Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.

Why Do You Want To Buy?
Are you tired of paying rent? Have you decided to pay your own mortgage and not your landlord’s? Have you outgrown your current home? Are you looking for an investment portfolio? Are you looking for a rental property? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown?
Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.

Ready to find out more?

View our Guide to Buying

Guide to Buying

Buyer Gameplan

Determine your budget

Figure out what you can spend for a down payment and take into account other monthly expenses. (mortgage payment, maintenance fees, taxes, utilities, possible parking)

Obtain Mortgage Pre-approval

It is important to work with a local lender, as they can work on a quick timeline and have local appraisers. (see Darren for recommendations)

Select a Local Attorney

He/she will know the inner workings of the area of purchase.

Prioritize Your Needs

Budget? Space? Location? Building Amenities? Parking? Views? Put these in order and if you get 75% of them consider it a worthy option.

Identify Your Timeline

When you need to move out of your current place and when you need to move in to your next home.

Explore

Start to explore different neighborhoods that fit your needs. Research schools. Evaluate transportation needs / access to transportation. Determine building amenity: must haves vs. nice to haves (washer/dryer, gym in building, pet policy, storage facilities, parking)

Be Careful with Finances

Do not make major financial changes such as adding new credit cards or cash deposits without proper records. Do not plan on changing jobs from the beginning of the process until you close. Review your credit scores and clean up any potential damaging credit items.

Examine Building Financials

Once prospective home is selected, examine building financials with Darren and attorney.

Buyer Checklist

Build Your Green File:

Copy of one month’s recent and consecutive pay stubs
Copy of last two years of W-2 statements
Copy of last two years of personal tax returns (1040s)- all pages
Two months of asset account statements- all pages and all accounts
Copy of fully executed contract of sale
Copy of photo identification, such as a valid driver’s license or passport
Credit Inquiry letter- A letter explaining if any recent credit inquires have resulted in any new debt

Additional documentation may be required if:

You own additional properties
You have had credit issues in the past
You are receiving gift funds to use as a down payment on your purchase transaction
You are a permanent resident alien, or are in the U.S. on a work visa
You receive or are required to pay alimony or child support
You receive social security, pension benefits or disability income

The Process

The Initial Agreement and Deposit

An effective agreement is a legal arrangement between a potential purchaser and the property’s seller. In the state of New Jersey after a contract is signed by both parties it enters into attorney review. This process takes a minimum of three business days. The initial deposit is held in the trust account of the attorney representing the seller.

Contract to Close

Your Attorney will help you through to closing. They will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions. There may be recorded easements and encroachments, which limit the rights to use your property.

Home Inspections

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. Darren can recommend several different inspectors.

Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, OR

2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract (usually the price).

Appraisal and Lending

It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.

Association Approval

If the property that you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all of the information completely and legibly so there is no delay in processing the application. Most associations require a certificate of approval before move-in. Your Attorney will request that the original copy of this approval letter be brought to the closing, so that it can be recorded with the deed in the county public records.

Property Insurance

If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You can save money on insurance with these tips.

Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should. Darren will be happy to recommend experienced knowledgeable insurance agents for every property type.

Purchase Timeline

1. PRE-APPROVAL

Seek pre-approval for a mortgage. This important first step will determine how much you can spend on your home. Contact Darren for recommendations on lenders. (1-2 days)

2. BUYER’S CONSULTATION

Buyer’s Consultation - Darren will sit down with you and discuss the process of finding a home and find out your needs. (Few days after pre-approval)

3. SEARCH HOMES ONLINE

Look for homes online. Darren will assist you in finding homes that have the criteria to fit your needs by providing a list of these homes. Internet savvy buyers save valuable time by doing research online, while gaining a better understanding of current market conditions. (Up to 1 week)

4. VISIT HOMES

Visit potential homes. The average person sees around 15 homes compared to the savvy internet buyer who views just 4-5 homes before buying. (1 day- 1 month)

5. START NEGOTIATION PROCESS

Once you find a home you like, start the negotiation process. It is important to understand past comparable sales and current market conditions in order to prepare for the negotiation process. (1 day - 1 week).

6. OFFER ACCEPTED

Congratulations! Offer accepted, sign sales contract. The quicker the contract is signed, the better. Darren will review parts of the contract with you and submit it to an attorney. (1 day)

7. ATTORNEY REVIEW

Start attorney review, where both attorneys will review all aspects of the contract and move forward when all issues are resolved. The attorneys will be reviewing building financials, budgets, and board minutes. Once both parties have signed the contract, it becomes legally binding. (3 days - 2 weeks)

8. HOME INSPECTION

Order home inspection. Most Home Inspectors work during the week, so be prepared to take 2-3 hours off of work to be present for inspection. (Day after attorney review is complete)

9. APPLY FOR MORTGAGE

Apply for mortgage through lender. Important to get this process started right after attorney review ends. (Day after attorney review is complete)

10. WAIT FOR COMMITMENT

Wait to get mortgage commitment, prepare for closing. This last step often requires patience but the feeling of getting your new home is well worth it! (30-45 days)