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. ASSEMBLING YOUR TEAM: 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 mortgage broker 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. BUILDING AMENITIES: Consider what amenities are important to you. Many buildings in New Y ork 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 before making 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 Y ork 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 these factors in mind, you can make an informed decision when buying an apartment in New York City.

Cooperatives vs. Condominiums vs. Townhouses

Assembling Your Team

REAL ESTATE BROKER

  • Provides a market/ neighborhood analysis and a comparison of on-market, in contract and sold properties

  • Negotiate the purchase and terms of the deal

  • Prepare a strong purchase application to help the board approval process run smoothly

  • Knowledgeable on due diligence and litigation processes

  • Offer guidance on co-op board interview (if needed)

  • Conduct walk-through of the apartment prior to closing

MORTGAGE BANKERS / BROKER

  • Assess borrowing capacity

  • Evaluate financial strength of collateral for co-op, condo or townhouse

  • Develop financing options based on buyer? s objectives

  • Provide Pre-Approval for targeted transaction(s)

  • Coordinate legal/ financial diligence and contract terms with Realtor and Attorney on strategy

REAL ESTATE ATTORNEY

  • Perform thorough due diligence review of all documents related to the apartment 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 language to 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 a list of the bank and personal checks required

  • After the closing, the attorney will provide closing statements and copies of all documents signed at closing

HOME INSPECTOR

  • Evaluates the condition of an apartment or house, prior to a sale

  • Inspects the apartment or house and provides a detailed report of their findings to a buyer.

  • Looks for signs of damage, wear and tear, and other issues that could affect the property’s value or 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

Mortgage & Pre-Approval Process

ATTAIN PRE-APPROVAL, same day - 2 days

  • Pre-Approval is a preliminary indication of borrowing capacity based on application information and a hard credit pull

  • Pre-Approval is subject to verification of complete documentation regarding credit, income, assets and the subject property collateral

  • Employed: 2 years W-2, YTD Pay Stub, 2 months bank statements

  • Self Employed: 2 years Tax Returns, Business Returns, K-1s

MORTGAGE COMMITMENT LETTER, 2-4 Week s

  • Formalizes Pre-Approval based on official underwriting (process begins once contract of sale is fully executed)

COMMITMENT TO LEND SUBJECT TO

  • Appraisal of property

  • Title

  • Project Approval

  • Purchase/ personal financial approval

CRITICAL COMPONENT FOR

  • Co-op/ Condo Board Submission

  • Managing Non-Contingent Contract Risk

COMMITMENT LETTER REQUIREMENTS

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 the conditions 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 purchase the apartment. This is very advantageous in negotiation and ultimately in closing the deal quickly.

MORTGAGE PRE-APPROVAL FORM

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 have already begun the process of obtaining a mortgage.

REBNY FORM

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 profile that stands out.

COOP FORMS

Specific Coops may require additional forms to be filled out in advance.

Estimates Fees & Closing Costs

Terms & Fees To Know

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 façade work.

COMMON CHARGES: A condo fee that includes building operating costs and management fees.

FLIP TAX: A fee paid by a seller 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 sale on an apartment. Flip tax can be negotiated or a co-op will have a strict rule on 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 purchase the apartment.

MAINTENANCE FEE: A co-op fee that includes utilities, building insurance, property tax and staff salaries. A percentage can be tax deductible but varies by building.

MORTGAGE CONTINGENCY: A provision in a purchase contract saying that if the prospective buyer cannot get a mortgage within a fixed period of time with the specified terms, the buyer can call off the whole deal and get back his deposit.

PROPERTY TAX ABATEMENTS: 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 the outer 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.

REAL ESTATE TAXES: Taxes levied on apartment. For a condo, this is a separate NYC tax 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 the co-op.

Timeline to Closing

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