will primarily address the buying | | | | relationships with them. We understand how |
| process as it relates to New Jersey, with the | | | | they work and we know them to be reliable and |
| occasional reference to New York. There are | | | | ethical. We develop a style and method of |
| many differences from state-to-state. This | | | | working with these people that helps to keep |
| article is not intended to take the place of | | | | the process moving forward. Transactions can |
| legal representation or a qualified | | | | fall apart due to simple lack of or |
| RealtorÂ(R). | | | | mis-communication. |
| | | | |
| When you go shopping for a house and begin to | | | | Once attorney review is completed, the buyer |
| work with a RealtorÂ(R), one of the first | | | | will frequently have agreed to the payment of |
| questions a good RealtorÂ(R) will ask you | | | | a second deposit. This would have been in |
| is, "are you pre-approved." At this point I | | | | the contract. This is not always the case. |
| am frequently met with righteous indignation, | | | | This usually must be submitted within a |
| "my credit is perfect." What you have to | | | | certain number of days of the end of attorney |
| understand is that RealtorsÂ(R) dig a lot | | | | review. |
| of empty wells. When a potential buyer comes | | | | |
| to us and tells us they want to buy a house, | | | | Even experienced real estate investors will |
| having a pre-approval letter simply shows the | | | | rely upon the services of a professional home |
| RealtorÂ(R) that the buyer is serious | | | | inspector. A home inspector can save you |
| about their intentions. In addition, before | | | | thousands of dollars by pointing out problems |
| we can make an offer we have to have that in | | | | or potential problems with a home. This may |
| hand so that when we make an offer, we can | | | | involve something as serious as a bad |
| present the pre-approval with it. | | | | electrical panel or wiring, to as mundane as |
| | | | the grade of the ground around the house. |
| The type of relationship you have with your | | | | Something to remember though, just because |
| Realtor is called an agency relationship. | | | | the home inspector puts it on the report, it |
| This means that your Realtor has certain | | | | doesn't mean you are going to get a huge |
| fiduciary responsibilities depending upon in | | | | credit from the sellers or that they are |
| what capacity they represent you. The | | | | going to repair every minor issue. Home |
| Realtor can represent just the buyer (buyer's | | | | inspectors are paid to find things wrong. Be |
| agent), just the seller (seller's agent), or | | | | realistic and realize you are buying a used |
| both the buyer and the seller (disclosed dual | | | | house. Obviously this is different for new |
| agent, not legal in all states but legal in | | | | construction. In New Jersey there is a 10 |
| New York and New Jersey.) In New Jersey and | | | | year warranty on new houses. |
| New York, agents are required to provide | | | | |
| prospective customers with a Consumer | | | | Once attorney review is over, the buyer's |
| Information Statement (NJ) or an Agency | | | | attorney will order a title search and a |
| Disclosure (NY). These documents are | | | | survey. A title search looks back at the |
| required to be given to you and the | | | | chain of ownership of the home to make sure |
| RealtorÂ(R) must acquire your signature | | | | that there are not any outstanding liens or |
| so that (s)he can prove to the state Real | | | | claims on the home (also known as "clouds on |
| Estate Board that you were given this | | | | the title"). The title insurance policy you |
| pamphlet that describes these relationships. | | | | buy protects your and the bank's ownership of |
| | | | the home in the event that something is not |
| A good RealtorÂ(R) will be able to enter | | | | found when the title search is done. It is |
| your criteria into their local Multiple | | | | as its title implies, insurance. |
| Listing System (MLS) and that system should | | | | |
| be able to generate listings on a daily basis | | | | If you are relying upon a mortgage to |
| based upon your criteria and then email them | | | | purchase your new home, you will have a |
| to you. This method is far preferable to you | | | | mortgage commitment date in your contract. |
| going and looking at is a great tool, but | | | | This is the date when you must have your |
| its listings can also be a little stale. | | | | bank's or mortgage rep's commitment letter. |
| Things sell and they may take a bit of time | | | | This must be provided to the seller's, their |
| before they come off of, or are updated on | | | | Realtor and their attorney. Before this can |
| Make sure you have a computer savvy | | | | be issued you will need to complete a lengthy |
| RealtorÂ(R). If they are not, find | | | | application and provide proof of income and |
| another RealtorÂ(R). | | | | assets. They will also do a more thorough |
| | | | credit search. |
| After you have found the perfect house your | | | | |
| RealtorÂ(R) will help you write an offer. | | | | A bank will also do an appraisal of the |
| In New Jersey we do this with form | | | | house. This determines the current market |
| contracts. In New York we do this with a | | | | value of the house as compared to comparable |
| letter of intent. | | | | local sales. The bank wants to make sure |
| | | | that you (they) are not over paying for the |
| Once terms have been agreed upon, In New | | | | house. |
| Jersey the contract goes into attorney review | | | | |
| whereby each side's attorney reviews the | | | | The elapsed time from offer to closing can |
| contract with their client's interest in | | | | range anywhere from 10 days to 5 or 6 months |
| mind. In NJ, a contract is not valid until | | | | depending upon the individual situation. |
| both attorneys have made their changes and | | | | Things that can move very quickly if the |
| agreed upon everything (in consultation with | | | | buyer doesn't have another house to sell |
| their respective clients, obviously). In New | | | | first (a home sale contingency) or if the |
| York, once terms have been agreed upon, you | | | | home they are buying is vacant. |
| do a home inspection prior to actually having | | | | |
| the attorneys draw up the contracts. In NJ | | | | Before closing you will do a walk-through of |
| the home inspection is not done until you get | | | | the house to ensure that the house is in the |
| out of attorney review. | | | | same condition as when you originally saw it |
| | | | and that it is being delivered in "broom |
| When your Realtor recommends a lawyer or a | | | | swept" condition as per the contract. You |
| mortgage representative to you, chances are | | | | will also want to make sure that they have |
| he is doing it with your best interest at | | | | removed all of their personal belongings from |
| heart. No ethical RealtorÂ(R) or one who | | | | the premises, unless otherwise pre-arranged. |
| valued their license would receive any kind | | | | |