Make an Offer on Your Dream Home or Save for a Down Payment?

 

You’ve finally found your dream home and you think you’re ready to buy, but unfortunately it’s not as easy as ringing the doorbell and claiming the house. The decision to buy can be the start of a tricky dance between buyer and seller, typically with real estate agents acting as mediators. Your agent will be able to help you with questions you may have on the potentially daunting process of buying a future home, but this guide can help you get started.

When is the “right” time to buy a home?

Deciding on the right time to make an offer on a house can be an intimidating task, especially if the house appears to have all you ever wished for and more. Because a down payment can be an important part of buying a home, you need to be aware of your borrowing capabilities with and without a down payment when making a home purchase.

What is a down payment?

A down payment is a specific portion of the total cost of the house that the lender requires you to submit up front in order to qualify for a mortgage loan. The more money you are able to apply towards the down payment, the lower your interest and monthly mortgage payments will be. It is ideal if you can save up an amount that is at least 20% of the home’s price.

Is a down payment required?

Without question, it’s vital to wait to make an offer until you have a handle on your finances, as it makes the buying process easier. When you make an offer on your dream home, you should know how much house you can afford – meaning you’ve been pre-approved to borrow a set amount of money from a lender. Sellers are inclined to go with buyers who make a solid offer and have proof of exactly how they’ll come through on that offer. Depending on your finance history, credit report, asking price of the home and requirements set out by your lender, you may not be required to make a 20% down payment.

What is earnest money?

Most likely, you will be required to submit an “earnest money” check or money order, which will be held in an escrow account until closing, if the seller accepts your offer. Earnest money is a good faith deposit that the seller requests before they agree to sell their house to you. This deposit shows that you are serious about purchasing the house and that you are most likely financially capable of following through with paying off the house. The earnest money deposit (EMD) is typically listed on the Multiple Listings Sheet (MLS) and is usually submitted with the offer. Because it is possible to lose your EMD, it is recommended not to submit a higher EMD than what the seller lists on the MLS. The EMD can be lost if your contract with the seller is breached without an acceptable reason or if another potential buyer’s offer is accepted over yours.

How can I avoid losing my EMD?

 

Real estate breach of contract happens all the time – and it’s usually not something that the buyers could have seen coming on their own. Although your real estate agent is an expert in selling homes, it’s possible that they aren’t as versed in real estate law as a NJ real estate attorney. Trust in your real estate agent, but once you have a contract in hand, it is always wise to have it reviewed by your favorite real estate lawyer.

Working with both an experienced real estate agent and a real estate attorney won’t guarantee that you’ll land the home of your dreams, but it will increase your odds. Do you have questions about your real estate contract? Fill out this simple form and have your questions answered by a professional and experienced New Jersey real estate attorney.

Advertisements

The Role of the New Jersey Real Estate Attorney

Upon contemplation of purchasing a home in New Jersey, you may be wondering if you should work with a real estate attorney as well as a real estate agent during the process. To some people this may seem redundant, but there are several very good reasons to consider hiring a NJ real estate lawyer.

In New Jersey, state law gives home buyers and sellers a three day “attorney review period.” This three day period begins when a real estate contract is signed. The contract is not considered legally binding until the three day attorney review period has ended.

Many home buyers ignore the attorney review period and ask, “What can my attorney do that my real estate broker can’t do?” The answers follow.

Review legal contracts

During the attorney review period, your NJ real estate attorney will read through the entirety of your real estate contract, looking for any red flags and addressing crucial elements that may be missing. Having your real estate attorney review your contract during the attorney review period will increase your chances of a successful closing without any glitches and without surprises several months from now. Real estate attorneys have been specifically trained in the area of real estate contract law, and they know precisely what to look for, whereas real estate brokers are generally most interested in closing the deal.

Because real estate agents frequently use generic forms that are “one size fits all,” many special circumstances may not be addressed in your purchase agreement. An attorney will notice when crucial details are missing from your sales agreement, and they can add contingencies where they are needed.

Perform a title search

New Jersey real estate attorneys will perform an action called a title search when property is being sold from one owner to another. A title search must be completed in order to determine if a property is free of any liens, judgments, or encumbrances. An attorney can perform a title search much faster and cheaper because of his networking connections and close relationships with title companies in the area.

Legal filings

Often, real estate deeds must be filed with the county and state government. This is more true when commercial property is involved. In these cases, your real estate lawyer will easily be able to assist you with obtaining your tax identification number, establishing your business entity, securing a business license and navigating all of the state regulations surrounding any construction that you may wish to have completed on your new commercial (or residential) property.

Some people choose to move forward with a home purchase without the assistance of a real estate attorney in New Jersey. While this is within your legal rights, it is well worth the extra money and relatively short investment of time to work closely with a lawyer near you who specializes in real estate contract law.

In doing so, you will protect yourself from any problems that may arise during the property transfer process. Some glitches that may occur include: improperly filed deeds, tax issues, undiscovered liens, home inspection challenges/property defects, missing or improperly filed documentation/permits, and failure to properly register commercial property. Your attorney can also attend the closing with you to ensure that everything goes as planned.

Will working with an attorney cost you more money than if you didn’t hire one while you were purchasing a new home or location for your business? YES.

However, the potential money a certified NJ real estate attorney can save you in the long run is indeterminate and can oftentimes be exponential when compared with your initial investment in retaining your attorney’s services. The smart move is to invest in a secure transaction by making sure that your real estate contract is legally binding, in your favor, without errors, and free of encumbrances.

 

Image: “Sherwood Country Club” by Sherwood CC – licensed under CC by 2.0