Selling a house in the Garden State.
The Realtor Contract and Attorney Review:
Once you have an accepted an offer from a buyer, the realtor will have you sign a realtor prepared form contract that is used in nearly every real estate purchase in New Jersey. At the time you sign the contract, the realtor will ask you for the name and contact information for your attorney. The buyer will sign the same contract and give the realtor a small deposit. The realtor will then send a copy of the fully signed contract to your attorney and the buyer’s attorney. Upon receipt of the contract, your attorney will review the contract. This period of “attorney review” lasts three days. During attorney review, the buyer’s attorney will send an “Attorney Review Letter” to your attorney delineating the changes to be made to the realtor contract. Once the parties agree to changes made by the buyer and seller, attorney review is concluded. The seller and buyer are then contractually obligated to each other to sell and buy the property. Shortly after conclusion of attorney review, the buyer may be asked for a larger, second deposit to be held in escrow by your attorney. The amount of the second deposit can greatly vary from a small amount of money to as high as ten percent of the purchase price. This figure is negotiable, but the more the buyer puts down on contract, the more attractive they are as a buyer in that the buyer is demonstrating their seriousness in closing the deal and gambling the loss of their deposit should they seek to back out of the deal and breaching the contract.
Buyer To Obtain Mortgage Funds and Provide You Proof of a Mortgage Commitment:
As the seller, you now wait for the buyer to obtain a mortgage from a lender. This process can take anywhere from 45 to up to 90 days. The mortgage approval process includes a review of your buyer’s tax returns and other essential financial records. It also includes an appraisal of the value of your home. That means that at some point, an appraiser from the lender will visit your home to physically inspect it and conduct an appraisal. Once the lender has agreed to provide your buyer with mortgage funds, the lender will issue a mortgage commitment. A mortgage commitment is a promise from a lender to lend a certain amount of money at a certain interest rate over a certain period of time. The buyer is contractually obligated to give a copy of the mortgage commitment to you, through his attorney, who will then send it to your attorney. This lets the seller know that the buyer is moving along the purchase process and has obtained the necessary funds to complete the transaction. This is very important because you have stopped showing your house to other potential buyers and are looking forward to completing the sale with this buyer. The sale can only happen if the buyer has the necessary funds.
Address Issues Raised in the Title Report; Order a Payoff Letter,; Order a Water Meter Reading:
The buyer’s attorney will also order a title report from a reputable, licensed title insurance company or one of their agents, commonly known as an “abstract company.” The title report compiles information about your property such as ownership and liens on the property, including outstanding mortgages. The title company or the buyer’s attorney will forward a copy of the title report to your attorney. Your attorney will review the title report for any possible issues. If there are issues with respect to your ownership, or if there are judgments or other outstanding monetary matters, your attorney will discuss them with you. It will then be your obligation to clear those matters, with the help of your attorney. If you have a mortgage on your property, you will need to order a “payoff letter.” A payoff letter is a statement from your lender stating how much is owed on your mortgage to pay it off by a certain date. The payoff amount is not the amount stated on your last mortgage statement. The payoff amount will be higher, as it will include interest through the closing date, plus any other sums due. Ask your attorney when you should order the payoff letter. Upon your receipt of the payoff letter, send it to your attorney without delay.
Closing Preparation:
While you are waiting for the buyer to obtain their mortgage commitment from their lender, prepare to move by lining up your movers and cleaning the home so that there are no issues when the buyer does their “walk through” or final inspection of the home, typically a day before the closing, or just prior to the closing on the same day.
The Closing:
The moment you have been waiting patiently for several months has arrived. The closing in New Jersey may take place in a variety of manners. Sometimes, it will be at the buyer’s attorney’s office, other times it may be at the title company. Frequently, you, as the seller and your attorney will not be present at the closing but will have forwarded the fully executed Deed and other closing documents to the buyer’s attorney or title company. The mortgage documents will also be waiting for the buyer’s execution at the closing. Once the mortgage documents are signed, the funds due to you, the seller, are forwarded to the you or your attorney in the form of a bank check or wire, minus your closing costs. Your attorney or your title company will send the original deed to the Office of the County Clerk where the property is located for recording. Upon recordation, the recorded, original deed is then returned to your attorney or you. The transaction is now closed, and you have sold your property.
Congratulations!
