THE HOME BUYING PROCESS A NINE STEP PATHFINDER TO THE MAZE

By DR. RUTH MIRON-SCHLEIDER
Recipient of NJAR Circle of Excellence Award
1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010

Buying a home is one of the most significant purchases you will make in your lifetime. It is therefore imperative that you do it right: understand the entire process, anticipate and prepare for the various steps along the way that will require your input and participation, and know your rights and options.

The following synopsis will give you a general idea about the process of buying a home and the sequence of events (“steps”) leading to a successful “closing,” -- the time you will be handed the deed, title and keys, and thus become the proud new homeowner. Please note: Since there is no standard procedure for a real estate transaction, please use the following only as a general guideline.

We will assume that you have been working with a Realtor who has assessed your needs and wishes and has custom-tailored your search. Your Realtor has provided you with a comprehensive inventory of available homes, as well as an extensive listing of properties recently sold in the area. You have previewed a number of properties and you are now ready to make an offer. The home buying process is about to begin.

STEP 1 - THE INITIAL OFFER: In the State of New Jersey offers are usually presented in contract form. This means that you will be signing a Contract of Sale with the terms of your offer spelled out (i.e. total purchase price, amount of your mortgage, amount of your down payment, date by which you anticipate a mortgage commitment, proposed “Closing” date, items included and excluded from sale, etc.). A “Good Faith” deposit (usually $1.000.00) is attached to the contract and is held in your Broker’s trust account during the negotiations. Often, a lender’s pre-qualification or pre-approval letter is presented as well. At this point, the buyer’s Realtor contacts the listing agent and they arrange to meet, commonly at the seller’s home or broker’s office, to review the terms and substance of the offer. The prospective buyer’s financial qualifications, motivations and circumstances are presented to the prospective seller. It is your Realtor’s responsibility, as a Buyer’s Agent, to procure the lowest price and best terms for you, the purchaser.

STEP 2 - THE NEGOTIATIONS: Once the initial offer has been presented, the seller may accept, reject, or counter-offer your proposal. The negotiating process may be short and smooth, or drawn-out and complex. Your Realtor’s constant communication with you is crucial during this process. As your real estate professional, your Realtor is your dedicated, discrete and loyal advocate.

STEP 3 – MEETING OF THE MINDS: Once you and the seller agree upon a purchase price and terms of the sale, a “meeting of the minds” has been accomplished. The contract and all other necessary documents are signed and initialed by the seller and the buyer, and copies are immediately given to all parties involved, including each party’s respective attorney. You will need an original copy of the contract with original signatures, in case the bank requests it (most lending institutions accept faxed copies in lieu of original papers nowadays).

STEP 4 – ATTORNEY REVIEW IN PROGRESS: Once the contract is dated, signed and delivered to seller and buyer, the Attorney Review period begins. This period is intended to give the buyer’s and seller’s attorneys the necessary time to inspect the contract. Any necessary changes are negotiated by the attorneys and returned to the buyer and seller for their approval and signatures. It is, therefore, rather routine for attorneys to extend this three-day period. This process protects both buyer and seller. Once the contract is approved by both parties, the Attorney Review period is declared over and you proceed to the next step.

STEP 5 – HOME INSPECTION: It is your right and responsibility, as the purchaser, to inspect the home. The contract usually contains clauses which deal with home inspections and the specific period of time in which they must occur. Customarily, a buyer is given about 10 days to conduct an inspection. Inspection engineers usually examine structural and mechanical features as well as check for the presence of termites, radon and other environmental hazards. There are several excellent pamphlets on environmental wastes and hazards. “Environmental Issues for Home Buyers and Home Sellers” is a concise and informative booklet prepared by the New Jersey Association of Realtors. Your Realtor can provide you with a copy of this important publication.

STEP 6 – THE DEPOSIT: After inspections are completed, the balance of the deposit is usually due. You will send the deposit moneys to your attorney. Your attorney will, in turn, send your deposit to the seller’s attorney. Your initial deposit (which you submitted to your Broker with your original offer) will now be released to the seller’s attorney’s trust account when your Broker receives an attorney’s letter instructing him to do so.

STEP 7 – THE MORTGAGE: You will be interviewing various banks and lending institutions to obtain a financing plan that best suits your needs and special situations (such as no-verification loans, low down payments, etc.). Banks approve a mortgage application based on an applicant’s financial ability and on an appraisal of the property being mortgaged. It usually takes two to three weeks to obtain a written mortgage commitment after the application and all the necessary paperwork have been received. At this point, your attorney will order a title search and a survey.

STEP 8 – THE “WALK-THROUGH” INSPECTION: As the buyer, you have the right to inspect the home just prior to closing, in order to make certain that the home is rendered in the condition warranted in the contract. It is normally expected that the house and grounds have been maintained in same condition they were at time of contract. It is also expected, unless otherwise specified in the contract, that the property will be delivered vacant, in “broom clean” condition, with all personal belongings and debris removed.

STEP 9 – THE CLOSING: You are now ready to become a homeowner. At the closing, the deed will be conveyed to you and the title will pass on to you. Both you and the seller will receive a closing statement, known as RESPA (Real Estate Settlement and Procedures Act) in which the allocation of all moneys is specifically accounted. The seller will now give you keys to your new home. A residential closing lasts approximately 1-1½ hours.

Finding and purchasing your dream home takes a lot of hard work and professional know-how. Making even a small mistake can sometimes spell serious trouble. By working with a trustworthy and experienced Realtor, you will gain the services of a skilled professional with advanced training and expertise in residential sales. The right Realtor will carefully listen to your needs and wishes, and will walk you through the entire process, from A to Z. Your chosen real estate professional will expertly negotiate on your behalf and will help make your home buying experience an unqualified success.

Good luck and happy home ownership!!!

Ruth Miron-Schleider, a 33-year resident of Bergen County, is a Certified Residential Specialist, an e-PRO Internet Professional and an Accredited Buyer Representative. She is a member of the Eastern Bergen Board of REALTORS®, National Association of Counselors, the Senior Advantage Real Estate Council, and the Graduate Realtor Institute. For a complimentary consultation, call her at MIRON PROPERTIES, 201.266.8555, or contact Ruth via e-mail: Miron@MironProperties.com.

Information deemed reliable but not guaranteed, subject to errors and omissions.
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