How does the NJ real estate transaction work for a buyer?

In many jurisdictions, real estate agents or title companies handle a large portion of the legal details, but New Jersey has a unique system that places attorneys in a central role during the offer and contract phase. 

This added legal safeguard can help protect both parties from unforeseen issues, such as problematic contract language or undisclosed property conditions.

Preparation & Financing

Before diving into the search for a home, take stock of your finances. Start by reviewing your credit report, and consider your overall financial health:

• Monthly Expenses: Make a list of ongoing obligations like car payments, utility bills, insurance, and personal loans. This will help determine a comfortable mortgage payment level.

• Savings and Down Payment: New Jersey has a range of property prices, and the standard down payment can vary from 3% to 20% of the purchase price. 

• Emergency Reserve: It’s generally wise to have several months’ worth of mortgage payments set aside. Homeownership can bring unexpected costs!

Once you have an idea of your financial health you should consider contacting a reputable lending institution and get a mortgage pre-approval.  

Mortgage Pre-Approval

A mortgage pre-approval is a key step that demonstrates to sellers you’re a serious buyer. Though it does not guarantee final loan approval, it does provide clarity on the loan amount and a competitive edge.

When looking for a pre-approval, don’t hesitate to reach out to multiple lenders. Comparing interest rates and loan terms can make a significant difference over the life of your mortgage. 

Finally, while you can technically search for properties on your own, partnering with a real estate agent familiar with New Jersey neighborhoods often streamlines the home-buying process.

House Hunting

The next step is to figure out where you’d like to live. You can start by exploring online listings and using neighborhood data tools.

Property showings and open houses are opportunities to get a closer look at potential homes. If working with a real estate agent, they’ll schedule individual showings where you can tour properties one-on-one. 

Take notes or photos during each visit to help you recall details later. If you’re viewing multiple homes in a single day, everything can blur together without good documentation.

Making an Offer

Offer Price & Negotiation

After finding a home that suits your needs, the next step is determining the optimal offer price. Your real estate agent can help you examine comparable sales, recently sold homes in the same neighborhood with similar features, to guide your decision. 

Contract of Sale / Purchase Agreement

Once you find a home you like, in New Jersey, you’ll submit your offer using a standard real estate contract or purchase agreement, which usually includes:

• Offer Price: The amount you propose to pay for the property.

• Contingencies: Conditions that must be met for the contract to proceed (e.g., mortgage financing, home inspection, appraisal).

• Closing Date: A target date for finalizing the sale, usually 30 to 60 days from the contract signing, though this can vary.

• Additional Clauses: Specific requests or conditions, such as seller credits, included appliances, or a home warranty.

Earnest Money Deposit (EMD)

When making an offer, you’ll typically provide an earnest money deposit, which shows the seller you’re serious about purchasing the home. In New Jersey, the EMD usually ranges from 5 to 20% of the purchase price. 

This deposit is usually held in an escrow account. If the deal closes, the EMD is applied toward your down payment or closing costs; if the contract is canceled according to a valid contingency, you generally get the deposit back. If you back out for non-contingency reasons, you risk forfeiting some or all of this deposit.

Attorney Review Period

New Jersey has a three-business-day attorney review period for most residential real estate contracts. During this time, both buyer and seller attorneys review the contract for potential issues, ensuring it fully protects their respective clients rights.

Attorneys can also request modifications to contract terms, or either party can exit the deal without penalty. This period ensures you enter the contract fully informed of legal and financial implications.

Exiting Attorney Review

If neither side formally disapproves or revises the contract within the attorney review period, it automatically becomes binding. 

Make sure you maintain open communication with your attorney and real estate agent during this stage. Once you’ve exited attorney review, you typically cannot make major changes to the contract terms unless both sides agree in writing.

Home Inspection & Appraisal

After exiting the attorney review period, it’s time to thoroughly inspect the property. You’ll hire a professional home inspector to evaluate the home’s major systems and structure, which may include plumbing, electrical, roofing, heating, and more. 

Inspection reports can uncover issues, some minor and some more significant. Depending on the severity, buyers typically address them by:

• Requesting Repairs: The seller fixes the problems before closing.

• Price Reduction: The seller reduces the purchase price to account for the cost of repairs you will handle after closing.

• Seller Credit: The seller provides a credit at closing, which you can use toward closing costs or immediate repairs.

If you’re financing the purchase, your lender will require an appraisal to confirm the home’s value supports the loan amount. An independent appraiser compares the property to similar homes recently sold in the area. 

Closing Day

On or near your closing date, you’ll perform a final walk-through. This is your chance to confirm the property’s condition matches what was agreed upon:

• Confirm Repairs: Ensure that any repairs the seller agreed to make have been completed satisfactorily.

• Check Fixtures and Appliances: Verify that any items included in the sale are still in place and working properly.

• Look for New Damage: Make sure nothing has been damaged during the seller’s move-out.

What to Bring to Closing

Closings in New Jersey can take place at an attorney’s office, a title company, or sometimes remotely. Make sure you have:

• Photo ID: A valid driver’s license or passport.

• Certified Funds or Wire Transfer: Covering your down payment and closing costs.

Signing Documents

Expect to sign several key documents, including:

• Promissory Note: Your legal promise to repay the loan.

• Deed of Trust/Mortgage Document: Secures the loan against the property.

• Settlement Statement: Itemizes the financial details of the transaction.

• Affidavits and Declarations: Various legal statements verifying your identity and confirming certain aspects of the deal.

• Among other important but related loan documents.  

Closing Costs

Closing costs in New Jersey may include:

• Attorney Fees

• Lender Fees (origination, underwriting, application)

• Title Fees (search, insurance, survey)

• Transfer Taxes (imposed by state and/or local governments)

• Recording Fees (to register the deed)

• Escrow Deposits 

• Homeowners insurance (if not previously paid)

• Among other related fees.  

Once you’ve signed all the paperwork, handed over the funds, and the transaction is officially recorded, you receive the keys to your new home!

Why Choosing the Right Attorney Matters

New Jersey’s real estate transaction process makes selecting a knowledgeable attorney an essential step. 

While the attorney review period provides a safeguard, the right legal counsel ensures your contract is structured to protect your interests, whether you’re dealing with complex negotiations, unexpected inspection findings, or title issues. 

Summary

Understanding New Jersey’s real estate transaction process is important for all homebuyers. From the attorney review period to contingencies and closing protocols, it’s designed to protect buyers’ interests but can be complex to understand.

At Gonzalez & Polanco, LLC, Attorneys at Law, our team has nearly three decades of expertise in real estate and insurance law. We provide personalized legal services to guide clients through contract reviews, negotiations, title clarifications, and dispute resolutions, ensuring every step complies with New Jersey’s regulations.

Whether you’re finalizing a purchase agreement, resolving an inspection issue, or need assistance in understanding local zoning ordinances, our bilingual team is here to help. Contact us at 732-442-2500 or schedule a consultation through our website. Let us advocate for your interests and secure the peace of mind you deserve when making one of the most significant investments of your life.