First of all, congratulations! This decision is huge and it’s great you can afford it. No matter if you’re a Wall Street banker, financial genius or just a penny pincher who has managed to make his dream come true, the process of buying an apartment in NYC is a big thing with plenty of details to think of.
Should you hire a broker first? Or settle on a neighborhood? What does pre-approval mean? Where to start?
Find Your Agent
All this buying process is personal, so you have to choose your real estate broker carefully. You’ll spend hours together, and this person should be truly happy to answer all your numerous questions. Since a broker is the person you should trust, run some background checks to see if they meet your criteria. Try to find out how long they have been in business.
Ask them to provide a list of what they have sold, as well as the clients’ contact information.
Yelp will help you to find reviews online. You will most probably work with your agent for a long time, so it’s better to choose carefully and wisely, as the stakes are high. Do you think you can rely on this person?
Let everyone know you’re planning to buy an apartment. Maybe some of your friends or relatives have dealt with a broker they enjoyed working with. You’ll most probably like them too.
You’d better interview at least three agents to find the one to help you buy the dream home. It should be someone who knows a lot about the neighborhood you’re planning to buy an apartment in.
Explore Your Financial Options
Don’t have enough money for the moment? Think about getting a mortgage. You can get a loan either from a mortgage broker, or a bank. As a rule, people go to a bank and ask for a loan, as banks usually give you the lowest rates. In case you get turned away in a bank, a mortgage broker is your next best option.
A mortgage broker is a middleman between a borrower and a bank/mortgage lender. Thus, they do not lend money directly. They work with a number of lenders, mortgage or commercial banks, to find loans for their clients. If you get pre-approved for a mortgage, it’s a great opportunity to show the seller that you’re a credible buyer. Some sellers can even require you to submit a pre-approval letter. This will allow you to be in the first row of buyers.
Getting pre-approved means the lender has considered your financial information and they have let you know the amount you can afford and the amount they will lend you. The documents you need to provide to get pro-approved are mostly about how much you earn, your debts and account balances, as well as the information about the place you live in.
Once you’ve found the perfect terms, choose the borough and the neighborhood to move to. Learn as many details about it as possible, spend time there, and keep your mind open not to miss anything.
Co-op VS Condo
The New York City real estate market is different from any other in the United States, and not only because of the prices.
You may already know that there are two types of apartments in NYC, co-op (cooperative) and condominium (condo). There are definitely more co-ops (about 75 percent of the real estate market) than condos in NYC, but the gap between them keeps narrowing. If you’re looking for an apartment in a new building, it will be most probably sold as condominium.
The main difference is that when you buy an apartment in a condominium, it actually belongs to you, while an apartment in a cooperative is technically not yours. The building is owned by a corporation, and you just buy some shares in it. You will have to sign a lease to give you the right to occupy the unit.
In both co-op and condo, there is the Board Approval Process you will be engaged in. But it’s more complicated when you buy an apartment in a cooperative. They not only decide whether you will be the proud owner of an apartment in their building. The board can also dictate the rules about how you can renovate the place, rules regarding pet policies, and so on and so forth.
As for the price, it’s less expensive in a cooperative than that in a condominium. But closing costs on a condominium are usually higher than on a co-op. They are the numbers you will pay over the price of the apartment. Closing costs include fees, charges and taxes.
Consider all the factors scrupulously before deciding where to buy an apartment.
Begin The Search
Good news is that once the price range and other options are clarified, you won’t have to spend months viewing all the apartments. Your agent will most definitely know the market tendencies of the preferred neighborhood, and will show you most suitable apartments. Luckily (or not), the New York real estate inventory is pretty low, so you won’t have too many options.
You should know every possible detail of the neighborhood you’re planning to move to. Be sure your agent does not hide anything about the building. Is it close to some toxic site? Is it near a flood zone? Is the building managed well? If you have children or planning to, learn about public and private schools nearby.
Is the apartment you chose located directly below the roof? Keep in mind that any roof will leak sooner or later. Is the place close to an elevator shaft? Its noise can trouble you all the time. Do you want to live on the first floor, right above the cellar or garage?
As we have said, think of every detail. Once you have found the perfect place, be ready to make a quick decision on whether you want to buy it.
Get A Lawyer
As soon as the seller accepts your offer, be ready to sign the contract. According to NYC rules, you are required to have a real estate attorney to prepare the details of the contract and represent you at the closing. It’s another thing differing New York from other states. Real estate lawyers take a flat fee for their services, so do your best to get the best deal.
This person should specialize in NYC real estate, not any other place in the US. The best way to find a lawyer is the word of mouth. Maybe someone you know can give you the contacts of a trustworthy attorney. NYC buyers usually rely on upon lawyers, as transactions in the world of real estate are complicated.
The check you’re signing might be the largest in your life, so it’s important not to miss anything. By the way, the lawyer will also help you to lessen the price, usually up to 10 percent of the apartment value.
Your lawyer will also dig all the available information about the place.
Once the contract is finalized, you and the seller will sign it. The attorney will also represent you at the closing, advising you on the documents to sign, as well as make sure the payments are accurately made.
An attorney’s charge is either a flat fee, or an hourly rate. As a rule, NYC attorneys charge a fee, which is often between $ 1,500 and $ 2,500. If your deal is much complicated, this amount can be as big as $ 5,000.
As soon as the deal is closed and you finally get the keys from your perfect apartment, don’t forget to pop a bottle of your favorite champagne and celebrate it properly.