Buying a House in New Jersey


The following is a sequence of events that will occur from the time you find your new home until the time you take possession.

When you find the"right" house, the first step is to sign a contract stating the price and terms you are willing to offer for the house.  In New Jersey, all offers must be in writing - there are no "verbal" agreements for real estate.  The realtor prepares the contract.  When the offer is presented to the sellers (usually immediately after you have signed the contract), it is accompanied by a check which is usually $1,000.00.  This check - referred to as "earnest money", is deposited into the broker's or attorney's Escrow account and the deposit will be released to the seller at closing.  If no agreement is reached, your "earnest money" will be returned to you.  When all the terms of the sale have been agreed upon, the seller will sign the contract and you will initial any changes which have been agreed to.


The usual contract is subject to a few contingencies that will vary according to the property and your needs as a buyer.  When all the contingencies have been met, you will be committed to the purchase of the house. 

The following are possible contingencies:

1.   Attorney Review: 3 days.

You have the option of hiring a New Jersey attorney who deals with real estate.  During the three business days following delivery of a fully executed copy of a contract to all parties, your attorney will review the contract and contact the attorney for the seller to approve the contract.   Changes may be made during this three-day period, but must be agreed upon by all parties.

2.    Structural Inspection: 10 days.

It is recommended that you hire a qualified inspector to inspect the house for major structural defects.

3.    Termite Inspection: 10 days.

It is recommended that you hire a licensed exterminator to inspect the house for all wood boring insects.  Should the inspection reveal infestation and/or damage, the seller will be notified and probably will remediate the problem because you will need a clear termite certification and one-year warranty from the Termite Company in order to obtain a mortgage.

4.    Radon Inspection: 10 days

Many buyers are ordering a radon inspection to ascertain that the radon level is such as not to pose a health hazard.

5.    Mortgage Contingency: 30 days.

Most people will be borrowing money to buy their new home.  In this case, a contingency outlining the terms of the mortgage (amount, length of mortgage, interest rate) must be included.  Customarily, the interest rate and points are specified as "prevailing" rate and points.  The mortgage should be applied for as soon as possible.


The contract must state a closing date, usually written as "on or before" a specific closing date.  This date often influences the negotiations, since taking possession at the seller's convenience make the offer more attractive.


Generally, within 10 to 14 days, attorneys will have approved the contract, inspections will have been completed, the remainder of the deposit money (usually totaling 10% of the purchase price) will have been deposited into the same broker's trust account (as noted above) where it is held until closing.  The amount and date of deposit monies will be a clause in your contract.


As soon as you have heard a decision by the bank regarding your mortgage application (generally up to 30 days) your attorney will then start to prepare for the closing.  A title search and application for title insurance will be made.  The deed will be rewritten in your name and all paperwork necessary for settlement completed.  If an early closing is desired and mortgage approval is certain, your attorney may start this procedure before approval is received.  At the closing you will be required to have homeowner's insurance for at least the amount of the mortgage.


It is recommended that just prior to closing; you inspect the house with your realtor to verify that it is in the same condition that it was when you went to contract.  Also, it is recommended that you check with the realtor so that proper arrangements are made regarding the transfer of utilities into your name.


Just prior to closing, your attorney will give you an itemized list of all expected expenses: property tax apportionment, fees, fuel oil remaining, etc.  It is at the closing that you officially take title to the property and are entitled to possession.


In summary, here is the sequence:

1.      Realtor prepares contract with your price offer and terms.

2.      Realtor negotiates contract with seller.

3.      Changes agreed upon and contract initialed.

4.      Attorney receives contract and approves.

5.      Inspections ordered and carried out.

6.      Second part of deposit turned over to realtor or attorney.

7.      Mortgage Approved.

8.      Title work ordered by attorney.

9.      Homeowners' insurance ordered by you.

10.    Utilities transferred.

11.    Pre-closing walk-through.

12.    Closing

13.    Welcome to your new home.

Ellen Hollis

Ellen Hollis

Realtor/Relocation Specialist
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