1. Making the offer.
New Jersey requires that agents use a Broker’s contract to make offers. Your contract offer must be accompanied by a mortgage pre-approval and a copy of your initial deposit check is preferred (made out to the broker’s escrow account). This check by law must be deposited by the 5th business day.
It’s best if your agent presents your offer in person to the seller but that’s not often possible. Great agents accompany your offer with a cover letter to help the seller become emotionally tied to you.
It’s important to keep communication going. Be realistic – sending in a very low offer will upset the seller. You won’t get as much from a furious seller as you will from someone who wants to work with you. Negotiations often happen quickly, in 1-2 days.
Once everyone agrees on price and terms, the offer is revised and sent to the seller to be signed. Upon the seller’s signature, it becomes a contract and is sent to the attorneys who begin their review.
4. Attorney Review
Attorney Review begins with your attorney cancelling the contract. Now the attorneys can make the changes they want and create a new, binding contract. This typically takes a few days to 1 week.
5. Home Inspection
A home inspection is usually done for structure, wood destroying pests and radon; plan on 3 hours. You should also do a tank sweep for underground oil tanks. Based on your home inspector’s advice and your wishes, you may want to do additional inspections. Your agent should be with you at inspections.
6. Inspection Negotiation
The main inspection report comes in 1-2 days; radon takes 1 more week. After discussing this with your attorney and agent, you decide what repair and/or credit requests you want. Your attorney sends your requests by letter to the seller’s attorney. This can become a negotiation.
Now the mortgage process is finished. The bank sends an appraiser to the house to verify that its value justifies the loan amount. If it doesn’t, your attorney and agent will discuss what options are available to you. This doesn’t happen often but if it does, it becomes another negotiation. When the mortgage is approved, you receive a written commitment.
Don’t be surprised if your written commitment comes with conditions – many are standard (confirming your employment, income, credit etc) but sometimes the bank underwriter wants more documentation to prove certain things. A good banker will be working with you on this.
8. Final Steps to Closing
After the written mortgage commitment is received, your attorney orders the title and survey. Both attorneys prepare the closing documents and schedule the closing with the bank.
A walk through inspection is done the day of closing to make sure the house has been properly maintained, is vacant, in broom swept condition and includes whatever is to remain. You may need another 7-10 days earlier to make sure things are on schedule; please go my article on this.
This happens at your attorney’s office. You first close on the mortgage (1 hour) and then on the house (30 minutes). During this entire process your attorney will be explaining all the documents involved. The seller gives you the keys and the house is yours!
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