So, you’re leaping. After living as a renter in the Big Apple for a decade or more, you’re in a position for buying an apartment in New York City finally. You’ve sacrificed and saved your pennies for the past five years, so now it’s time to become a homeowner in New York City. No matter how much apartment you can afford or in which neighborhood you plan to live, heed these first-time buyer’s tips to ensure your initial home-buying experience goes off without a hitch.
Buying an apartment is rewarding and requires a long-term commitment. You need a professional team who can handle the buying process without losing sight of your individual needs. Here’s how the step-by-step process of buying a New York City apartment can work for you.
Table of Contents
- Buying an Apartment in New York City
- Know what you want and need
- Making the Decision
- Advantages of Homeownership
- Find a Buyers Agent
- Real Estate Buyers Agents
- Get Pre-Approved for a mortgage
- How to Finance a Home
- Co-Ops vs. Condo: Which Works for You?
- Have flexibility
- Live The Dream Buy an Apartment in NYC
- How to Find The Perfect Apartment to Buy
- Organize and Submit an Offer
- Purchase Offer Components
- Property Inspection
- Homeowner’s Insurance
- Pre-Closing Reminders
- Closing the Sale
- Moving In
- Apartment Types and Sizes
- Building Types
- Buying an Apartment Checklist
Buying an Apartment in New York City
Although many people assume that they’re going to purchase a resale, there are quite a few advantages to buying new. Some of those advantages include energy efficient appliances, green buildings, fire-retardant floor covering, high-tech required. True, lower replacement costs and custom financing options.
Questions You Need to Answer Before Committing to Buy
Based on our experience working with a wide range of buyer’s, we’ve come up with a list of questions we believe everyone should ask themselves before getting serious about buying.
The questions are
- Are you prepared to maintain and repair an apartment or home?
- Are you willing to stay in the same apartment or home for at least five to ten years?
- Do you have a realistic idea of the type of apartment or home and amount of space you’ll need for the next five to ten years?
- Are you relatively sure your financial situation will remain stable or improve over the next several years?
- Are you a disciplined saver who can build up an account for emergency repairs or costs?
Since these are questions you should think about detail, we encourage you to ponder them for a few days.
How to Buy When You Only Know How to Rent
Buying your first apartment is something you will never forget. For some, it is a stressful experience full of buyer’s remorse and pressure; however, that doesn’t have to be indicative of your experience. First-time home buyers have a lot of information to consider. It’s a task that can seem overwhelming, but with the proper advice and information, this could be one of the best experiences of your life.
Don’t be Afraid to Shop Around
A lot of first-time home buyers fall into the pattern of limiting their options. Just because you liked the first place you saw, that doesn’t mean it’s the only one you should consider. Whether it’s price, location or upgrades, decide what is most important to you and your way of life. When buying a home, the price is a significant factor for most people, but remember it is not the only thing to keep in mind. As the economy changes, you may find that the kind of home you’re looking for is closer to your price range than you thought. Check the price range of similar apartments or houses in the area you’re considering.
Consider the Mortgage
You should shop around not only for the house or apartments but the mortgage as well. We recommend getting a mortgage pre-approval even before buying. Before you find the perfect home, it’s essential to have your finances in order. Most people pay a mortgage when purchasing real estate. It seems logical to find the place you’re interested in and then find the mortgage loan to match, but this is where many first-time buyers encounter issues.
Having the mortgage sorted out beforehand will help you understand how much you can spend. The lender will look at your credit and other factors to tell you how much you are “pre-approved” for mortgage financing. Once you have your price range laid out, you can look for a home that’s priced well below your budget. You may be surprised how much you could afford. Finding the mortgage before finding the apartment will make you a serious buyer when you pursue an offer on a property.
Include Taxes and Insurance
When you’re buying your own home, you are responsible for every dime that goes into it. Insurance included and (the more overlooked) taxes. For a condo or co-op, there are also common charges and maintenance fees that many buyers don’t think about enough during the search.
If you’re considering buy vs. rent, you will need to figure out your monthly costs after you add taxes and insurance. The down-payment, closing costs, and taxes are sometimes afterthoughts for new home buyers, but they can increase your total payment to nearly twice the amount. If you’re not sure of your full price range in this area, using an affordability calculator will help.
When buying a co-op or condo, you must consider some extra fees. You will be responsible for paying a share of costs for running the entire building — this is a maintenance fee or common charges. It is a small percentage of your overall payment, but it can raise the total substantially. It is essential to consider these fees when narrowing down your apartment search. If you keep your options open and remember the cost, you will not only find the place of your dreams but the most practical one. Buying the first house is a beautiful journey. Enjoy the experience because you only get one shot at your first time.
Learn More About Buying a Home in NYC
There is a lot that goes into making a real estate purchase in New York City. If you want to learn even more about the ins and outs of the NYC real estate market. Elika provides a comprehensive “First Time Home Buyers Guide” free PDF download to help resolve all questions and concerns for potential home buyers.
Know what you want and need
Whether you’re looking to buy a luxury penthouse New York City apartment in Midtown or a studio apartment in a walk-up building in West Harlem, focus your search as narrowly as possible and do it with a wish list in hand. Shopping aimlessly in a city of endless choices doesn’t work with designer clothing, let alone real estate –– an H&M budget won’t get you a suit from Prada, much in the same way a one-bedroom budget in Washington Heights won’t get you a sprawling two-bedroom in the West Village.
Know what you want, need, and can afford before you begin the process, and keep your attention fixated on those neighborhoods and apartments that are a good match for your lifestyle.
Making the Decision
Buying an apartment is a big decision from a financial and emotional perspective. Home ownership is the American dream. Owning a home must be your dream. The choice to purchase a home must make sense for you at this moment. If you have your finances in order and find a good deal, home ownership is the best investment you will ever make in your lifetime.
Advantages of Homeownership
- Freedom. You have the freedom to do with your property as you, please make it truly your home
- Build Equity. Rent paid will never be seen again. A mortgage payment allows you to build equity
- Appreciation. Between 1998 – 2018 NY home prices saw gains of over 150% on average
- Tax Breaks. The US Tax Code allows you to deduct mortgage interest, property taxes plus more
- Predictability. Unlike rent, your mortgage payments should remain steady over the years
- Stability. Become part of a community, establish roots and lifelong friendships
Find a Buyers Agent
If you’re serious about buying a New York City apartment, engage an exclusive buyer’s agent at the start. A qualified buyer’s agent will guide you in the right direction, have access to all listings on and off the market, and be able to negotiate terms and price on your behalf. Don’t know where to begin to find a compatible broker? Ask friends, family, and coworkers for recommendations, and interview your prospective agents before you sign on the dotted line and agree to work with him or her. Find a local, knowledgeable buyers agent that is an advocate for your best interests.
Real Estate Buyers Agents
- Listen and analyze your needs and preferences
- Keep you updated on current market conditions
- Locate apartments and homes matching your criteria
- Refer a team of professionals – attorney, inspector, etc. – on your behalf
- Perform a Comparable Market Analysis
- Negotiate with the seller’s agent on your behalf
- Prepare documents and submit Condo or Co-op applications
- Handle any additional issues
- Assist with post-closing services – Movers, Insurance Companies, etc
Get Pre-Approved for a mortgage
Don’t waste your time, a seller’s time, or the time of the brokers involved in the sale by not getting pre-qualified. Obtain a pre-approval letter before you begin searching for your new home, ensuring that you’ll have the ability to make an offer should you stumble upon “the one.” Without pre-approval, agents and seller’s won’t take you seriously, and they’ll move on to a buyer who has the necessary paperwork. Plus, you’ll know how much of a loan you qualify for ahead of time.
Lenders pre-approve home buyers for a specific amount of financing. Home buyers must feel comfortable with the amount of monthly mortgage payment terms. If the figure strains your budget, monthly payments could become unmanageable over time. Ultimately, it is your decision but make it a wise one. Overstretching your budget can lead to unwanted stress.
How to Finance a Home
- Select a Mortgage Broker or Bank
- Submit a loan application and receive pre-approval
- Determine a suitable payment and choose a loan option
- Forward an accepted purchase offer contract to the lender
- Receive an appraisal and final commitment letter
- Get funding at closing
Co-Ops vs. Condo: Which Works for You?
New York City has a relatively unique real estate scene with the inclusion of the cooperative. A co-op provides a more affordable opportunity; Be warned, however, that while co-op boards may not be quite as rigid as they appear in films and television shows, they are still notoriously choosy and have many rules and regulations that can be difficult to navigate.
So what is a co-op? Co-op is short for a Co-operative, which is a corporation that owns a building or apartment complex. The residents of such an apartment building will often describe themselves as owners, but this isn’t entirely accurate. Residents of a co-op do not actually “own,” anything, rather they are shareholders in the corporation. This relationship includes a “proprietary lease” which gives the entitlement to use the apartment. The size of your apartment tends to govern the number of shares you own in the corporation: the more significant the New York City apartment, the more shares. The building is considered an entity unto itself, and a co-op owner owns shares of it, rather than having direct ownership.
To live in a co-op, you must first submit a co-op application then attend an interview in hopes of being approved by the Board of Directors, which has veto power to keep out undesirable residents. In addition to your apartment cost, you also pay a portion of a monthly maintenance fee to cover things such as heat, hot water, insurance, staff salaries, real estate taxes and the mortgage indebtedness of the building.
Another part of the co-op structure is that there tends to be a sizeable down payment, which is determined by the co-op board. The co-op board decides how much of your purchase price can be mortgage financed and how much must be a cash downpayment. These payments are unusually high in desirable buildings, which also have very tight rules and regulations about whom is allowed ownership.
Co-ops make up somewhere in the neighborhood of 70% of the New York real estate market, while condos make up the remaining 30%. While co-ops have their shortcomings condos, tend to be more expensive overall.
Condos are popular as they have more financing options, more comfortable application and acceptance rates, and fewer fees for common areas and maintenance. However, condos are more expensive as there are fewer available, although this is changing as more condo buildings are being built around the city.
A condo is a “real” ownership deal, as the owner gets a deed and an individual tax bill. There are still maintenance fees for common areas, but these tend to be less than those for co-ops. Condos tend to be good options for those that use creative financing, including young buyers and investors.
Over the past decade, both co-ops and condos have been subject to the same fluctuations in the market. However, cooperatives remain lower priced overall and are still the most popular option for first-time buyers.
Based on the initial wish list you had made before you began shopping, you might not be able to afford Park Slope, even though you have your heart set on that neighborhood. Adjacent areas of Brooklyn, however, could offer more space and additional amenities and still be within your budget, so stay open-minded.
If you are not prepared to stray from your dream section of NYC, adjust your list and scratch off that extra bath, or the outdoor space, both of which add thousands of dollars to an asking price.
Live The Dream Buy an Apartment in NYC
How do you find your dream home? Once you are pre-approved for financing, you can begin to search for the perfect home. Looking on your own can be a confusing and overwhelming experience. Your personal buyer’s agent can pinpoint homes that match your needs and preferences.
How to Find The Perfect Apartment to Buy
- Choose your preferred neighborhood(s)
- Prioritize the facilities and services you would like in your area. (schools, transportation, fitness center)
- How much space would you want and need in your new home? Which type of space? (dining room, closetS)
- Is your priority the neighborhood or size of an apartment?
- Would you prefer to buy a ‘fixer-upper or a ‘move-in-ready’ home?
- How much importance do you place on home value appreciation?
- Do you value neighborhood stability?
- Would a condo or coop be a possible choice?
- Which features and amenities (essential and luxury) would you expect in your home or building?
Tip: Preferences may change as buyers go through the process of purchasing a new home.
Organize and Submit an Offer
When you find your dream home, it is time to make an offer. Buying a New York City apartment is an emotional purchase, but it is a significant investment. Your real estate agent can help you estimate the fair value of a particular New York City apartment by researching market comparables. Agents will check out similar neighborhood properties, determine market value, and get you a fair price. Hesitate, and you could lose the deal to another buyer.
Purchase Offer Components
- Price – a pre-approved amount that meets your approval and you are capable of paying.
- Terms – includes financial and timing in the offer.
- Contingencies – clauses are allowing you to escape the deal under certain circumstances ( a problem that did not exist previously or of which you were not aware at the time of the contract, also perhaps a mortgage contingency should the lender not approve such property, etc.). Contingencies specify any event that must occur for the contract of sale to be formed and enforceable.
- Once agreeing on a price and signing a contract of sale you will then need to apply to the board of directors of the co-operative or the condominium building. The documents are the same, but the review is different.
When you find your ideal New York City apartment, it can be hard to see beyond the superb interior design or spacious rooms. Potential home buyers must dig deeper to discover possible hidden issues such as structural damage (water damage, bad construction, etc.) A property inspector can help find those issues for you.
Home buyers should attend the inspection to gain a better understanding of the home. Should the inspector find minor and significant home repairs. Small issues can be fixed easily – even delayed for a period. Significant problems, however, require calling in a specialist to examine the effect. A professional can advise whether you should fix the problem or walk away from the deal.
New buyers must purchase a homeowner’s insurance policy. This coverage protects homeowners against loss or damage to property as well as liability if someone gets hurt in your home.
- Keep control of your finances and credit
- Stay in contact with your real estate agent and lender.
- Return phone calls and complete documents promptly.
- Contact your agent or attorney at least once or twice a week.
- Verify with your lender that the mortgage funding steps have reached completion
- Do a final walk-through of the home with your real estate buyer’s agent.
- Before closing, confirm with your attorney, home insurance official, and lender that the settlement statement, certified funds, and evidence of insurance are in place.
Closing the Sale
When you have an accepted offer, mortgage commitment, and have completed a home inspection and a walk-through you are getting closer to moving into your dream home. Just a few pre-closing duties will ensure that you do not risk your closing date or mortgage.
Your dream home awaits its new owners. Hire a reputable moving company to help you move into your new apartment. Congratulations!
Are you ready to purchase an NYC apartment and become a homeowner? By this point, you’ve doubtlessly made some significant changes in your life and taken a long, hard look at your finances. To help you in this journey, consult this helpful home buyer’s checklist.
Apartment Types and Sizes
The city boasts many standard-sized apartments, but several types have their particular kind of layouts. Here are descriptions of a few.
This is a one-room dwelling in which the living room and the bedroom are in a single space. In larger studios, the kitchen is in a separate room, while in others the eating area can be found along one wall in the main space. Studios are also referred to as efficiencies.
This is a one-room apartment that also offers an open area adjacent to the main space which is used for sleeping. This type of dwelling is also referred to as an L-shaped studio because of its configuration or a junior—one bedroom.
Flex (convertible) Two
This is a one-bedroom apartment that features ample space, typically the living room, transformed into another bedroom and a smaller living room by the installation of a temporary, also known as pressurized, wall dividing the space.
This is a one bedroom apartment that features an alcove area in the living room, which is typically used as a dining room or converted into a second bedroom.
A two-bedroom apartment with an alcove in the living room that is convertible to a bedroom.
This type of apartment exists exclusively in prewar buildings, and describes a dwelling with six rooms: a living room, a formal dining room, a kitchen, plus two full sized bedrooms, and a small third bedroom, generally referred to as the maid’s room. (Classic 7s and 8s also exist, and offer one or two additional full-sized bedrooms).
These apartments rent for short periods—anywhere from one week to one year—and contain all the furniture and kitchenware you would need to live comfortably.
There are three basic kinds of buildings in Manhattan: Doorman, Elevator (attended and unattended) and Walk–Up (unattended):
The types of apartment buildings that offer door attendants tend to be on the larger side and provide the most significant amount of safety and security. They also afford the highest level of comfort and convenience because your doorman can do a lot for you while you’re not home, including such things as taking drop-offs of packages and dry cleaning.
If you are new to the city, you will quickly learn that Manhattan revolves around deliveries, and having someone who can sign for your packages can feel like the ultimate luxury. Within buildings that have doormen, there are kinds of formats: luxury high–rise, standard, and part-time doorman.
These kinds of buildings have a full around-the-clock staff consisting of multiple door attendants and attendants. They often offer such amenities as hotel-type concierge service, on-site health clubs, pools, laundry service, and children’s playrooms. The specific luxury amenities will vary from building to building but will leave you feeling pampered.
These buildings have someone on duty 24 hours a day and offer the safety and convenience of having a doorman without the extra luxury amenities.
These buildings usually have doormen for day shifts, but rely on security cameras or some other type of technology to protect residents at night.
These buildings do not have doormen on duty, though some may employ elevator attendants. Regarding security, convenience, and price, these kinds of buildings are considered somewhere between doorman buildings and walk-ups. They often have laundry rooms on the premises, as well as intercom systems, but the amenities stop there. Still, if these buildings are adequately maintained, they can be comfortable places in which to live.
These buildings do not have doormen or elevators. They can be townhouses or brownstones (4–5 stories), above storefronts (usually 1-2 stories), or low–rise buildings (free standing 4–5 stories). They are the most reasonably priced kinds of apartments in the city, yet they have very few amenities.
Most walk–up buildings do, however, have double door security and a few have more sophisticated features, such as intercoms and security cameras. As with elevator buildings, the quality of life in walk-ups can vary greatly depending on the degree to which they are maintained.
Buying an Apartment Checklist
Locate an Agent
If possible, you should try to interview at least three real estate agents before making a decision. Keep in mind that there are different types of real estate companies. Some work on behalf of only sellers or only buyers, others that work either for buyers and sellers and still others that attempt to work for both simultaneously.
Work out a Pre-approval
Assuming a mortgage is in your future, you’ll want to set up a pre-approval. This will allow you to establish a certain level of comfort with your mortgage payments, and to plan your budget. If you’ve found a good agent, they should be able to refer you to some fair lenders. Just make sure there’s no conflict of interest between the real estate company and the lender–they shouldn’t be associated.
Begin Looking at Prospective Apartments
With a well-prepared agent and depending on desirable available inventory, you likely will be able to visit roughly 3 to 15 different apartments per day. Beware of concentrating only on open houses, though; typically, the number of available apartments will be much more significant in any area you target.
Start Narrowing Your Choices Down
Once you’ve had a good look at your options, you should begin to focus on only two or three apartments. Plan a follow-up visit to do a more detailed viewing of each home. With any luck, you’ll find at least one suitable alternative if your front-runner falls through.
Learn about Purchase Contracts
Many first-time homebuyers make the mistake of failing to review their contract before signing. Sit down with your attorney to discuss processes, documents, negotiation strategies, and any other relevant considerations while you’re still searching. The added confidence when it comes time to sign will be well worth your time.
Get an Attorney
It’s customary in New York City for home buyers to have a real estate attorney represent them during the buying process. Real estate transactions in the city are involved, and sellers often will have their lawyer on hand as well.
Review Comparable Sales Data
Begin reviewing comparable sales data, so you know the fair market value for the apartment you’re considering. Be sure you’re watching market values—if they aren’t stable (i.e., are frozen or dropping), you should check out the market inventory and rate of absorption. An experienced buyers agent will guide you through this process with additional industry data and resources.
Submit an Offer and Begin Negotiations
Having chosen a particular home, you’ll want to make a written offer right away. In the case, you reach an accepted offer keep in mind that should another buyer come along and place a higher offer on the property before you, and the seller has signed the contracts there is a chance the seller may decide to go with the higher offer. A deal is not complete until both the buyer and seller have signed the contract of sale.
Put it in Writing and Move Forward
If the negotiations have reached a point where a fair price has been accepted, then now is time to get ink on paper with the seller. If your negotiations have stalled or turned against your favor, though, you’ll want to move on to the next home and try again elsewhere.
Start Shopping for Mortgage Deal
Once you have a contract in the bag, you’ll want to shop for a good deal on your mortgage. Start with the lender which has pre-approved you in addition to one other, and then perform cost comparisons to narrow down your choice. Keep these things in mind as you shop.
- Type of loan (and your credit profile)
- Amount of your mortgage loan
- The loan’s lock period (your closing date determines this)
- The quote’s date and time (rates often fluctuate throughout any given day)
Get a Home Inspection
Be sure to confirm the home passes all the primary inspection criteria—structural integrity, plumbing, electrical work, lead, radon, termites, and all applicable.
Square Away Your Insurance
Here are the necessary things you’ll need on which you’ll need to provide information.
- Address and county, construction year, and type of dwelling
- Number of total apartments in the building/complex
- Roof type
- Heating type (also any other types of heating, like fireplaces or wood-burning stoves)
- Proximity to fire hydrants and the nearest fire department
- Information about the locks (deadbolts, chain locks, etc.)
- Electrical service info
- Square footage of your intended home
Submit your Purchase application
To get approval for your co-op, you’ll need to get permission from the board. Bring a copy of your board application with you, or at the very least, have the information below handy for the meeting.
- Copies of your tax returns for the required period
- REBNY Financial Statement highlighting your assets and liabilities
- Paycheck stubs, bank statements, and statements for any 401(k), mutual funds, and stocks you may own
- Letters of recommendation
- Documents/references to verify your current employment and your history of work.