So, you’re leaping. After living as a renter in the Big Apple for a decade or more, you’re in a position to buy a New York apartment ––– 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.
Purchasing a home 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.
Know what you want and need
Whether you’re looking for a fixer-upper townhouse in Brownstone Brooklyn, 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 a home 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. Buying a home is a huge commitment. 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 next residence, ensuring that you’ll have the ability to make an offer should you stumble upon “the one.” Without pre-approval, agents and buyers won’t take you seriously, and they’ll move on to a buyer who has the necessary paperwork. Plus, you’ll know how much cash you qualify to borrow ahead of your search.
Lenders pre-approve home buyers for a specific amount of financing. Home buyers must feel comfortable with the amount of the 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 a 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 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 attend 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 large down payment, which is determined by the co-op board. The co-op board determines how much of your purchase price can be financed and how much must be paid in cash. 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 aren’t 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.
Locate Your Dream New York City Apartment
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 Search for the Perfect Home
- 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 home?
- 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 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.
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. The inspector might unearth minor and significant issues. Small issues can be fixed easily – even delayed for a period. Significant problems, however, require calling in a specialist to examine the issue. 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.
Purchase Offer Components
- Price – a pre-approved amount that meets your approval and you are capable of paying
- Terms – other factors (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 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.
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.
- 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.
Your dream home awaits its new owners. Hire a reputable New York City moving company to help you move into your new apartment. Congratulations!
- 1 Know what you want and need
- 2 Making the Decision
- 3 Advantages of Homeownership
- 4 Find a Buyers Agent
- 5 Real Estate Buyers Agents
- 6 Get pre-approved for a mortgage
- 7 How to Finance a Home
- 8 Co-Ops vs. Condo: Which Works for You?
- 9 Co-op
- 10 Condos
- 11 Have flexibility
- 12 Locate Your Dream New York City Apartment
- 13 How to Search for the Perfect Home
- 14 Organize and Submit an Offer
- 15 Property Inspection
- 16 Homeowner’s Insurance
- 17 Purchase Offer Components
- 18 Closing the Sale
- 19 Pre-Closing Reminders
- 20 Moving In