The Three Step Process to Buying a Home
1. Contract for Sale of Home/3 Day Attorney Review.
A contract represents the meeting of the minds between buyer and seller. It means that the Seller has accepted the Buyer’s Offer. The contract is the Law of the Transaction and will dictate the terms that both buyer and seller agree to follow and abide by.
In the State of New Jersey, if a contract is prepared by a real estate agent, the contract is required to have a 3 Day Attorney Review provision. This provision gives either party, buyer or seller, the right to terminate the contract within 3 business days (weekends and holidays do not count) after the contract has been signed. Attorney review is the opportunity to suggest modifications to the contract which may involve an exchange of revisions/modifications between the attorneys for buyer and seller. Attorney review is said to “end” upon both buyer and seller indicating agreement by signing a final addendum.
If a contract does not have an attorney review provision, then the contract as signed is binding on the parties.
2. Home Inspections & Mortgage Contingency
Home Inspection: Typically the first 10 days of a contract.
Most contracts give the buyer the opportunity to have a professional home inspection of the home. Based on the home inspection the buyer may request the seller to make repairs or address different issues about the construction and systems of the home. The Seller may agree or disagree to make repairs.
Mortgage Contingency: Typically the first 30 days of a contract.
Most contracts are contingent on the buyer obtaining mortgage financing to purchase the home. If the buyer does not get approved for a mortgage the transaction may be terminated.
3. Do a Real Estate Closing:
The closing is the culmination of the contract. All contingencies should be satisfied. The buyer performs a final walk through of the home and then meets with their attorney to sign the various mortgage documents. The buyer and seller meet for the transfer of title. The sellers sign the required documents to sell the home. Both buyer and seller sign the closing statement indicating agreement to the dollars and cents, which authorizes the settlement agent to disburse the funds. The buyer then goes back to the home and pops a bottle of wine!
|Typical Buyer Closing Costs:||Estimates|
|Lender Fees||$300 – $1000|
|Home Inspection||$300 – $800|
|Pre-Paid Interest||$ daily interest for remaining days in month|
|Real Estate Taxes||4 – 5 months|
|Home Owners Insurance||$900 (varies with purchase price)|
|Title Search||$400 – $500|
|If property $1,000,000.00, then 1% mansion tax|