When it comes to the basics of real estate transactions in New Jersey, it can seem complicated and overwhelming if you are not familiar with the legal jargon and real estate-industry-related concepts. However, it is all relatively simple if you break it down. There are several types of real estate transactions to consider, and different approaches for each of them.
What is a Real Estate Transaction?
To start, it helps to know what qualifies as a real estate transaction, or what a real estate transaction can be defined as. A real estate transaction is generally where an owner of a home or real property intends to sell that property to a willing buyer. The typical transaction entails negotiation, legally binding contracts, and the transferring of title. There are more complex deals such as commercial purchases, lease-to-own, or seller financing, but generally, most people are dealing with a residential single-family home purchase.
The Players in Real Estate Transactions
While the seller of the property and the purchaser of the property are two important roles in a real estate transaction, they are not the only ones. There are many other people who may be involved in the process. Real estate agents can be involved in negotiating the sale price and preparing the form contracts approved by the State of New Jersey in residential deals. It should be noted that commercial deals require an attorney-drafted contract. Mortgage lenders may also be involved if the buyer needs to take a loan in order to purchase the property. A prudent purchaser always retains a home inspector to inspect the property during the due diligence period.
Types of Real Estate Transactions
There are many types of real estate transactions, but they fall into several distinct categories. A standard purchase agreement lists guidelines and conditions that everyone involved in the transaction must follow in order for it to be finalized. The purchase agreement will also list basic information about the transaction such as the property being sold, the buyer and seller’s names, and their contact information.
A contract for deed is a real estate transaction that involves the buyer purchasing land but paying for it in installments over time. This contract will detail information about the property, the buyer and seller, and how the installments will take place. The seller retains the title until the agreed-upon amount is paid in full.
Lease-to-own or lease purchase is a transaction where the tenant/buyer has the option to purchase a property at a set price on or before a certain date. This is similar to a seller-financed deal where the seller of the property holds a note and mortgage while allowing the buyer to pay off the property over time instead of with a lump sum or bank financing. These transactions are frequently used by buyers with less than excellent credit who cannot obtain traditional financing.
A lease contract involves not the purchase of property but renting of property. A lease will list the terms that the tenant must follow in order to remain on the property, along with how much they will pay the landlord.
Real estate transactions can be not only complex but sometimes the biggest financial decision a person makes in their life. Therefore, it is advisable to have a lawyer assist you when participating in them.