Probably the most important aspect of selling your home is contracting with the best real estate broker as your listing agent and pricing the property correctly for the market. One successful approach that I have encountered personally is the setting of a listing price at or slightly below fair market value. This technique engenders a flurry of early activity and bids and many times a bidding war that achieves a sale price above and beyond expectations. Other approaches may better suit your own philosophy and personal financial circumstances.
Your broker will provide you with any and all written offers submitted and signed by prospective purchasers, whether through the listing agent or a participating broker on the other side. If acceptable to you as seller, you will sign the offer, thereby creating a contract subject to attorney review – a procedure unique to New Jersey transactions initiated by real estate brokers. The brokers will arrange for the delivery of the signed contracts to the respective attorneys for each of the parties, to commence attorney review. A $1,000.00 binder in the past was typically paid by the buyer at this point as good faith money, but this munificent payment has, for the most part, gone the way of the dinosaurs, as administratively not worth the trouble.
Attorney review typically lasts three (3) days, but can be shorter or longer depending upon how quickly the parties can agree upon and execute the attorneys’ work product. During this time, counsel for either of the parties may either accept or reject the form contract, or, in the vast majority of cases, propose amendments by way of a rider and/or a letter amendment setting forth revisions to the form contract. If the contract remains viable after this period by the attorneys' agreeing upon and the parties’ accepting and signing such amendments, and such amendments being circulated by counsel, attorney review is deemed successfully concluded. Any party may terminate the contract during the period of attorney review, for any reason or for no reason. In sellers’ markets, this opens up the prospect of a higher offer being made to and accepted by the seller. In buyers’ markets, the seller runs the risk of the buyer’s grasping a perceived better opportunity elsewhere. Upon successful completion of attorney review, the buyer becomes more in control of the transaction, subject to satisfaction of the inspection and mortgage contingencies. The additional deposit in most cases is paid within ten (10) days of completion of attorney review.
The home inspection in most cases represents the last bastion of seller’s control over whether the deal becomes firm and closes. Once the buyer’s inspection report is received, the attorneys negotiate repairs and/or credits against the purchase price in lieu of repairs, sometimes assisted by estimates. Terms of the resolution should be confirmed by letter by and between counsel. At this juncture, the only remaining contingency is buyer’s receipt of the mortgage commitment; in “all cash” deals, the deal becomes firm and non-contingent once the inspection contingency is satisfied.
Once the title searches, and, if necessary, the survey -- ordered by the buyer’s attorney -- are in hand, and the buyer’s committed mortgage lender, if any, authorizes it as “clear to close”, a closing date is now set by the mortgage lender and confirmed between attorneys after consultation with their clients. Before coming to the closing, a final walk-through inspection is arranged by the participating broker; a credit or escrow will handle any eleventh-hour problems.
At closing, the title documents (e.g., deed, affidavits and municipal approval) are delivered by seller in exchange for the net sale proceeds from buyer. Any and all mortgage balances of the seller and any and all liens against the premises are debited from the seller’s funds at closing, as well as the brokers’ commissions and attorney’s fees. In addition, New Jersey realty transfer tax (paid to the county and shared with the State) is charged to the seller at closing. Unless a senior is involved as a seller, entitling the seller to a partial exemption, this tax is exacted on a sliding scale and, by way of example, amounts to $4,175 on a $500,000 sale and to $9,575 on a $1,000,000 sale at current rates.
A common practice is for the seller to sign title documents in advance of closing, giving seller’s attorney a written authorization to sign at closing a federally-required form (Closing Disclosure (“CD”)) on behalf of seller and an ALTA Settlement Statement as well, which is also signed by buyer and the settlement agent. The CD and ALTA are prepared at the eleventh hour by the settlement agent after having received the lender’s fees and charges. If the seller does not attend the closing, the net sale proceeds may either be wired into the seller’s bank account or a check accepted by seller’s attorney and delivered or picked up by the seller after seller’s attorney returns from the closing. This enables a smoother move out and/or possibly saves a sick day or vacation day from work.
After closing, make sure you don’t spend all your money in one place!
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Christopher G. Weigl is an attorney at law who resides in Ridgewood and maintains his law office at 123 Prospect Street in Ridgewood. He is a forty-two (42)-year practitioner admitted to the bars of New Jersey and New York, a past Chairman of the General Practice Section (now the Solo and Small Firm Section) of the New Jersey State Bar Association (“NJSBA”) and a member of the Real Property Committee of the Bergen County Bar Association. He is a past recipient of the General Practitioner of the Year Award from NJSBA and concentrates in his general practice on real estate.
Christopher G. Weigl
Attorney at Law
123 Prospect Street
Ridgewood, New Jersey 07450
(201) 689-7772
(201) 788-0534 (cell)
(201) 689-7885 (fax)
cgwesq@verizon.net