Although the steps involved in selling a house or condo are similar regardless of where you live, New Jersey's real estate laws and practices are unique in some respects. To avoid problems, become familiar with the process early on.
Here's an overview of the basics—from working with a real estate agent to making legally required disclosures to closing the deal.
Working With a New Jersey Real Estate Agent
Most people selling their home in New Jersey work with a licensed real estate broker or agent. A good real estate agent will help price your house, based on a comparative market analysis (or comps), effectively market your house to prospective buyers, and handle other tasks, such as reviewing house purchase documents and negotiating with buyers.
Before signing a listing agreement (discussed below) with any agent, get references from other home sellers and check customer reviews on sites such as Zillow and Trulia. You can find licensed New Jersey real estate agents at the New Jersey Real Estate Commission’s Real Estate Licensee Search.
Signing a Listing Agreement in New Jersey
Once you find a real estate agent you want to work with, you’ll sign a “listing agreement” giving the agent the right to market and handle the sale of your house. Most real estate agents use standard forms created by their state or local Realtor association, such as the New Jersey Association of Realtors. Listing agreements typically cover the following terms.
- The real estate agent commission that you (the seller) will pay. This typically ranges from 5-6% of the house sales price and is split between your real estate agent and the buyer’s agent.
- The type of listing. Most listing agents will want you to sign an exclusive right to sell listing, which obligates you to pay a commission to the agent regardless of who brings in the buyer (see this sample New Jersey Residential Listing Agreement). Other arrangements are possible, however, such as an open listing, in which you agree to pay a commission to whichever agent brings in a buyer, or an exclusive agency listing, in which you agree that your agent is the only agent authorized to sell your house, but that you will pay a commission only if the agent brings in the buyer (not, for example, if you find a buyer for your house yourself).
- Duration of listing. In all cases, the listing agreement will cover a set amount of time, such as 60 to 90 days.
- List price. Your agent will recommend the appropriate selling price based partly on comparing your house to similar homes (“comps”) that have been sold in your immediate area (as found in a Multiple Listing Service (MLS)) and partly on what price (above or below the house’s actual value) will best attract buyers. To educate yourself as to whether the agent is recommending an appropriate price, the National Association of Realtors’ website is a good source of information on prices of houses currently on the market, and websites such as Zillow and Trulia provide data on actual sales prices.
- Items included or not included in the sale. For example, you may plan to leave behind a built-in dishwasher (which is therefore part of the property that the agent is contracted to sell), but exclude a refrigerator that you plan to move to your new home.
- Duties and obligations of seller and real estate agent. Your agreement will spell out how the real estate agent will list or market your house, what type of insurance you must maintain on the property, and what disclosures you must make.
Making Real Estate Disclosures in New Jersey
State courts in New Jersey have held that sellers must disclose any known, material defects in the property that others cannot easily observe (Weintraub v. Krobatsch, 64 N.J. 445; Correa v. Maggiore, 196 N.J. Super. 273). To aid sellers in making all required disclosures, the New Jersey Association of Realtors offers a disclosure form, which includes details on the property, including:
- age of roof and any replacements
- problems with driveways, retaining walls, or other structural components
- issues with plumbing, electrical, heating, cooling, and other mechanical systems
- water source and sewage system
- environmental conditions such as pest infestation, or the presence of asbestos, radon (see N.J. Stat. Ann. § 26:2D-73), methane, or other hazardous materials
- legal issues, such as zoning violations, homeowner's association involvement, and relevance of building codes, and
- other specified details of the property.
In addition, if your house was built before 1978, you must comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website, for details.
Responding to Offers and Counteroffers Before Signing a Purchase Agreement
A buyer who wants to purchase a particular New Jersey home will make a written offer, specifying the price, proposed down payment, and any contingencies, such as receipt of a satisfactory inspection report done by an inspector the buyer hires, or the buyers’ arranging financing or selling their current house.
You may reject an offer outright, accept it as-is, or (more typically) respond to a buyer’s offer, with a counteroffer. A counteroffer accepts some or most of the offer terms, but suggests changes to others, such as a higher price or a closing date that’s sooner than the buyer proposed.
A legally binding contract, typically called a purchase agreement, is formed when you accept a final offer (agreeing to any changes from the original offer). Your agreement will contain key terms of the sale, such as the agreed-upon price, contingencies, financing terms, dispute resolution, and closing date. See the New Jersey Association of Realtors Standard Form of Real Estate Contract for a sample. Your real estate agent will provide you with the latest copy of this form.
Once both buyer and seller sign a purchase agreement, the transaction will go into escrow.
Escrow is the time period between signing the purchase agreement and closing on the house. You will choose an escrow or title agent, a neutral third party, to serve as intermediary and supervise the process (preparing title reports, processing loans, removing buyer contingencies, and so on).
The buyer typically has a lot more to do during this time period than the seller. By the close of escrow, the buyer will need to finalize financing, remove all contingencies, have the house appraised (typically required by mortgage lenders), and get title insurance—usually under deadlines set forth in the purchase agreement.
Issues often come up that require negotiating, such as who will pay for repair problems identified in an inspection report. The buyer may insist that you pay to remedy a defect or lower the purchase price. If you cannot reach an acceptable agreement, the buyer may have the right to back out of the deal.
Attending the Closing of Your New Jersey Home
By the close of escrow (known as the closing or settlement), you and the buyer should have fulfilled all the terms of your purchase agreement. At the closing itself (sometimes a meeting of the parties, other times conducted in separate locations), all final documents and funds will be exchanged between buyer and seller. The buyer pays you the purchase price, and you give the buyer a deed and other transfer documents and clear title to the house or condo. You pay off any outstanding loans on your property and pay commissions to the real estate agents (per your listing agreement).
The closing normally takes over the course of one day.
Sellers do not usually need to be present at a New Jersey closing so long as all costs are paid and documents are signed. Typically, the buyers will sign the final documents at the office of their title company or escrow agent and pick up the keys. Then the escrow agent will record the new deed in their name at a local government office, and the home officially belongs to the buyers.
For more details, see Escrow and Closing in Buying or Selling a Home.
Working With a Lawyer
Unlike some states, New Jersey does not require that sellers involve a lawyer in the house-selling transaction. However, both the buyer and the seller have the option of engaging an attorney to review the purchase agreement before it becomes final. The attorney can make suggestions to the purchase agreement or disapprove of the contract, but the attorney must do the review within three days of the buyer and seller signing the purchase agreement.
Even if it’s not required, you may decide to engage a lawyer if you find yourself in an unusual situation, such as if you need to draft a lease agreement to rent the house back after the sale or if problems show up on the title report such as a lien on the property.
If you are selling your home without a real estate agent (a “for sale by owner” or FSBO), it may be useful to hire an attorney to help with the legal paperwork.
Check out our lawyer directory, to find an experienced real estate attorney in New Jersey.
More Information on Selling a House
The Residential Real Estate section of this site includes a variety of useful articles on all aspects of the house selling process, including marketing strategies and tax issues.