What do buyers in New York need to know to be informed and make the right decisions?
We know that choosing a new home is one of the most important decisions in our lives. At Bold our goal, and the fundamental groundwork of our business model is to understand the needs of our clients and find the right place at the right price for each and every one. We also work hard and smart to find the right buyers for sellers...and sellers for buyers.
Real Estate, especially in New York City, is not easy to understand; and you must have many questions. Our Bold colleagues always do the very best to answer all client questions, address all concerns and simplify the search for the ideal condo, co-op, rental or sale. If our clients are happy, we are happy. Here is our guide to address many of the most frequently asked questions to help us help you.
Buyer Glossary Guide:
Cooperative – Popularly known as a “Co-op”, is part of a group of owners, each of whom own shares of stock in a corporation which owns the building. An ownership certificate is given to the new owner at the closing. In most cases the interest paid on a co-op mortgage is tax deductable. Shares purchased are based on the size of the space and the various amenities offered by the owner. Each month a maintenance fee is paid which is used for upkeep of the public areas, salaries of staff employees, real estate taxes and the owner’s’ mortgage on the building. A mortgage is required to purchase a Co-op. The average time it takes to buy a Co-op is 3-5 months, and to rent a Co-op is around one month.
An elected Board of Directors conducts the business of the building, reviews all applicants, conducts interviews with prospective buyers, oversees the building management, decides financing rules and approves (or denies) co-op ownership requests.
Condominium – Similar to owning a single family home. Each owner pays their own property taxes, and a percentage of the building’s common areas, which are part of the ownership and are used toward the upkeep of the building including employees’ salaries, repairs and building improvements. Real Estate taxes are tax deductible; common charges are not. Although there is rarely a formal approval process (like when buying a Co-op), applications are submitted to the Board of Managers for review. The average time it takes to buy a Condo is 2-4 months. To rent a Condo, usually takes a month or less.
Cond-op - The industry definition is a residential cooperative on the ground floor which typically has commercial units which are owned by an outside investor or the original sponsor of the building. Although the residential units are a Co-op, these commercial units are individually owned so the Co-op owners receive no financial benefit from these commercial units.
What additional information and requirements in regard to Condos and Co-ops should you know? The following includes estimates used as a general guide and are based on market averages.
Step by Step
Reviewing this list will prepare you to begin the process of seeking your ideal property. This will require quick action by everyone involved as the New York real estate market is very competitive.
- Meet with your BOLD Real Estate agent to identify the ideal property for you. Advise the size, neighborhood, amenities and the price range, disclosing as much general financial information as you can. Try to be flexible during your search. It will speed up the process and will increase the chances of your agent helping you achieve your real estate goals.
- Your BOLD agent will use the information you provide to begin a thorough search and will escort you to properties they think will fit your specifications. Weekday showings are best but evenings and weekends can be arranged. Give your opinions after each visit so your agent can narrow down the search and find the right place for the right price as soon as possible.
The Purchasing Process.
- We can provide options for an attorney, mortgage broker and/or bank. To make you a more qualified buyer, even before the “right” property is found, an experienced New York real estate attorney will be needed during the buying process. Also speak to the mortgage broker or bank to obtain a pre-qualification for a loan.
- Once you make a decision of the property you wish to purchase, submit an offer to your BOLD agent. It should include price, closing date, your financial qualifications (signed by a CPA), job description, net worth, salary, debt status plus what personal property of the seller you wish to have included, and your timing for a proposed closing date. Your offer may be countered.
- It will benefit you to reduce your credit card debt and have at least 20-30% of the purchase price in liquid assets. Ideally, the annual housing costs should be no more than 25% of your gross income and your total debt should not exceed 25-30%.
- Once you and the seller are in agreement of your offer, the seller’s attorney will submit a contract, which you and your attorney will carefully review. The buyer will sign it and deliver it to the seller with a 10% deposit check for signature. Once the contract is fully executed (signed by all parties), it is returned to the buyer. The check will be held in escrow until the closing.
- Once the contract is accepted and signed, apply for a mortgage submitting all financial information to the banker. This may take 30 days to finalize so your BOLD agent will help you work quickly to move this forward. During this time, the managing agent will take 1-2 weeks to process the application which includes running credit reports.
- During the mortgage approval process you and your BOLD agent will complete the Condo or Co-op board package which should be returned to your agent 10 days from your receipt of the fully executed contract or three days from the date a bank commitment letter is received.
- Upon the receipt and acceptance of your application and contract, the Co-op board will schedule a personal interview
Note: in the case of a condominium, there is generally no formal interview. If your application is reviewed and all materials are included and in order an approval is typically granted.
The entire process can move quickly in a Condo sale and assuming the loan can be secured in a timely fashion, one can move from contract to closing in about 60 days. However a Co-op process, being more elaborate, can take up to 90 days.
It is advised that the following be prepared and accessible for the interview as no applications will be accepted by the Managing Agent unless it is complete:
- Employment verification including pay stubs
- A bank verification letter
- Brokerage statements
- A net worth statement
- Your previous three years tax returns.
- The mortgage application and commitment
- A landlord reference
- Credit check authorization
- Personal and business references
A decision should be forthcoming with one week.
- On the day before the closing you and your BOLD agent will inspect the property to make certain that all appliances work, all personal property has been removed and the premises is in broom clean condition.
- A closing meeting is confirmed. It is usually held in the office of the building
management company. In addition to the items listed in No. 9 above, you will need
your passport, driver’s license, checkbook and all required certified checks per
your attorney’s instruction. Expect some unforeseen delays like holidays, vacations
of board members and other important board business that take priority over a closing.
But be patient; if everything is in order and the interview goes well you are on
your way to the closing date.
In attendance at the closing will be you, your attorney, your and the seller’s respective agents, the seller and their attorney, and the title company closer. At that meeting the move in day will can be established and you will now own your own home to be enjoyed for many years to come.