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Purchasing a Property

An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.  When purchasing residential property in NJ and particularly on or near Long Beach Island, Buyers should be aware of practices and norms that are not always the same as in other states or non-shore communities.

Letter of Intent to Purchase Real Estate and Initial or Good Faith Deposit

Also known as an Offer to Purchase, your Agent will create a Letter of Intent to Purchase Real Estate which will include Buyer and Seller names, Property Address, offered Purchase Price, that price divided into its composite parts of Initial Deposit, Second Deposit, Mortgage (if any) and Cash at Closing.  It will include the proposed Closing Date, contingencies that would effect a successful sale and any other terms to be included in the contract. Sellers also like to see a pre-qualifying letter from a financial entity indicating that you have the means to purchase the property.  

The Initial or Good Faith Deposit is traditionally $1000, but could be more or less, and is delivered for escrow to the Buyer’s Agent who certifies it’s receipt in the Offer to Purchase.

Your Agent will present the Offer to Purchase to the Seller’s Agent or directly to the Seller.  There are 3 possible responses: 

1. Acceptance of your terms;

2. Rejection of your offer; or 

3. Counter Offer.  If it is a counter offer then through your agent you have the same three options the Seller did… and repeat until you have a deal or determine that you can’t make one.

The Contract

Once you have Offer & Acceptance (O&A) the Buyer’s Agent is usually the one to write up the contract using the Standard Form for Real Estate Sales in New Jersey and your agreed-upon terms.  When you have signed and initialed as required your Agent will forward the contract to the Seller’s Agent who will have the Sellers sign and initial as well.  

Once there is a fully signed contract it is distributed through the Agents to all parties and their respective Attorneys to begin Attorney Review.

Tip: It is highly recommended that you choose a local attorney for many of the same reasons you want a local agent.  It is very useful to have one who is familiar with the area and its typical pitfalls as well as the other attorneys and the agents.  The process is smoother when all the participants understand and agree on their roles and have easy, ongoing communications.  Your agent can give you a list of nearby attorneys.

Attorney Review

In New Jersey, a fully signed contract to purchase residential real estate is not binding for three business days.  This is to give the parties time to have the contract reviewed by their attorneys who propose changes and negotiate on your behalf regarding the legal verbiage of the contract and any other issues that may come up along the way.

Once both attorneys have signed off on the contract, with your approval, Attorney Review is concluded. 


(The Listing Agent may now place the property “Under Contract” in the MLS, also known as “Pending” or wait for the completion of any contract contingencies.)


The Second Deposit is due to whatever entity and on whatever date was agreed to in the contract.  Typically this one deposit will be the bulk of the escrowed amount.  Deposits are held by the Escrow Agent, who could be the Buyer’s Agent, Seller’s Agent, one of the Attorneys, or a third party and is delivered to the Closing Agent in time for Settlement.


Unless you are purchasing land or knocking down the existing building(s) right away, chances are you will want to have inspections done on the property and/or building(s).  The most common are the general Home Inspection and Wood Boring Insects Inspection.  You may also choose to have inspections done by specialists in a particular area such as Roofing, HVAC, Bulkhead, and Docks, etc. These will typically be arranged by the buyer immediately after Attorney Review has ended and should be completed, including the report, within about two weeks or by whatever date was agreed to in the contract. We will be happy to give you options for inspection providers.

Sometimes defects are revealed in an inspection that the Buyer wants to be addressed by the Seller or as a credit to address it themselves.  In that case, it is up to the lawyers to negotiate between the parties and if possible get the deal back on track.  

Once any inspection contingencies are satisfied and we know the contract will move forward it is usually the Buyer’s Attorney who will order the Title Report, Survey, and Flood Elevation Certificate.  There may be a need for a Tidal Report as well. 

Association Approval

If the property that you are purchasing is conditional upon an association approval, request the rules, regulations, and other important documents from the seller as soon as you have an effective agreement to purchase. Make sure that the application documents and processing fees are submitted to the appropriate person at the association by the required time. Fill out all of the information completely and legibly so there is no delay in processing the application. If you are required to meet with the association for your approval, make an appointment as soon as possible for the interview. Most associations require a certificate of approval before move-in. Your closing agent will request that the original copy of this approval letter be brought to the closing so that it can be recorded with the deed in the county public records.

Insurance: Property and Flood 

These are two separate and equally important types of insurance policies to consider when purchasing property near any body of water and especially at the Jersey Shore.  If you are obtaining a loan, you will be required by your lender to purchase a certain amount of both, however, the required amount of either may not be sufficient in case of catastrophe and you may choose to purchase more to protect your investment.  

You may be able to save significantly on homeowners insurance by shopping around. You can also save money with these tips:

  • Consider a higher deductible. Increasing your deductible by just a few hundred dollars could make a big difference in your premium.
  • Ask your insurance agent about discounts. You may be able to get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
  • Ensure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.

Basic Flood insurance, currently up to $250,000.00, is purchased through the National Flood Insurance Program.  The cost depends on the flood rating for your area plus the elevation of the property and building(s). A Base Flood Elevation Certificate is required to determine your rate.

We will be happy to give you a list of experienced, knowledgeable insurance agents for every property type.

Appraisals and Lending

It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value of the lending institution via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. If the purchase price and /or financing is high enough the mortgage company may require two or more separate appraisals. 

Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc.  This is usually arranged by the mortgage company through the agents and should happen very soon after your loan application.

Other documents your lender may require:

  • Copy of the Contract and any changes made during Attorney Review,
  • Copy of Association Approvals, if applicable, 
  • Copy of Inspection reports,
  • Current Survey of the property,
  • Current Elevation Certificate,
  • Property Insurance in the amount of the purchase price or higher with the institution’s name recorded as of the expected closing date
  • Flood Insurance in a specified amount or up to the maximum with the institution’s name recorded as of the expected closing date.  Flood Insurance may be transferable from the Seller at closing.

When you are within two weeks of closing, double check with your lender to be sure they have all required documents and that the loan will go through smoothly and on time.  

Tip: We have lenders we work with on a regular basis who, like the local agents and local attorneys, bring something extra to the table by understanding this region. Let us refer the lenders to you who have most pleased our previous clients and customers.