?'s from 1st-time buyers in NJ (Fair Lawn, Dumont: sales, rental, insurance)

[movinout77]

Hi, everyone. My fiancée and I are looking to buy a house in New Jersey. We currently live separately in Staten Island, NY, and neither of us owns property. We've done a fair bit of research on the process and have been perusing listings for a few months. But, we still have a bunch of questions - some that can probably best be answered before we contact an agent/broker, and would appreciate any help from forum members on here. This site already has been so helpful, with all its data and discussion threads.

- Do brokers represent the buyer in NJ? Do most buyers hire one? What's the typical relationship between buyer and broker, and how and how/much are brokers typically compensated?

- It seems like it takes several months from starting the search with an agent/broker to closing on a property. I've read that getting pre-approved for a mortgage makes a buyer's position stronger, but it seems like the pre-approval only lasts for 2 months or so. That doesn't seem like a lot of time, especially since interest rates have to start going up again at some point, and that this market is moving so slowly. Are we too early in the process to look into pre-approval? And is pre-approval only good for specific properties, or is it more of a general "we'll lend you $X on any property at Y rate and under certain other conditions, and this is good for Z days"?

- We researched many areas and have visited some of them in person, and while no area is perfect, there are quite a few that fit our criteria. In case it helps, some of our criteria are: single family home w/ 3-4 bedrooms, with 1 hour of Staten Island and 75 minutes of downtown/midtown Manhattan, pretty good schools, near a train line, not much more than $450K.
But, none of these areas are all that close to each other (e.g., Fair Lawn, Fanwood, Verona, Springfield, Dumont). Does it make sense to have multiple brokers/agents who specialize in these areas? We're deferring this question for now by starting our search exclusively in Fair Lawn, and then we'll branch out from there if we don't like what we see.

- Why is the market so slow, outside of the general economy? Is it because there aren't many qualified buyers right now, or is it that many of us who are qualified feel that houses are still overpriced and not worth buying right now?

- What should we make of asking prices? They seem to be all over the place for properties that seem so similar. Is it that some sellers are pretending it's still 2005 and others are not? It's no shock that the most overpriced homes are listed for over a year or have been listed several times. My instinct is to ignore asking price, offer slightly lower than what houses have sold for in the past few months, and if no one bites, we'll rent for a little while and try again in a year or so.

- Re home inspections and disclosure, when do these normally happen? After the offer? If the house is found to need work, can the offer be rescinded/re-negotiated? And are home inspectors typically licensed in the State of NJ?

- How stringent are the 28/36 rules if you have no debt? In other words, we have no loans, no regular credit card balances, etc. Should we still plan to have mortgage, tax, and insurance be only 28% of gross income?

- What are the typical closing costs in NJ -- particularly in central or northern NJ in the $400k range? We're budgeting for about $20k-$25k.

- Are we required to put many months of property tax in escrow, which I think is part of the closing costs? This could be burdensome, considering the property tax situation in the state.

- We don't have to worry about paying any sort of transfer tax, right? That seems to be on the seller, though we looked up the rate and it's not a trivial amount.

- Assuming we own nothing (we don't) and that the house is in reasonably good condition (neither of us can expect to fix anything big on our own), how much do most people in our price range budget for furnishing and fixing up the place? I know this is really wide open, but we've got about $50k-$60k for this.

- If we start interviewing agents/brokers in a week or two, is making a moving by February a realistic goal? Anything later seems too close to our June wedding, and we think not having a place by then means we should start looking into rental options.


Thanks so much for any input you can provide!

[millsan1]

Seems like you have it pretty well covered. $20K should be plenty for closing costs, exclusive of down payment.

I happen to know of a cool townhouse next to Fair LAwn for $400. Owner is motivated. I did not look at it, but it was on my shopping list. Feel free to pm me and I will forward you the lady's contact info. I have no affiliation, nor am I a broker, so this is just a friendly gesture.

[elflord1973]

Originally Posted by movinout77

- Do brokers represent the buyer in NJ? Do most buyers hire one? What's the typical relationship between buyer and broker, and how and how/much are brokers typically compensated?

Buyers can find a buyers agent. The buyers agent represents the buyer and the buyers interest in the transaction. They help you find a place and negotiate. They take a cut (seller pays). If there's no buyers agent, sellers agent pockets the extra commission. So there's no reason not to have one.

- It seems like it takes several months from starting the search with an agent/broker to closing on a property. I've read that getting pre-approved for a mortgage makes a buyer's position stronger, but it seems like the pre-approval only lasts for 2 months or so. That doesn't seem like a lot of time, especially since interest rates have to start going up again at some point, and that this market is moving so slowly. Are we too early in the process to look into pre-approval?

Yes. Buyers agent can help you with this, but you can get pre-approval very quickly (walk in to a bank, walk out with pre-approval)

- We researched many areas and have visited some of them in person, and while no area is perfect, there are quite a few that fit our criteria. In case it helps, some of our criteria are: single family home w/ 3-4 bedrooms, with 1 hour of Staten Island and 75 minutes of downtown/midtown Manhattan, pretty good schools, near a train line, not much more than $450K.
But, none of these areas are all that close to each other (e.g., Fair Lawn, Fanwood, Verona, Springfield, Dumont). Does it make sense to have multiple brokers/agents who specialize in these areas?

It makes sense to specialize in an area. I'd suggest trying to narrow it down.

- Why is the market so slow, outside of the general economy? Is it because there aren't many qualified buyers right now, or is it that many of us who are qualified feel that houses are still overpriced and not worth buying right now?

Prices haven't corrected because the government are propping them up.

- What should we make of asking prices?

The only information conveyed by an asking price is that the person listing would like to sell the place. You need to look at closed sales to determine what prices really are.

If you get started early, you can check out a place, wait for it to sell, and then see what the price is.

They seem to be all over the place for properties that seem so similar. Is it that some sellers are pretending it's still 2005 and others are not?

Yes.

It's no shock that the most overpriced homes are listed for over a year or have been listed several times. My instinct is to ignore asking price, offer slightly lower than what houses have sold for in the past few months, and if no one bites, we'll rent for a little while and try again in a year or so.

After scanning the current inventory, I'd just focus on new listings that hit the market. There's a reason these places have been on the market forever -- party listing the place doesn't want to sell it for the going price

- Re home inspections and disclosure, when do these normally happen?
After the offer? If the house is found to need work, can the offer be rescinded/re-negotiated? And are home inspectors typically licensed in the State of NJ?

After the offer has been accepted. COntract should include inspection contingency.

- How stringent are the 28/36 rules if you have no debt? In other words, we have no loans, no regular credit card balances, etc. Should we still plan to have mortgage, tax, and insurance be only 28% of gross income?

They are very generous. "Only" 28% of gross ? Suppose you have 100k, which is about 75k after tax, which goes down to about 60k if you're saving for retirement. 28% of gross is close to half your take-home.

- If we start interviewing agents/brokers in a week or two, is making a moving by February a realistic goal? Anything later seems too close to our June wedding, and we think not having a place by then means we should start looking into rental options.

Would suggest not rushing it in this market. The inventory is largely overpriced, and the people who are buying now are those who "need to buy" now, which means that they are essentially paying a premium to get a place now instead of wait a little.