Buying a home can be daunting, especially if it’s your first time. Therefore, when buying a home it’s important to assemble a competent team including a real estate agent, mortgage broker, attorney and a home inspector who can work together to protect your interests. However, while all these professionals are there to work on your behalf as the homebuyer, research and preparedness will allow the homebuying process to go smoother.
Ideally, before enlisting anyone else’s help, a homebuyer should reach out to a bank or mortgage broker for a preapproval. A preapproval is a preliminary document from a bank approving a homebuyer for a mortgage up to a specific limit. This letter will set your budget and will inform sellers that you are capable of closing on the home. While historically most buyers used mortgage brokers, with numerous rate comparison tools available online, those without complicated credit issues may save thousands of dollars by finding the best lender online and reaching out directly.
Next, an interested buyer should determine whether they wish to be represented by a buyer’s agent. It is important to know that the seller’s agent represents the seller’s interest, not the buyer’s interest. Additionally, the seller pays the commision to his agent, which is then split with the buyer’s agent, so often you can get this service free of charge. Your agent will guide you through the home search and negotiations. It is important to choose an agent who knows your market and can advise on locations and prices.
Once you’ve found a home and settled with the seller on a price, your real estate agent will likely prepare a contract and present it to the buyer. The standard broker contract in New Jersey typically gives three business days for attorney review. This period begins as soon as you receive a signed contract from both parties. During this period, your attorney can elect to disapprove of the contract or any part of it, and revisions can be made. You cannot disapprove of the contract without an attorney. After this period, the contract will be binding, and it may be costly to terminate it. From this point on, your attorney should be managing numerous aspects of the transaction, from coordinating and holding deposits, to clearing title and scheduling a closing.
Once attorney review is completed, you will begin your due diligence period. This means that you will begin to inspect the home. While sellers are required to reveal material defects in a home, there may be aspects of the home that are not known to either party that require correction. Many of these defects can be revealed during a thorough inspection by a licensed home inspector.
Checking for potential health hazards including lead paint and radon, environmental hazards including abandoned heating oil and septic tanks, and other issues such as locations of flood zones, may impact the insurability. If any defects are revealed, this will be your opportunity to raise them with the seller. The seller may choose to correct the issues, or adjust the price to allow you to correct those defects. However, many contracts will allow for contract termination if the issues cannot be corrected.
While the steps required to purchase a home may seem complex, a team of qualified professionals can relieve most of the pressure from the purchase. A qualified attorney can ease stress by guiding you through the process. Michelle Rosen dedicates the time and effort to make sure each purchase is done with the care and attention necessary.
By Michelle Rosen
Michelle Rosen, Esq., is an attorney in New Jersey who practices property law. The information contained in this article is for informational purposes only, and should not be construed as legal advice on any subject matter. An individual should not act or refrain from acting on the basis of any content included in this article without seeking legal or other professional advice.