It can be stressful to think about what it takes to sell a home, especially if you have never been through the process before. It is essential that you understand the process of selling your home, so you can ensure it goes as smoothly as possible. Here are the typical steps selling a home in the state of New Jersey:
1) Negotiating the Contract of Sale
- Before anything else, you will need to negotiate a contract of sale with a prospective buyer, assuming you have already found someone willing to purchase your home. The contract sets out the terms of the deal itself, including the responsibilities and privileges of both parties. Once it has been signed, it means that both the buyer and seller have agreed to its terms, and it is considered legally valid. It’s important not to sign a contract thinking that it’s subject to Attorney review. Often times people hear the term attorney review and think that all contracts are subject to “attorney review“. Once a contract is signed, it is a binding document between the parties if realtors are not involved, typically the contract does not have a “attorney review, provision“. Before signing a contract the time to review and understand is before you actually sign the contract.
2) Three-Day Lawyer Review
- If the contract of sale was provided by a real estate agent, New Jersey law requires the contract to have a provision that gives you three business days (excluding holidays and weekends) to have the contract reviewed by a real estate lawyer. This provision of the contract is typically called a “three day attorney review provision”. During this time, both the buyer and seller may seek legal guidance, and may choose to terminate the contract based on the legal advice they receive. Provided neither side cancels the contract during this time, it goes forward as planned. While the three day, Attorney review provision can be utilized to simply cancel a contract, it is more common that the contract is “disapproved as written“ and a proposed addendum setting forth modifications to the contract are sent to the Buyers attorney. Sometimes a party may end up canceling an attorney review because they got another offer. The Attorney review letter is typically to add some extra legal-ease to the contract. However, the Attorney review provision is critical to help the parties iron out more substantive issues such as house, sale, contingencies, house purchased contingencies, and to have the opportunity to discuss with attorney what to expect during the course of the transaction.
3) Home Inspections
- Most contracts will have a home inspection provision, typically giving a buyer 10 to 14 days to have inspections. The buyer may bring a professional Home Inspector, who is a generalist and they may bring in more specific contractors if needed for inspections. The buyer can then request that any issues discovered by the inspector be repaired, although you can refuse to do so. Every home is sold “As Is”, but the home inspection gives the buyer the opportunity to ask you the seller to fix a repair identified deficiencies. Sometimes a buyer will waive home inspections. This may be because they inspected the property prior to finalizing the contract, or perhaps the buyer is a contractor. While it is unusual that a buyer will “waive home inspections“ it may be a point that is discussed at time of contract or during attorney review.
4) Mortgage Contingencies
- A mortgage contingency makes the contract contingent on the buyer obtaining financing and obtaining a mortgage commitment. A mortgage commitment is a written promise from a bank or financial institution to loan the buyer money for the purchase. 30 days is the typical time period, but this is negotiable. If the buyer is denied a mortgage, this could lead to a cancellation of a contract and a return of deposit moneyIf the buyer is denied a mortgage, this could lead to a cancellation of a contract and a return of deposit money to the buyer to the buyer. It’s important to note that it’s a good idea at the beginning of the transactionIt’s important to note that it’s a good idea at the beginning of the transaction that the buyer provides a pre-qualification from a lender that buyer provides a pre-qualification from a lender. This is important when selling a home, as this can weed out buyers who will not be able to afford to purchase your home. If they fail to qualify for a mortgage for the agreed upon price, the transaction may be canceled and you are back on the market.
5) Closing
- Provided all else goes well, the process of selling a home will culminate with the closing. Historically, a closing involved the physical presence of the buyer, the seller, the realtors, maybe the lender, and the attorneys for the parties. A closing was a real sit-down meeting where the Buyer would sign their mortgage documents and then having money available for closing there was the passing of the deed and the keys in exchange for a check and the Seller then went to the bank to make a deposit. Today a closing doesn’t quite take place the same, although it can. Usually a seller will meet their attorney days or weeks prior to the closing to pre-sign their documents, which is the deed and various other needed documents deed and other documents will typically be overnighted to a title company to hold an escrow. On day of closing the buyer will typically do a walk-through of the home that you are selling. Typically the house is vacant and as we say broom clean. After the walk-through the buyer goes to their attorneys office/realtors office or title company, to sign their mortgage documents. The closing nowadays takes place via email and instead of the seller getting a check, the title company for the buyer wires funds directly into the seller’s bank account.
We use the word “typically “quite often. Every transaction is different. The above is intended as a general description of the process. Issues such as solar panels, septic systems, stucco siding, flood, zones, easements, encroachments, etc. are beyond the scope of our general description above.
The New Jersey real estate lawyers at Riley and Gutman, LLC, are ready to assist you with your real estate transaction. We are committed to providing prompt, experienced and personal service to our clients, and will provide you with the legal support you need throughout your transaction and beyond. Give us a call at 731-431-0300, or visit our contact page for more information.