February 20, 2020
Use These 6 Tips to Sail Smoothly to the American Dream
Homeownership is often dubbed as the symbol of the American Dream. Those words pack a whole lot of emotion into the act of buying or selling a home …whether it’s your first house, a bigger house, or the house to which you right-size when you want to pare down the logistics of your life.
There’s no denying that a real estate transaction is one of the biggest financial transactions you’ll make in your life. Keeping your emotions in check is important. Clear-headedness pays off. And part of that clear-headedness is partnering with the right professionals, to help you set sail, navigate effectively and finish the race with as little stress as possible.
Choose the right real estate broker or go solo
Real estate brokers and real estate attorneys are knowledgeable about the ins-and-outs of real estate transactions. To say the least, it’s helpful to have these professionals in your corner.
Choosing the right realtor, for example, can make a big difference in the outcome of your purchase or sale. You want to work with a realtor who’s experienced and knowledgeable of the area in which you’re buying or selling. You want to partner with a realtor who actively listens to you and focuses on your needs first, not their commission.
While the majority of residential real estate deals are done with the help of a realtor, some transactions, termed FSBOs (for sale by owner), are executed without realtors, leaving buyers and sellers to negotiate the terms of the sale first, on their own, and then, with the assistance of a real estate attorney who can put the agreement into a binding contract.
Select an experienced real estate attorney
Almost all real estate transactions begin with signing a real estate contract. This legal document is the most important document in the entire transaction, because it establishes the rights and obligations of the buyer and the seller. Once the contract is finalized, the buyer and seller are bound by its terms. Surely, either party will regret if they did not understand all the terms of the contract or if the language in the contract describes something other than what you intended.
That’s why it’s always important to have an attorney experienced in real estate transactions review your contract and the terms of your purchase or sale. It’s also advisable to choose a legal professional who works in the town or immediate area in which you are buying or selling a home. Knowledge of local issues can protect against issues that could affect the sale price or create problems down the road.
Although real estate brokers use a “standard” contract, one “size” does not always fit all situations. A given provision in a contract may be appropriate for one transaction, but not for another. An experienced real estate attorney can identify any potential problems and ensure that your interests are adequately protected.
Understand the attorney review process
New Jersey is unique in that each standard broker’s contract contains a provision to allow for an attorney review of the contract. This three-day attorney review period is the time when both the buyer and seller have the right to consult with an attorney, to review the terms of the form contract, and make changes to protect each side of the distinctive transaction. Part of this process is making sure that the parties preserve the right to terminate the contract under certain circumstances and walk away without any further obligation to each other.
Granted, the thought of cancelling a transaction you have your heart set on may seem disturbing. But getting involved in a purchase or sale in which your best interests are not protected is even more troubling, because that contract could have financial or other ramifications down the road.
Turning to the professionals, however, does not free you of responsibility in the process.
Be proactive. Even if your agent is scouting out homes for you, scan the listings and attend open houses on your own—even listings that are FSBOs. These activities will help you clarify your thinking and communicate your wants and needs more clearly to your broker.
You may or may not start out knowing exactly where you want to live. There are many factors that will influence your decision. Proximity to work, quality of schools, access to transportation and the amenities of a community if you’re in a downsizing mode. Ask around among friends and colleagues and search the internet. Drive around to get familiar with places that interest you. Eat lunch in local restaurants and shop in the supermarkets to get a sense of the environment.
Learning as much as you can about the home-buying process is also important. Turn to the internet to become familiar with the market values of area homes that meet your requirements. Acquaint yourself with real estate documents as well as the various steps in the process such as attorney review, home inspections, title search and closing.
Sometimes what you wish for can exceed the money you have to comfortably spend for a new home. It can also prevent you from establishing a realistic sale price. If you’re a buyer, get real by establishing a budget and sticking to that budget by looking at homes you can afford when you begin your search.
Typically, you’ll have to apply for a mortgage to buy a home. Your credit score will be a prime factor in determining how much money a bank or mortgage lender will let you borrow—even more, if they will provide you with a mortgage approval. There are many sites that will allow you to review your credit score for free without lowering your score. Do your homework beforehand. Engage in the mortgage application process knowing your score.
Plus, watch your debt. Pay off as much as you can before you apply for a mortgage. Above all, avoid making huge or outlandish purchases before or during the mortgage approval process. Finally, engage with a mortgage professional before you’ve made an offer on a home – having a mortgage commitment (as opposed to just a pre-approval) makes you a much more attractive buyer in a competitive market.
Your perspective will, of course, be different as a seller. You love your home and the memories and stories it holds for you. Again check your emotions. Your memories and stories do not have a dollar value. You must price to sell. Establish a sale price that compares with homes in your market that are similar to yours and have recently sold. Your realtor can provide these comps (prices of comparable homes) and use them to advise you on a realistic sale price that will attract buyers.
Prep and communicate to manage the nerve-wracking moments
Knowing what to expect and the potential pitfalls will prevent you from being blindsided. A buyer is contentious, a seller is intractable. The home inspection may leave a seller with too many changes or a buyer dissatisfied with the response of a seller to desired fixes. An even worse nightmare: things could go wrong at the 11th hour and interfere with your closing. If and when glitches arise, be measured in your reactions. Communicate your opinions and wishes thoughtfully and intentionally to your broker and lawyer and end every conversation with the certainty that they totally understand your viewpoint.
While there are no guarantees that you will experience a totally stress-free transaction, following the above guidelines will help to make for smoother sailing. Partner with experts and stay on top of the details of the transaction so that monies are exchanged, and the ink is totally dry on your designated closing date.
That way, post-closing when you turn the key in the lock of you new home or say good-bye to the house where you’ve lived and set off on a new adventure, you can take a huge sigh of relief, finally get emotional and luxuriate in the American dream.
At Phelan, Frantz, Ohlig & Weqbreit, LLC, we take our responsibility to be your advocate when you’re buying or selling a home seriously. Please contact us if we can be of assistance in helping you effectively and efficiently navigate your real estate transaction.