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New York Buyer Guide

Posted by admin on September 29, 2020
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This Buyers Guide Will Explain

  • Financing Your New Home
  • Evaluating the Right Space
  • Property Types 
  • What Sellers Want
  • International Buyers
  • Documentation for Buyers
  • Buying Timeline 
  • Glossary of Terms 
  • Closing Costs

Financing Your New Home

Your budget will be the single most important factor in your journey to buying a home. The price of a property depends on a variety of factors – size, location, building type, condition, amenities, etc. We can assist in helping you to determine your financial state and develop the best strategy for securing the best property within your budget. We will happily introduce you to a mortgage broker in order to determine if you are eligible for a loan, wherein they would determine if you qualify for a specific amount and provide you with the details of that loan.

Evaluating the Right Space 

  • Choose a neighborhood with accommodations that are important to you, i.e. dining options, nightlife, or proximity to work
  • Decide how many bedrooms you would need and the approximate size of those bedrooms
  • Determine which apartment amenities and building features are important to you, i.e. having a pool, doorman, pet policy or fitness center
  • Determine which property type works best for you, i.e. condo, co-op, town home

Property Types

Condominiums (Condos)

With a condominium, a purchaser owns the apartment plus a percentage of the common areas of the building. The purchaser takes the title by the form of a deed, which is then recorded in the county clerk’s office. If you intend to obtain a loan to purchase an apartment, you will sign a mortgage, which will be recorded in the county clerk’s office. By purchasing a condo, you have now joined an association. The association provides functions such as general maintenance to the common areas, building support stay, city compliance in exchange for a monthly fee. A condo is real property, meaning you will pay your property taxes separately or inclusive with your mortgage payments.

Cooperatives (Co-ops)

Cooperatives are a unique form of ownership where the buyer purchases a stake in a building/corporation. Each owner is allocated a percentage of shares based on the size of the apartment they occupy as well as its relative desirability (views, position in the building etc.). The corporation pays the total amount of the building’s mortgage, real estate taxes, employee salaries, and other expenses for the building maintenance. The tenant-owner, in turn, pays a portion of these expenses as determined by the number of shares the tenant owns in the corporation.

Townhomes & Brownstones

Townhouses also known as Brownstones are freestanding, open 2-5 story pre-war buildings. The two terms are often used interchangeably. The actual buildings can vary from narrow and low-rise two-unit row houses to large and elaborate brownstones that if not divided into units can have a living area of up to 10,000 sq. yards. Similarly, the prices of these types of buildings differ dramatically depending on their location, size, condition as well as their legal status.

What Sellers Want

  • For co-ops, an applicant who can meet the requirements for board approval and generally have a debt to income of less than 28%, and 2-years’ worth of post-closing liquidity 
  • Meet the required down payment minimum or cash
  • Qualified real estate agent and attorney 

Required documentation including

  • Three months of most recent bank statements
  • A minimum of two years’ worth of tax returns
  • Any brokerage statements or list of assets
  • Recommendation letters

International Buyers

We always welcome global buyers and foreign investors to purchase within the New York market. We have the ability to leverage global presence to help you save on the effort in your search for the right property. We have deep knowledge of international financing, taxation, and ownership laws. We have multilingual capacities and can facilitate your transactions in whichever language you prefer.

Documentation

Whether it is a condo application or a co-op board interview, here is a list of must-haves to successfully receive building approval:

  • Copies of your tax returns for the required period 
  • REBNY Financial Statement highlighting your assets and liabilities
  • Paycheck stubs, bank statements, and statements for any 401(k), mutual funds, and stocks you may own 
  • Letters of recommendation: personal and professional 
  • Documents/references to verify your current employment and your history of employment

Buying Timeline

1. Clarify purchase requirements with real estate broker
2. Preapproval for Mortgage
3. Bid Preparation
4. Property Search
5. View Properties
6. Submit Offers and retain an attorney
7. Negotiations
8. Deal Acceptance
9. Deal Sheet
10. Contract Review/Due Diligence
11. Sign Contract/Deposit
12. Loan Approval/Purchase Appraisal
13. Submit Board Package
14. Board Interview
15. Clear to close loan/ Loan contract finalized
16. Schedule closing
17. Walk through
18. Closing

Below are common terms and definitions you might come across when looking for an apartment in New York City. Some of these may be used differently in other parts of the country so please make sure you familiarize yourself with them and avoid any unnecessary confusions.

Agency: A legal relationship between a principal and his agent arising from a contract in which the principal engages the agent to perform certain acts on the principal behalf.

Appraisal: An opinion or estimate of the value of a property.

Assessment: The amount of tax or special payment due to a municipality or association. This is applicable in condo buildings and co-ops where assessments can often amount to significant monthly expenses.

Counteroffer: A rejection of an offer to buy or sell, with a simultaneous substitute offer.

Deed: A written document, property signed and delivered, that conveys title to real property. It is usually signed and handed over during closing.

Equity: Interest or value that the owner has in real estate over and above the liens against it.

Grantee: The party to whom the /title to real property is conveyed is the grantee or the buyer. Grantor: Anyone who gives a deed is the grantor.

Title Company: A title company makes sure that the title to a piece of real estate is legitimate and then issues title insurance for that property.

Inspection: A physical scrutinizing review of property or of documents.

Lien: A charge against property making it security for the payment of a debt, judgment, mortgage, or taxes. A lien is a type of encumbrance. A specific lien is against certain property only, while a general lien is against all the property owned by the debtor.

Market Value: The theoretical highest price a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing but not compelled to sell, would accept.

Points: Fees paid to lenders to induce them to make a mortgage loan. Each point equals 1% of the loan principal. Points have the effect of reducing the amount of money advanced by the lender.

Purchase and Sale Agreement: A written agreement between seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also called offer and acceptance, contract of sale, and earnest money contract.

Zoning: legal mechanism for local governments to regulate the use of privately owned real property by specific application of police power to prevent conflicting land uses and promote orderly development. All privately owned land within the jurisdiction is placed within designated zones that limit the type and intensity of development permitted.




Estimated Closing Costs for the Buyer of a:

Condominium:

For the Purchaser

Purchaser’s Attorney: $1,500-$3,000+

Bank Fees (if applicable)

Points: 0 to 2% of loan amount

Application/Credit Check Fees: $500+

Bank Attorney: $500+

Short Term Interest: prorated: Up to 1 month

Tax Escrows: 2-6 months

Recording Fees: $365+

Mansion Tax 1%: of purchase price for Sales $1M or more

Mortgage Tax: 2.05% of mortgage amount of loans < $500,000  
2.175% of mortgage amounts $500,000 or more

Title Insurance Fee (for owner): based upon coverage

Violation Search: $400-$500

Managing Agent Fee: $250+

Common Charges Adjustment: Prorated; Up to 1 month

Real Estate Tax Adjustment: Prorated; up to 6 months

Estimated Closing Costs for the Buyer of a:

Cooperative

Purchaser’s Attorney: $1,500-$3,000+

Bank Fees (if applicable)

Points: 0 to 2% of loan amount

Application/Credit Check Fees: $500+

Bank Attorney: $500+

Short Term Interest: prorated; Up to 1 month

UCC-1 Filing Fee: $20+

Recognition Agreement Fee: $250+

Lien Search: $400-$500

Mansion Tax: 1% of purchase price of $1,000,000 or more

Move-In Fee: $250+

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