The Offer Process

What Is the Process?

It’s not unusual for clients to hesitate to submit an offer for a property because they aren’t sure what the process is. I understand—it seems daunting, it seems like there is a lot to grasp, and that it takes a ton of work to get pre-qualified.

The New Jersey real estate offer process can be intimidating if you are not familiar with it. In this edition of my newsletter, I will answer all of your questions to prepare you, so you will be confident and ready to move when you find the right home.

  1. The property enters the market and showings begin (remember a property can appear online before they allow showings).  
  2. After about a week of showings and usually a public open house, the listing agent will call the selling agent to gauge interest (this is why you give agents my name or card).
  3. If enough buyers express interest in making an offer, the selling broker will set an offer deadline and send offer instructions to the selling agents and their clients. When the listing agent asks for offers, they will ask for a standard list of documents from each buyer. These include:
    • The offer document
    • The pre-approval or proof of funds letter (if cash)
    • The signed seller’s disclosure
    • The signed lead disclosure
    • The COVID waiver (new this year)

What do I need to make an offer?

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The Offer Document

When making an offer on a New Jersey property, the offer is submitted using a boilerplate contract. You will need to consider certain terms in the contract. These include Your official name and address, offer price, deposit, mortgage amount, type of mortgage (conventional, adjustable, FHA), close date as well as offer terms (described below). Clients often ask: “Is this contract binding?!”. The answer is a resounding “NO!”. While the offer is in the form of a contract, the contract is not binding until well into the accepted offer phase.

 

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The Pre-Approval

You will need to have a pre-approval from your mortgage broker. As discussed, it is not unusual for desirable properties to enter the market and have offers within 5-10 days. This leaves little time for you to get your financials in order and sent to a mortgage broker for a pre-approval Better to have a call with a mortgage broker before you seriously begin your house hunt. This way they will have the necessary financial information at the ready and they can provide you a letter within 12-24 hours (or less). And your pre-approval should reflect the price of the property. One size does not fit all in this case. Ask me for at least 2-3 referrals to mortgage brokers if you do not have a trusted broker in mind.

 

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Seller's Disclosure

This document will be provided to you before an offer is made. It lays out the condition of the property and its mechanicals (their ages, upgrades), any fees from the condo, or liens/mortgages on the property. It is important to know that this document is NOT legally binding. There are ways to read between the lines and a good agent will be able to spot the gaps and provide guidance.

 

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Lead Disclosure

The State of New Jersey (as many states do) requires disclosure of the potential presence of lead paint. This form is required by Realtors to use in sales transactions when sellers of a residential property are required to disclose to the buyer any known information on the property's lead-based paint hazards. Lead was a common additive in paint previous to 1978. Any house built prior to 1979 requires a disclosure. Lead-based paint becomes hazardous when the dust is inhaled or when paint chips are eaten by young children. Spoiler: The majority of homes in Essex County (not to mention much of NYC) were built previous to 1979 and all will require signing a form. Lead paint in most of these houses is likely encapsulated by decades of paint. 

 

Contractual Terms of Sale

Circling back to the contract, the listing agent will disclose to the potential buyers any special terms the sellers want you to state in your offer.

  1.  Preferred closing date
  2. Items not included in the sale, such as light fixtures or window treatments
  3. Requiring that the buyer visited the property in person
  4. Any mechanicals or structural conditions that should be considered “as-is.” This means the seller will not issue any credits for those items as inspection contingencies. Usually, this would include chimneys, garages, or older wiring (knob and tube).

Additional forms:

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