The Buying Process Here are the steps you should expect: 1. (Recommended): Buying an apartment in Manhattan can be a daunting task. But with the right knowledgeable and experienced broker, the experience can become fun, enlightening and rewarding. If you decide to work with a professional, choose one real estate agent, or team to work with. Choose the agent/team you feel the most comfortable with and work with that agent exclusively. Being committed to working with one agent or team avoids confusion and duplication of effort while securing a partnership that works on your behalf no matter how long it takes. If you choose to work with us, we will guide you through the entire process. 2. Talk to a Mortgage Banker or Broker. Before looking at properties, you must know what you can afford. Based on your financial profile, your mortgage banker or broker quickly can determine what you can spend and how much you can borrow to finance your new home. There is no cost or obligation to you for this service until you actually apply for a loan. We can recommend the right mortgage professional for your needs. 3. Retain an Attorney - Brokers in New York City do not prepare contracts. You must hire a real estate attorney for your transaction. When considering a lawyer, it is important to hire an experienced attorney who specializes in New York cooperative and condo sales. Among other tasks, your attorney will conduct due diligence to advise you of the viability of the building. We can recommend attorneys. 4. Look at Properties - Most buyers look at an average of 15-25 properties prior to making their purchase. When the inventory is low, you won’t be able to see as many properties that match your search criteria and budget. Keep in mind that some apartments have limited showing times, and that the best properties get snatched up quickly. If you are using an agent, then they should schedule as many appointments as possible for you at properties that meet your criteria. Try to be as flexible as possible with your viewing schedule. Remember, Real Estate is a market where price is determined by supply and demand. 5. Make an Offer - Once you find the property you want to buy, get ready for the thrill of buying. Offers are made verbally in New York City and then in writing, and in many cases require financial documentation with the offer. The seller may make a counter offer and begin a negotiation process until an agreement is reached about the price and terms. If you are using an agent, they will prepare your offer for the seller, and use their expertise and skill to negotiate the best deal possible for you. 6. Sign the Contract - Once your attorney concludes that the contract and property finances are satisfactory, you will be ready to sign the contract. At this point you will generally deposit 10% of the sales price into the sellers’ attorney escrow account. Remember that until the seller has counter-signed the contract and delivered it back to you or your attorney, they are free to entertain and accept other offers. 7. Gather your Financial Documents and References - For both your loan application and board application (if applicable), you will need to supply detailed financial information. Most common are 2-3 years of tax returns, bank and investment statements, business, personal and landlord reference letters. If you use an agent, they will help you. 8. Obtain Financing and Apply for your Loan (if you are financing). Your bank will review your qualifications, have the property appraised, and when the loan is approved issue you a Commitment Letter. 9. Submit Board Package –Only after the building’s management company reviews your application and determines that it is complete will they submit your package to the Board for review. Expect review time to last 2-6 weeks. If you use an agent, once your package has been prepared they should review it prior to submission. 10. Meet the Board of Directors (co-ops only) - The managing agent will schedule an interview for you to meet the board. Some boards meet only once a month, so try to make yourself available when you get notified of the time and place of the interview. This board interview is a serious matter and should be treated as such. You should arrive promptly and dress appropriately. Answer only the questions you are asked without volunteering extra information. If you use and agent, they will prepare you for the interview. 11. Inspection – The day before or the morning of the closing, the property is inspected. If you use an agent, they will accompany you on the inspection and bring a careful eye in inspecting the property. 12. Closing ! Once you receive your board approval, you are ready to close. Typical time from board approval to closing is 10-14 days to account for paperwork preparation and filings, and the need to coordinate everybody’s schedule. Make sure to get the exact funds you will need from your attorney --and give yourself enough time to obtain certified bank checks or a wire transfer. Don’t forget to get your keys! Closing Costs For Condos/Townhouses -Own Attorney: Typically start at about $2,000. Consult your own Attorney -Points: 0%-3% of loan amount (optional, but your rate can come down) -Application Fee: $300 -Bank Attorney: $500 -Appraisal Fee: $300+ -Underwriting Fee: $350 -Misc Fees: $300 -Managing Agent Fee: $300 -Tax Escrows: 2-6 months -Mortgage Tax: 1.75% of loan amount for loans under $500,000. 1.875% of loan amount for loans exceeding $500,000. -Fee Title Insurance: $450-$650 per $100,000 -Mortgage Title Insurance: $250-$500 per $100,000 -Move in Deposit: $500+ (sometimes refundable) -Short Term Interest: up to 1 month (depending on closing date) -Common Charges Adjustment: up to 1 month (depending on closing date) -Real Estate Tax Adjustment: 1-3 months (depending on closing date) -Mansion/Luxury Tax: 1% of purchase price if $1,000,000 or more. For Co-ops: -Own Attorney: Typically start at about $2,000. Consult your own Attorney -Points: 0%-3% of loan amount (optional, but your rate can come down) -Application Fee: $300 -Bank Attorney: $500 -Appraisal Fee: $300+ -Underwriting Fee: $350 -Misc Fees: $300 -Managing Agent Fee: $300 -Judgment & Lien Search: $300 -UCC-1 Filing Fee: $20 -Move in Deposit: $500+ (sometimes refundable) -Short Term Interest: up to 1 month (depending on closing date) -Maintenance Adjustment: up to 1 month (depending on closing date) -Mansion/Luxury Tax: 1% of purchase price if $1,000,000 or more. At closing, sellers (of both co-ops and condos) are required to pay the New York State (.4%) and New York City (1% on sales of less than $500,000, and 1.425% when greater than $500,000, in most cases) Real Property Transfer Taxes. In newly constructed and gut renovated buildings, developers typically want the buyer to pay these taxes, plus their attorney’s fee. This is subject to negotiation, and can add to the buyer’s closing costs. Disclaimer: All information in this report has been obtained or derived from sources deemed reliable, but does not represent the information to be accurate or complete. Any opinions contained herein represent the judgment at this time and are subject to change without notice. Do not rely solely on this report to make real estate purchase or sale decisions. Always consult industry experts before you buy.
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