NYC BUYERS GUIDE
East SideManhattanBrokerage
650MadisonAvenue
NewYork,NY10022
2126067660
DowntownManhattanBrokerage 149FifthAvenue,4thFloor
NewYork,NY10010
2124312440
Introduction
Buying an apartment in New York City can be a daunting task, especially for first-time buyers Here are some important factors to consider when preparing to purchase an apartment in the city
1. ASSEMBLINGYOURTEAM:Working with reputable real estate agent who is knowledgeable about the New York City market is important. A good agent can help guide you through the buying process, from finding a property to negotiating the best deal and closing the sale. In addition, you will want to identify a mortgage professional if you plan to finance, a real estate attorney to assist in all legal aspects of the purchase and engage home inspectors and other experts as needed when evaluating whether to make a purchase
2 LOCATION: The first factor to consider is location New York City has many different neighborhoods, each with its own unique character and price range Think about your daily routine and what type of neighborhood would suit your lifestyle best Some popular neighborhoods in Manhattan include the Upper East Side, the Upper West Side, the West Village, and Tribeca In Brooklyn, popular neighborhoods include Williamsburg,Park Slope,and Brooklyn Heights
3. BUDGET:Determine your budget and what you can afford Keep in mind that prices can vary greatly depending on the location and amenities of the building Make sure to factor in closing costs, taxes, and monthly maintenance fees If you are financing, your mortgagebroker will help you determine your budget
4 SIZE AND LAYOUT: Determine what size apartment and layout you need Apartments in New York City can range from studios to multi-bedroom, co-ops, condos, and townhouses Decide how much space you need and what layout and ownership type would best suit your needs
5. BUILDINGAMENITIES:Consider what amenities are important to you Many buildings in New York City offer amenities such as doorman service, fitness centers, and rooftop gardens Decide what amenities are important to you and factor those into your decision
6 BUILDING RULES AND REGULATIONS: With the help from your attorney, be sure to review the building's rules and regulations Some buildings have restrictions on pets or subletting, for example Make sure you are comfortable with the building's policies beforemaking an offer
7. BUILDING HISTORY AND FINANCIALS: With the help from your attorney, look at the building's history and financials Check for any past or pending lawsuits, the building's financial health, and any upcoming assessments You can obtain this information from the building's managing agent
8 TRANSPORTATION: Consider the proximity to public transportation New York City has an extensive public transportation system, including subway, buses, and trains. Determine what transportation options are available near the building and how convenient they are for your daily commute.
By keeping thesefactors in mind,you can makean informed decision when buying an apartment in New York City
Cooperativesvs.Condominiumvs.Townhouses
2 | AGUIDETOBUYINGIN NEWYORKCITY
CO-OP CONDO TOWNHOUSE OWNERSHIP Purchasing shares of stock & a proprietary lease Own thereal estatecomprising
apartment Own both thestructureitself
land APPLICATION PROCESS Requires board review
application and interview of purchaser Requires board review
application N/A APPROVAL Can accept or reject purchaser without giving reason Haveright of first refusal N/A FEES MaintenanceFee Common Charges & Real Estate Taxes Property Taxes DOWNPAYMENT & FINANCESAFTER PURCHASE Variable& building specificsometimes financing not permitted Most require 10% down payment and proof of funds to purchase Most require10% down payment
purchase
your
and the
of
of
and proof of funds to
AssemblingYour Team
REALESTATEBROKER
- Provides amarket/neighborhood analysis and acomparison of on-market,in contract and sold properties
- Negotiatethepurchaseand terms of the deal
- Preparea strong purchase application to help the board approval process run smoothly
- Knowledgeableon duediligenceand litigation processes
- Offer guidanceon co-op board interview (if needed)
- Conduct walk-through of theapartment prior to closing
MORTGAGEBANKERS/BROKER
- Assess borrowing capacity
- Evaluatefinancial strength of collateral for co-op,condo or townhouse
- Develop financing options based on buyer?s objectives
- ProvidePre-Approval for targeted transaction(s)
- Coordinatelegal/ financial diligenceand contract terms with Realtor and Attorney on strategy
REALESTATEATTORNEY
- Perform thorough due diligencereview of all documents related to theapartment and condominium or co-op
- Documents include offering plan, amendments, bylaws, rules and regulations, board minutes, financial statements of the co-op or condominium for the last two years, the proprietary lease (for co-ops), assessment history, construction and repair, underlying mortgage and any lawsuits
- After the real estate broker comes to terms of the deal,the seller?s attorney will prepare the contract and send it to buyer/ buyer?s attorney for review
- Attorney reviews terms and conditions in the contract with purchaser Most attorneys will negotiate with the seller?s attorney to include an additional rider or languageto protect buyer?s interest further
- Once the contract is agreeable on both sides, the buyer will sign the contract first and send it back to the seller?s attorney along with 10% down payment
- Order a title report (condo) or judgment and lien search (co-op) This is to identify any liens or encumbrance files against the seller or property prior to closing
- Coordinates closing with seller?s attorney,lender?s attorney and building?s managing agent
- Prepares closing statement that includes alist of the bank and personal checks required
- After theclosing,the attorney will provide closing statements and copies of all documents signed at closing
HOMEINSPECTOR
- Evaluates thecondition of an apartment or house,prior to a sale
- Inspects theapartment or houseand provides a detailed report of their findings to abuyer
- Looks for signs of damage,wear and tear,and other issues that could affect the property?s valueor safety
- Provides a buyer with an accurate and thorough understanding of an apartment or house?s condition so you can make an informed decision about whether to purchase
AGUIDETOBUYINGIN NEWYORK CITY | 3
Mortgage& Pre-ApprovalProcess
ATTAINPRE-APPROVAL,sameday-2days
- Pre-Approval is apreliminary indication of borrowing capacity based on application information and ahard credit pull
- Pre-Approval is subject to verification of complete documentation regarding credit,income,assets and the subject property collateral
- Employed: 2 years W2,YTDPay Stub,2 months bank statements
- Self Employed:2 years Tax Returns,Business Returns,K-1s
MORTGAGECOMMITMENT LETTER, 2-4Weeks
- Formalizes Pre-Approval based on official underwriting (process begins once contract of saleis fully executed)
COMMITMENT TOLENDSUBJECT TO
- Appraisal of property
- Title
- Project Approval
- Purchase/personal financial approval
CRITICALCOMPONENT FOR
- Co-op/Condo Board Submission
- Managing Non-Contingent Contract Risk
COMMITMENT LETTERREQUIREMENTS
Full documentation regarding credit, income, assets and the subject property collateral that is reviewed and approved by the Bank?s underwriting department Commitment Letter is typically binding subject to theconditions stipulated there in and the expiration date
Document Preparation
These documents will be presented to the seller or seller?s agent in an offer and will prove to the seller the buyer is ready,serious,and qualified to purchasetheapartment This is very advantageous in negotiation and ultimately in closing the deal quickly
MORTGAGEPRE-APPROVALFORM
This is a letter you will get from your bank/mortgage broker If financing, this is important for the seller to know you have been approved for a certain amount and havealready begun theprocess of obtaining amortgage
REBNYFORM
This is an industry standard Real Estate Board Of New York form that will summarize all of your financial information This will be critical for the seller as to confirm you have the funds to purchase the apartment and can pass board approval Please note that the entire form does not need to be completed at this point in the process but should include: cash in banks,stocks and bonds,income and liability and anything else in your financial profilethat stands out
COOPFORMS
Specific Coops may require additional forms to befilled out in advance
4 | AGUIDETOBUYINGIN NEWYORK CITY
EstimatedFees& ClosingCosts
AGUIDETOBUYINGIN NEWYORK CITY | 5 DESCRIPTION: COST:
$3,000
3
$500
MOVE-IN
$250
$1,500
$1,000,000
$1,999,999 100% $2,000,000
$2,999,999 125% $3,000,000
150% $5,000,000
2 25%
3 25%
3 50% $20,000,000 - $24,999,999 3 75% $25,000,000 ORMORE 3 90%
BANK/ FINANCINGFEES: Varies
fee,commitment fee,underwriting
6 BANKATTORNEYLEGALFEE: $1,250 - $1,750 7 UCC-1FILINGFEE: $75 - $125 8 PURCHASEAPPLICATION FEE: $800 - $1,250 9 COOPPURCHASESONLY: 8a Coop Application Fee: $500 - $1,000 8b Judgment and Lien Search Fee: $450 8c Financing/ Recognition Agreement Fee: $250-$500 ?? 8d Flip Tax Value (negotiable): 1425% - 1825% transfer fee,aco-op can haveastrict ruleon if buyer or seller pays 10 CONDO/ TOWNHOUSEPURCHASESONLY: 9a TitleInsurance: Approximately $4 per $1,000 of sales price(regulated by NYSlaw)
MortgageTitle Insurance: Approximately $1per $1,000 of loan amount (varies ) 9c Searches and Recording Fees: $1,500 - $2,000 9d NYSMortgageRecording Tax: - 180% if mortgage amount is less than $500,000 - 1925% if mortgageamount is $500,000 or more 11 NEWCONSTRUCTION PURCHASESONLY: 10a Sponsor?s Attorney Fee: $2,500 - $3,500 10b NYCand NYSTransfer Taxes: If paid by Purchaser,transfer taxes arecalculated and added to the purchaseprice(for tax purposes only) and then recalculated based upon the bulked up price
Working Capital Fund Contribution Fee: One-time fee equal to 2 months of common charges
1 BROKER'SCOMPENSATION: As set forth in separateagreement. 2 ATTORNEYFEE:
- $4,000+ (~$5,000 when purchasing a Townhouse)
MOVE-IN DEPOSIT(refundable):
- $1,500
FEE(non-refundable):
-
4 MANSION TAX(for purchases over $1M):
-
-
- $4,999,999
- $9,999,999
$10,000,000 - $14,999,999
$15,000,000 - $19,999,999
5
(includes points,application
fee,appraisal,etc )
9b
10c
Terms& FeesToKnow
ASSESSMENTS: An amount of money that a condominium/cooperative trust needs owners to pay in order to finance a project or outstanding debt that was not part of the annual budget These projects are for the common good of the building whether it be hallways, lobbies,roofs,mechanical systems,water or even the building façadework.
COMMONCHARGES:Acondo feethat includes building operating costs and management fees
FLIPTAX:Afee paid by aseller or buyer when purchasing in a co-op It is not a government tax It is a transfer fee to profit the building on the saleon an apartment Flip tax can benegotiated or a co-op will have astrict ruleon whether buyer or seller pays
HAVE RIGHT OF FIRST REFUSAL:The condo board can review purchaser but cannot reject without exercising right of first refusal to purchasetheapartment
MAINTENANCE FEE: A co-op fee that includes utilities, building insurance, property tax and staff salaries A percentage can be tax deductiblebut varies by building
MORTGAGE CONTINGENCY: A provision in a purchase contract saying that if the prospective buyer cannot get a mortgage within afixed period of timewith thespecified terms,the buyer can call off the wholedeal and get back his deposit
PROPERTYTAXABATEMENTS: The government grants a reduction or exemption from taxes for a specific period in order to stimulate real estate or industrial development The most common is 421a - this exemption lasts for 10 years, giving owners a 100 percent exemption from any increases in their real estate taxes for two years, then phasing out the exemption by 20 percent every two years over the remaining eight years In Upper Manhattan and theouter boroughs,the exemption can last for 15 or 25 years
PROPRIETARY LEASE: A lease given by a cooperative corporation that provides the share owner with the right to live in a particular unit or apartment.
REALESTATETAXES:Taxes levied on apartment For acondo,this is a separateNYCtax bill
SUBLETTING: Leasing to a subtenant Ex: If you own a co-op you?re subletting to a renter because you have a proprietary lease with theco-op
TimelineToClosing
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