Buying or selling real estate is typically the largest financial transaction of a person’s life. As such, it is crucial to ensure the transaction is handled properly from start to finish. We assist our clients every step of the way, from the initial review of the contract of sale through shaking hands at the closing table. In addition, as part of our estate planning and administration practices, we also frequently represent an estate executor in a sale as well as aid clients with their intra-family retitling of real estate, drafting of co-ownership and occupancy agreements and transfer of real estate for inheritance and wealth planning purposes. Knowing the outline of a real estate transaction is a helpful starting point for a potential purchase or seller.
A residential real estate transaction is typically a very methodical step-by-step process which is outlined below:
The contract of sale is signed by the parties and the deposit is submitted, and typically held by the seller’s attorney until closing. The contract of sale and any buyer’s or seller’s riders are the backbone of a real estate transaction and include all salient terms such as the purchase price, inclusions/exclusions of sale and any contingencies, most common of which is obtaining a mortgage in order to close on the sale.
The buyer will begin the process of obtaining a loan commitment (if needed), as well as perform an inspection and order a title report. A title report guarantees title to the property. In pertinence, this is done by running judgment and lien searches against the parties to the transaction as well as the property itself and by outlining the property’s ownership history. This ensures the seller is able to pass title to the buyer and there are no existing liens or judgments against the property itself which would otherwise prohibit the buyer from taking clean title.
The seller prepares the real estate transfer forms, the costs of which vary at the State, city and even county levels and are typically borne by the seller.
Assuming everything proceeds accordingly, the parties show up on the date of closing, sign all tax and transfer documents, the deed and any other documents related to the sale. The broker’s commissions and title company fees are paid out and the seller receives the balance of the purchase price.
The entire process typically takes 45 to 60 days from when the contract is signed. While only four “steps,” these transactions require a great deal of attention to detail. Adjustments are often necessary for pre-paid taxes, homeowner’s association dues or yet-to-be-received rebates. Purchasing a co-operative apartment (“co-op”), something extremely common in New York City, is an even more involved transaction which has its own nuances. Buying a co-op means buying a fractional ownership interest of the entire building and receiving a stockholder’s certificate and proprietary lease, not a deed, for the unit purchased. Co-op sales require payment of a “flip tax,” which is not actually a tax, rather a fee payable to the co-op board. To complete a transaction, a purchaser’s finances must be approved by the co-op’s board members and the purchaser must interview with and be approved by the board.
Up front knowledge of unanticipated fees and costs as well as potential pitfalls will help a prospective purchaser or seller make a more-informed decision and otherwise streamline the process. Having worked with buyers and sellers for decades, we are here to help you with your residential real estate needs. We have offices in mid-town Manhattan and Wayne, PA and will make every effort to accommodate your needs and help you accomplish your goals.