2010 Mar 11th

What’s Wrong With That Building?

Do Multiple Units for Sale Mean Trouble?forsalesigns

In Hoboken, there are often times when a particular building has multiple units for sale at the same time.  Is this a problem or an indication that there is “something wrong” with the building?  Not necessarily.  Hoboken is still a somewhat transitory town.  Singles become couples, families grow and need more room, people change jobs and move to other areas.  Just because two or more units are both for sale simultaneously does not necessarily indicate a problem with the condo building.  It may just be coincidence that multiple owners decided to sell at about the same time.

How Does a Buyer Really Know?

This is where asking questions, having a good realtor and a good lawyer come into play.  Talk to the neighbors.  There is nothing stopping a prospective buyer from being friendly and saying hello to people walking into or out of the building.  Ask if they have lived there long and if they are happy.  Ask if they have had any problems with the building or the condo association and if they think the building is well run.  There is no reason you can’t simply tell them the truth – that you’re thinking of buying a unit and wondered how they like living in the building.

While you are out shopping for properties, your realtor should advise you of other units for sale in a building in which you are interested.  He or she can make inquiries of the seller as to why there are multiple units on the market.  If the seller doesn’t know, the realtor can urge the seller to find out.  The other sellers are all neighbors, after all.  The realtor might also be able to contact the other listing agents and speak with them about why the other sellers have put their homes on the market.  If the building is professionally managed, the management company may be another source of information.  These preliminary inquiries are a good place to start.

Then you have the attorney review process.  Once you make an offer and reach agreement with a particular seller, you have the right to have your attorney review the contract, the condo documents (the master deed & bylaws) and any other associated information.  It is extremely important to examine the condo association financial statements (budget, bank statements, amount held in reserves, what the reserves and maintenance have been spent on).  If there is a problem, this is where you’re likely to find it.

Also, if the condo board has regular meetings and keeps minutes of these meetings those minutes can be requested.  Read the minutes – is there mention of a legal action against the building that has caused costs to increase dramatically, perhaps driving owners to sell?  Are there financial problems like, for example, a large loan taken out by the association that is coming due and might not be able to be refinanced resulting in a special assessment of the unit owners?  Or is there some sort of major repair on the horizon that has not been budgeted for and will result in a special assessment? Have your realtor ask these questions of the listing agent and have your attorney ask the sellers’ attorney.  The more you know, the better.

It’s possible many people in the building have decided to sell at once because of some underlying problem with the building or condo association.  I suspect, though, that in most cases multiple units for sale are just the nature of Hoboken.

Posted by Lori Turoff | Currently 21 Comments »

2010 Feb 2nd

Attorney Review – What You Really Need to Know

When you buy real estate in Hoboken, be it a condo or a house, there is a particular order of events that typically take place. Basically, you get your pre-qualification letter from a mortgage broker or bank, find your dream home, the seller accepts your offer and your realtor, if he or she is a competent agent, prepares a sales contract for you to sign. Wait! Agents aren’t lawyers! (well, I am but I think I’m the only one in Hoboken).  True – but the NJ Association of Realtors provides a standard-form sales contract that realtors routinely use as the starting point for your deal.

You go home and celebrate and start making moving and decorating plans. But – after you and the seller have both come to terms and signed the sales contract it gets circulated to your attorney and the seller’s attorney and what is called “attorney review” begins. What exactly does that mean? Read on.pic-legal_docs2

Attorney review is a ‘time-out’ period of 3 days required by New Jersey law. During this time your lawyer perform “due diligence”.  He or she will review and make changes to the sales contract by sending riders back and forth to the seller’s lawyer. It’s very important for you and your realtor to be copied on these riders so everyone knows what is going on. Remember, it’s your money being spent.  You need to agree to these changes, too.

The attorney review period gives you (and the seller) a chance to “sleep” on your decision. If at any time during attorney review you change your mind you can simply walk away. No reason or explanation necessary. You get your $1,000 good faith deposit back – no questions asked. It’s similar to when you join a health club and the papers say that you have 24 hours to change your mind and can get your money back.

Remember, though, that the seller can also change his or her mind during attorney review. At the height of the market or on a hot property many buyers would go into attorney review thinking they’d bought a new condo. In the meantime, the seller would get a higher offer and cancel the contract with the first buyer. So buyer beware – until attorney review is over, the sales contract is not legally binding. Both parties should be prepared for the worst, even if it means 3 (or more) sleepless nights while waiting for attorney review to end.

Often, 3 days are not enough. What happens is that sometimes real estate lawyers are so busy that they can’t get to your contract within 3 days. They will agree with each other to extend the 3 days to 5 days or a week. When hiring a real estate lawyer, you would be wise to ask about schedule and availability. It would be a shame to lose the condo of your dreams because your attorney was too busy to get to your sales contract before the seller changed his mind.

So find a lawyer who has the time to focus on your deal. Don’t make any irrevocable plans until attorney review ends. And most importantly, insist that your lawyer keep you and your realtor informed of what is taking place during the attorney review period.

Posted by Lori Turoff | Currently 6 Comments »

2009 Jun 17th

Buying a Hoboken Condo? Here’s a Useful Educational Tidbit

What is attorney review?

Many buyers, especially first-time buyers, are very hesitant to make an offer on a property they’ve seen even if they’ve been looking for a while and see something they absolutely love.  While it may be a general fear of commitment that keeps them from acting, often I think it is that they don’t understand the purchase process.  They are frightened of acting too hastily.  Instead, their hesitancy often causes them to miss out on the opportunity entirely which they later regret.  In part, this is because many people don’t understand “Attorney Review”.

Attorney Review refers to a New Jersey law that was enacted in part to protect the consumer.  Just like when you join a gym or health club, by law the contract gives you the absolute right to cancel within 24 hours, you can cancel your decision to buy or sell a property within 3 business days with absolutely no repercusions.  These ‘cooling off’ periods let the parties sleep on their decision so that they are not pressured into doing something by sales people.  There are other reasons for attorney review but that is the big one.

In brief, the process is as follows:

Once the contracts are delivered, the clock starts ticking.  Only business days count so if the contracts are delivered over the weekend, you start counting the days on Monday.  During this time period, each attorney will review the contract and prepare what is called a rider or letter addendum to the contract. The rider will create additional provisions to the contract, addressing any issues that have not been already addressed by the initial contract.  When representing a buyer, the attorney would try to extend the deadlines for your mortgage commitment and inspection report, as well as giving you the most flexibility to get out of the transaction, if your inspection report is unfavorable or if you are unable to secure a mortgage.  A seller’s attorney would make any changes possible to protect the interests of the seller and make sure the deal will go through.

The buyer’s attorney will request copies of important documents, including the Master Deed, the Bylaws, any  House Rules of the Condo Association, in addition to the financial documents, including a budget, and/or financial statements, which will show the financial stability of the building and minutes of recent board meetings.  This is when the buyer’s attorney is supposed to perform due diligence.  The lawyer reviews all the documents for red flags and keeps the client informed of the findings.  If something doesn’t look good, the buyer can walk away.  But let’s assume there are no problems with the condo association or the financials and we continue our deal.

Once the attorneys and their clients accept each other’s newly added sales contract terms, if any, Attorney Review is concluded.  Now you have a binding contract.  It’s  important to remember that until Attorney Review is completed, either party can change their mind and end the transaction.  No reason need be given.  The party that decides to back out simply has his or her lawyer send a letter that says “the contract is hereby disapproved” and the property is back on the market.  No loss of money, except the attorney’s fee (of course). 

This is important for a buyer because they can make an offer and get their foot in the door so they are the first potential buyer.  When there are more than one offer on a property, this can be a big advantage.  Most sellers feel some loyalty towards the first party to make an offer on their property and will usually try to negotiate with “Buyer A” before considering “Buyer B”.  Unless, of course, Buyer B makes a much higher offer in which case, human nature being what it is, all bets are off.  What I see happen quite frequently is that buyers wait too long.  They keep waiting for the price to be reduced (again) instead of just making a low offer.  In the meantime, someone else sees the beautiful property and swoops in often with a very low offer.  It may take some negotiating but in today’s market, many buyers are getting pretty good concessions from sellers on price.    So rather than waiting for that price reduction, when a seller is psychologically so much less likely to want to negotiate since they just lowered the price, make the low offer, be first, and see what happens.  You may get lucky and get the place you love for the price you would like to pay or very close to it!

Posted by Lori Turoff | Currently 1 Comment »

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