New Jersey Residential Real Estate FAQ's
How long will my transaction take?
Real estate transactions are notoriously unpredictable. This is because many factors impact the ability to close, some of which are outside of the parties control. This can include financing approvals, permits, inspections, various contingencies, and problems with title.
Do I need title insurance?
If you are financing a purchase, your lender will most likely require title insurance. If you are purchasing a property for cash, you do not technically need title insurance. However, it is strongly advised. Without title insurance, you cannot be sure that you have good title to the property.
What are the basic steps of a real estate transaction?
Real estate transactions can vary enormously depending on: 1. the wishes and experience of the parties, 2. the nature of the property and/or financing, 3. the existence or lack of various contingencies in the agreement, and 4. any special conditions which might exist.
Generally, real estate transactions in New Jersey follow the following timeline:
1. Preliminary Negotiations. Agents engage in preliminary negotiations and create a contract.
2. Attorney Review. Once the contract is signed by both parties, the clock begins ticking on the attorney review period. The attorney review period is three business days. During this time an attorney from either party can cancel the contract and/or make modifications which can be accepted or rejected by the other party. If a contract is not cancelled by either side during the attorney review period, then the contract will go into effect as written after three business days. If it is cancelled by one of the attorneys, the attorney will now negotiate through letters to arrive at a final agreement. Once an agreement is reached, the period of attorney review is concluded. You should speak with your attorney during or prior to the attorney review period to discuss any specific concerns, expectations, or wishes. Buyers should speak with their lender prior to attorney review to get an idea of the timeline for the transaction. Any lender pre-approval may be helpful in the negotiation process.
3. Inspection Period. Once attorney review is completed, there is normally a fixed amount of time to conduct various inspections. Inspections are a buyer's right (and are normally done at the buyer's expense), but you should be aware that the buyer's right to inspections may be modified or limited by the negotiated contract. Additional inspections such as inspections of pools and other amenities should be specifically negotiated during attorney review.
4. Title Search. During or after the inspection period, a title search is normally ordered. A title search will reveal any defects in title which should be remedied prior to the closing date.
5. Certificate of Continued Occupancy and Fire Certificates. Depending on the town, city, or municipality - a certificate of occupancy and fire inspection may be required in order to transfer title. The certificate of occupancy can sometimes go by other names, and requirements will vary depending on the jurisdiction. Inspections should be scheduled by Seller or Seller's agent as early as possible as there is often a waiting period. If there is any un-permitted work in the home, this will likely need to be remedied prior to issuing of a cert
6. Mortgage Commitment. A mortgage commitment is a letter issued by a letter providing a firm commitment going forward with the transaction. This is often delivered at some point prior to closing to provide assurances to the Seller. Once the commitment letter is issued, the finance contingency is deemed satisfied.
7. Exchange of Closing Documents. Prior to closing, Seller will provide Buyer's attorney, lender, and title company a package of documents for their review. If the documents are satisfactory to all parties, the parties can go ahead schedule the closing.
8. Walk-through. Immediately prior to closing, most parties will schedule a walk through of the property. This often takes place on the morning prior to closing. If there are any unexpected issues during the walk through, credits may be negotiated in favor of Buyer at closing.
9. Closing. In most transactions, Seller's side of the closing can be done remotely. However, depending on the lender requirement Buyers may need to close in person with a closing agent. During closing, the deed will be transferred to the Buyer along with other various documents. A Buyer will also often sign mortgage documents at this time.