Frequently Asked Questions
Q. How long does it take to close?
A. Typically, it takes approximately 60-75 days to close a standard residential real estate transaction. Commercial transactions vary but are usually longer time periods. If the purchase does not require financing then the closing could occur much sooner.
Q. What does the term “as is” mean?
A. Generally, this phrase is used in connection with the physical condition of the property and structures at the time the parties enter into the contract. Unless specifically provided in the contract, purchasers agree to accept, at the time of closing, the condition of the property and structures as existing at the time contracts were signed. For example, if there was a crack in the driveway, a missing window screen, a broken door, etc. it is agreed that these conditions are accepted by the purchaser unless again the contract otherwise states. Sellers, however, almost always agree to represent that the electrical systems and plumbing will be in working order at the time of the closing. Of course, this is just a general rule.
Q. What are the approximate closing costs?
A. Roughly, expect to pay about 5-6% of the sales price. For a seller, you will pay real estate commissions (4-5%); the New York State Transfer Tax ($4 per $1,000 of the sales price); attorney fee; title closer fee; and recording charges. The purchaser will pay its bank fees, title costs, attorney fee, title closer, and survey.
Q. Do I need to purchase a survey?
A. As the buyer, you may be required by your lender to obtain a new, updated survey. Even if not required, it is strongly advisable that one is purchased. Surveys help to identify the property lines, encroachments, as well as alterations and additions to the existing structures.
Q. What if the appraisal is lower than the sales price?
A. Most contracts of sale contain a “mortgage contingency” clause. This clause typically provides a purchaser with 30-45 days to obtain a commitment from a lender for a loan at a set amount which is identified in this clause. If a lender denies the purchaser its application for a mortgage, the purchaser is entitled to a full return of its down payment and the contract is canceled. Sometimes a reason for a denial of a mortgage might be a low appraisal. There might also be other factors such as the purchaser’s credit, income, or savings. In some instances, a lower appraisal may not result in a denial. For example, the sales price could be $500,000, and the loan amounts $300,000. If the appraisal comes in at $480,000, most lenders would still commit to lending the purchaser $300,000. Therefore, under this scenario, the purchaser would have satisfied the mortgage contingency and would have no right to cancel the contract.
Q. What does “on or about” mean?
A. Oftentimes, the closing date in the contract are phrased as “on or about” a given date. This language allows for the closing to take place within 30 days after the date set forth in the contract.
Q. Can a seller remain in the dwelling after the closing?
A. Most contracts provide post-possession language which permits a seller to remain in the dwelling as much as 5 days after closing. Reimbursement is made to the purchaser for the per day tax amount and per day mortgage interest. Money is also held back or held in escrow to protect the purchaser under this scenario.