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Purchasing a New York City co-op is a unique experience. There are valuable lessons we can impart to you from our extensive experience in helping the city’s buyers find suitable co-ops. Avoiding these mistakes can save you a lot of time and heartache.

Not using your own agent

An exclusive buyer’s agent works for you. The agent owes a fiduciary duty to the buyer, and he/she makes sure you do not overpay for an apartment Should you try to do this on your own, you will not save on the commission, since the seller pays this to the agent Instead of splitting it, he/she keeps the entire amount. The seller’s agent owes his/her client a fiduciary duty, and this includes getting the highest price. Purchasing a co-op adds another layer of complexity to the process, and you are going be glad you have an agent on your side.

You do not understand the financial requirement

A lender’s pre-approval letter is a must have when apartment hunting in New York City. You may have a sizeable cash balance ready to use for the down payment. However, co-op boards typically require much more. The boards want to ensure you have enough liquidity to pay monthly maintenance after you close. Post-closing requirements are typically one to two years of maintenance payments, and the board favors cash and other liquid assets such as mutual funds or shares of stock.
You need to adjust your expectations if you do not have the required liquidity. Another co-op building may work since boards have different requirements,

You don’t check the co-op’s approved lenders

There are lenders that will not extend mortgages to buyers in certain co-op buildings. This is not based on your financial situation, but, rather, there is an issue with co-op building itself. There are several reasons this could occur, such as the poor shape of a building’s finances and pending litigation. These serve as red flags, and knowing this ahead of time saves you time in order for you to find your dream co-op unit in a great building.

Celebrating too early

An offer is not official until both parties sign the contract. Even if the seller’s agent conveys his/her client’s acceptance, and you sign the contract, this is not a done deal. In fact, the seller can keep showing the apartment. With most of New York City real estate still favoring sellers, it is worth remembering that you are at a disadvantage.
Even once the seller signs the contract, you still have to submit your board package and pass your interview.

You do not take the application and interview seriously

It is not enough to have your offer accepted by the seller. You need to pass muster with the board, which are notoriously strict. You need to put together your board application and financial package. Following this, the next step is to prepare for your interview. Your agent can help you, but do your part and take it seriously.

Buying a co-op as an investment

New York City’s co-op boards generally do not like owners renting out units, preferring owners occupy the unit. Typically, boards either forbid subletting outright or place strict time limits. If you are looking for investment income, a co-op is not ideal. Condos usually have less strict requirements.

You do not hire a lawyer

Your lawyer is another important person on your side. He/she helps you by conducting due diligence, including reading the co-op’s financial statements and board minutes. Your lawyer makes sure you send the requested documents to your lender in the required timeframe and disperses the funds.

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