Are you thinking about purchasing your next home?
How can I prepare myself for the buying process?
Purchasing a home is exciting but there's a lot to consider. Take time to define your search parameters like price range, location preference, type of ownership (co-op, condo, etc.), size of property and building amenities, if applicable. Prioritize your needs (i.e., space, light, views, schools, etc.) but try to be flexible. In evaluating your budget, know what you can spend on a down payment as well as monthly expenditures like maintenance or common charges, real estate taxes, monthly mortgage, utilities, parking, etc. Find the right real estate professional to help navigate you through the process, speak with a mortgage lender to obtain written pre-approval for a loan, and choose an attorney experienced in NYC real estate.
What should I look for in an agent?
Buying a home is not only an important financial decision but a major life decision as well. Nothing says more about who you are or how you live than where you live so you need to make sure that your real estate professional is someone who understands you and your needs. Begin by asking friends for referrals. Choose a professional who specializes in homes in your price range and desired neighborhood(s); someone who's available to work on your schedule, who listens to your needs, asks a lot of questions about how you live and takes time to explain things you may not understand. Finding a new home should be an exciting and enjoyable process but it is also time consuming so look for someone whose company you enjoy - you will likely be spending a lot of time together.
What is the difference between a condo and co-op?
Co-ops are owned by a corporation. When you buy a co-op you're buying shares that entitle you as a shareholder to a "proprietary lease" in a particular apartment. Shareholders pay a monthly maintenance fee to cover building expenses including real estate taxes. Approval is granted by a board of directors, and all prospective buyers must submit a "board package". The board will also require an interview. A condominium is real property, and a purchaser is given a deed. Besides owning the apartment, you also own a small percentage of the building's common elements like the halls, stairwells, etc. Each individual apartment gets a separate tax bill from the city. There is also a monthly common charge for building expenses. Financing and subletting terms can be more flexible in a condo than a co-op.
What to look for at open houses
Open houses are held to showcase an apartment for sale to the public, and are visited by both serious buyers looking to zero in on a home and browsers who just want something to do on a Sunday afternoon. Some are very crowded while others are more intimate. The real estate agent hosting the open house should have prepared information on the property and be available to answer any questions. For serious buyers, this is a great opportunity to view the home without pressure. Try to look beyond the owner’s décor if it’s not your taste but the home still has great potential for your needs. If you want information on history, comparables, upgrades or other specifics, don’t be afraid to ask. And if you’re interested in a private showing, make an appointment to come back.
Helpful hints for completing a board package
In order to evaluate a potential purchaser in their building, the Board of Directors reviews extensive information from the prospective buyer in what is called a Board Package. Most co-op boards typically request financial disclosure with supporting documentation, employment history, current salary, personal and business references, tax returns and credit history. To help you in preparing your board package, first review the application and its requirements with your agent, who will assist you in the collecting and assembling the necessary paperwork. Complete the application in its entirety, answering all questions as clearly and concisely as possible, and submit only the materials that have been requested. Also be sure to have your reference letters written on either business or personal letterhead.
Helpful hints for completing a board interview
A building Board will want to arrange an interview with you to have the opportunity to meet you and discuss your application in further detail. Board interviews range from an informal meeting to a more formal interview, so be prepared by doing the following. Make sure you arrive at your appointment on time and dressed appropriately. Review your application prior to the interview to familiarize yourself with all the information. Assume that you’ll be asked a wide range of questions from personal to financial, so be make sure to cover your bases with all possible answers. Couples should decide in advance who will answer which types of questions. Be clear and concise in your responses. Don’t try to sell yourself, and avoid providing information that’s not directly asked of you. If you can help it, don’t ask questions either.
Step by step timeline for purchasing
Once you’ve started your search and are working with your agent to preview different properties, it’s important to be aware of the timeline of events that generally take place when you’ve found that perfect home. In most cases, once you decide to make an offer, it can take an average of 60 - 120 days to complete the closing process.
- Prepare the Offer: 1 day
- Negotiate the Offer & Acceptance: 2-5 days
- Loan Application & Appraisal, Loan Approval and Commitment Letter, Sign Contract/Escrow Deposit: 2-4 weeks
- Co-op Board Package & Interview/Condo Application: 4-6 weeks
- Bank & Attorney Prep Closing: 1-2 weeks
- Final Walk Through: Day of Closing
- Transaction Closing: 3 hours
What paperwork do I need?
To complete your board package (not applicable for townhouse or condo purchases), your agent will provide an application which varies from building to building. This typically must be completed and returned to your broker (who will deliver it to the appropriate party) within 10 days of receipt of the fully-executed contract or three days for the date you receive a bank commitment letter, whichever applies. Generally, a co-op board package requires at the minimum several Personal and Business Reference Letters from friends and colleagues (your agent can provide samples), employment verification letters and/or pay stubs, bank verification and brokerage statements, net worth statement (this mirrors the information requested by your bank), two years of tax returns and the mortgage loan application and commitment.
How are closing costs determined?
For many homebuyers, closing costs are a mystery. If you are purchasing you need to be aware of these costs well in advance of the closing date. Typical closing costs associated with the purchase of a cooperative, condominium or townhouse include but are not limited to: attorney fees (which vary); fees associated with your mortgage loan such as origination costs (0 – 3% value of loan), application, credit check, etc. ($500 and up), appraisal ($600 and up); move-in deposit ($500 and up, usually refundable if no damage); various taxes including mansion tax (1% of total purchase price when $1 million or more), insurances and other items, plus your remaining down payment. Condos and townhouses also require title insurance, title search and recording fees (approximately .5-.8% of purchase price). Buyers should consult their real estate attorney or financial advisor for specifics. Those buying in new development projects should pay particular attention to these numbers as you will likely be paying NY City and NY State transfer taxes (usually 1.825% of the purchase price) as well as other seller fees and expenses like the cost of the seller’s attorney.