RE/MAX Realty Professionals Inc.
Kristof Tabor
Broker Salesperson
973-773-4000 ext. 32
Contact Me by E-mail
Information for Buyers
Making an Offer
Homebuyers who haven't bought or sold a home in recent years are often surprised by the complexity of today's purchase offers. Gone are the days of the one-page purchase contracts. Today's purchase offers are six or seven pages long and have multiple disclosures. Verbal offers to buy real estate are not binding. In New Jersey, the offer is usually drafted by your real estate agent.
If you are not paying all cash for the property you will need a mortgage pre-approval attached to your offer. Most sellers will refuse to look at your offer without this document. To obtain the mortgage Pre-approval you will have to talk to a mortgage provider and submit certain documents such as paystubs and tax returns.
Most buyers think simply in terms of the price when they decide to make an offer. But the price is just one of the details that make up the purchase contract. Typically, an offer will include the following: the deposit amount, the mortgage and down payment amounts, the closing date, the occupancy date, an itemization of what's included in the sale, various contingencies to protect the parties (such as satisfactory title review, financing, inspections or the sale of another property), time periods for performing the contingencies and who's responsible for complying with any point of sale ordinances (like installing smoke detectors).
In addition, the purchase contract may include optional clauses, such as an arbitration clause for dispute resolution, or a liquidated damages clause if the parties wish to limit damages that can be awarded to the seller if the buyer breaches the contract.
You may be wondering why you have to make so many decisions before you and the seller have even agreed on a price. Price, while important, is not the only consideration. For example, a full-price offer might not be acceptable to the sellers if it's contingent on the buyers selling their home. Sellers need to know all the terms and conditions of the buyers' offer before they can decide if the offer is acceptable. This is why all the terms and conditions that will pertain to the purchase transaction are encompassed in the offer.
FIRST-TIME TIP: To prepare to make an offer ask your agent to give you a sample copy of the purchase contract. Read it over and if there's anything you don't understand, ask for an explanation. Too often, buyers don't read the contract in advance. They're rushed when they do finally make an offer, and they don't take the time to read the contract while they're in the midst of making an offer.
Ideally, no matter how rushed you are, you should sit down with your agent and review the contract. Together you can decide on the specific terms you want to include in the contract. Be sure to leave yourself enough time so that you have the opportunity to fully understand the contract before you sign it.
The Benefit of Using a Buyer's Agent
Please Note: When buying a property buyers should remember that the listing agent advertising the property is representing the seller in the transaction. By law the listing agent cannot offer full service to the buyers. Most buyers like to be fully represented when purchasing real estate. That is why we offer buyers agency representation to our clients. What's best about this service is the fact that is FREE to our buyers. Our commission is covered from the seller's proceeds.
If you are interested in the agency representation please read Consumer Information Statement for the state of New Jersey.
What is Your Credit Rating?
Anyone who has ever had a bank account, a mortgage, a credit card, a car loan, an account with a retail store etc. will almost definitely have a credit rating.
Most information in your credit rating comes from companies you have credit with such as the banks, department stores, finance companies etc. as well as from certain public records such as lawsuits, tax liens, judgments and bankruptcies.
In accordance with Federal Law, accurate Negative information, such as late payment or an account turned over to a Collection Agency can remain on your credit report for seven years.
If you have been denied credit, insurance, a job or rental dwelling opportunity because of information contained in your credit report, you are entitled to a complimentary copy of your report within 60 days. If after checking you believe the information to be incorrect you may file a brief statement explaining why. Inaccurate information on your credit may be removed but no one can have accurate, current or verifiable information removed from your record.
Closing Cost
Closing costs are simply the fees, costs and taxes associated with the purchasing of a home, the borrowing of money and the preparation of necessary paperwork to finalize the sale. The total amount of your closing costs will vary depending on where your new home will be located, what type of property you are buying, the price of the home and the complexity of the transaction. It is extremely important that you work closely with your Realtor and lender in the early stages of the home buying process to determine what these costs could be, since closing costs can easily represent thousands of dollars. Typically the closing cost is between 2%-5% of the purchase price depending on your credit rating, points purchased, prepaid taxes, prepaid insurance and other fees. Your mortgage representative can give you an estimate for a property in question.
The main categories are:
1. Discounts Points to Buying Down the Mortgage
This fee is optional and can vary significantly from 0.5 to 3 points on the total of the mortgage. It is a one-time charge that is calculated based on the amount of the mortgage loan. A buyer would pay this amount up front to reduce the ongoing cost of the mortgage over the life of the loan. This charge is fully deductible as mortgage interest.
2. The Costs of Originating the Mortgage
These generally include a variety of fees such as the loan origination fee, the appraisal fee and the cost of credit reports. There are also other fees that you will be expected to pay at closing such as hazard and mortgage insurance and interest accrued on the mortgage between closing date and the end of the month.
3. Taxes and other Local Fees
These charges will vary according to the requirements of local governments. Some may demand that your property taxes be pro-rated according to when you will officially become the owner of the house. There can also be personal property taxes, homeowner's association dues, and other assessments that are specific to the area that you are moving into.
4. The Cost of Documentation
You will have to pay for any research involving public records and the title history on the property you are buying. This insures that the title on your property is unencumbered by other ownership or liens and can be delivered to you at closing. Other costs include Recording and Transfer fees that cover the legal recording of the deed to your name.
5. Home Inspection and Termite Inspection Cost
While home inspection is optional, we strongly recommend ASHI certified home inspector
6. Insurance Cost
You will have to purchase a home insurance policy before the house is transferred to you. Start shopping for best rates about 2 weeks before the closing.
It is critical that you have a clear understanding of the total cost of your closing. Your mortgage representative should supply you with a detailed estimate well in advance of the actual closing.
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