Home Buying Process

Buyers Guide to NYC Apartments for Sale

Finding the right apartment and how to pay for it are only the starting steps in the process.

Many buyers deal with stress when buying a home or an investment property. That’s because the purchasing process in New York City can be confusing and overwhelming without the right help. But by taking some time to learn the buying process, you can make it a lot easier. Even better, Elika buyer’s agents make this process much less stressful by providing advice and assistance to our clients. We’ve represented hundreds of buyers in New York both local and international. Best of all, since we don’t offer any seller’s services, all potential conflicts of interest and avoided. With us by your side, you can be sure of receiving the best possible service and knowledge.

Before buying a property, buyers should understand the different types of New York City apartments available. For instance, most apartments, for sale in New York City are co-operatives. Unlike other types of properties, a cooperative building is owned, by a corporation, which consists of the building’s residents. Our guide to the home buying process below will discuss and outline all crucial considerations.

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Home Buyer’s Guide

Finding the right home can be a daunting task for even the most financially-savvy person. After all, your choice of an apartment will have to suit your needs and finances for years to come. Following a game plan and working with an Elika agent can simplify the process. If you’re a foreign buyer, you may want to visit our dedicated international buyer’s guide. To get started, consider each of the steps below.

Steps Buying an Apartment in New York City

Finding a property is only that start in what can be a long process. In general, buying a home in New York City involves the following steps:

• Select a New York City Attorney
• If you plan to finance, pre-qualify for a loan
• Decide on your desired neighborhood(s) and begin your search for a Condo or Co-op
• Research and perform a comparable market analysis to estimate fair market value for the property
• Make an oral offer for purchase
• Make a written offer which serves to formalize the intention to buy
• Wait for the seller to respond with a counter offer
• Negotiate with the seller until the sales price and terms accepted
• Due Diligence is performed by your attorney reviewing the contract, building financials and minutes
• Pay the down payment (typically 10%-20% or more of the purchase price) and sign the contract
• Apply to the co-op or condominium management company
• Upon approval, your attorney will coordinate your real estate closing.

Documentation Required When Financing

• Personal and Business reference letters (Original Copies)
• A pre-approval letter from your Mortgage bank or broker.
• Most recent checking and savings bank statements
• Previous two years tax returns
• List of other liquid or non-liquid assets
• Most recent 401K or retirement fund statements (if applicable)
• Most recent asset portfolio statements (if relevant)
• Employment verification letter confirming your start date, annual salary including bonus
• If self-employed – letter from your CPA or attorney verifying your salary and net worth

Deciding Between Co-op or Condo Apartment

When you purchase an apartment in a cooperative, you’re buying shares in the corporation. You don’t legally own the co-op apartment, but you do own shares in the corporation that owns the co-op apartment. Each apartment’s value in shares is calculated, according to rules set by the Board of Directors. The more prime; the real estate value, the higher the number of shares.

The Board of Directors runs each cooperative building, paying for its mortgage, taxes, and upkeep. The money that you pay for your shares goes towards these costs. However, to join the co-operative, you’ll have to be approved by the Board. Condominiums are another popular option. A condo is a more traditional type of property since buyers purchase the real estate itself. Therefore, the buyer needs to pay real estate taxes on the property. Unfortunately, there are fewer condominiums than cooperatives for sale in NYC. Different property types carry various advantages for buyers depending on their goals, financial resources, and other factors.

Cooperative apartments have several advantages, such as being less expensive than condominiums. Taxes also included in the cost, which makes for more straightforward billing arrangements when buying this type of property. However, a co-op’s Board of Directors may require a sizeable down payment. Co-ops are also very well-maintained. As the building’s owners are its tenants, there is a strong incentive to keep all apartments in good condition. Doing this increases the value of all of the building’s shares.

About 75% of the apartments available in New York are cooperatives, as well as 20% – 30% approx less expensive. Therefore, buyers who consider co-operatives have a broader array of choices when working with a qualified buyer’s agent.

Benefits of a Co-op

The main advantages of a cooperative are: Cooperative apartments are less expensive than condominiums. Taxes, also included in the cost, so buyers often have more straightforward billing arrangements when buying this type of property. However, a co-op’s Board of Directors may require a sizeable down payment. Co-ops are very well-maintained. As the building’s owners are its tenants, there is a strong incentive to keep all apartments in good condition to increase the value of all of the building’s shares.

It is still essential to visit a cooperative in person with an experienced agent before purchasing to choose a high-quality apartment. About 80 percent of the apartments available in New York are cooperatives, so buyers who consider co-operatives along with condominiums will have a more extensive array of choices when working with a qualified buyer’s agent.

Advantages of Condos

There is no Board of Directors with a condominium, so the purchasing process is much easier and quicker. Building rules are often much more relaxed, especially when it comes to residency. For instance, some buyers that are moving to the U.S. may have money in foreign accounts. Because of this, international buyers tend to have an easier time purchasing condominiums than co-operatives. Condos require less of down payment, usually 10%. Due to the high demand for condos, lenders are willing to loan money with a smaller down payment. In NYC, buyers can often finance condominiums with a down payment of only 20%.

However, mortgage rates are sometimes higher when a down payment is relatively low. Condos are also more comfortable to sublet, as renters don’t need to be approved by a Board of Directors. Makes condominiums a much better choice for buyers who are looking for investment properties.

When buying a home, consider how your chosen apartment type will affect its long-term value. Elika Real Estate agents will help you choose the right kind of property. Also, they can explain how the buying process differs between condos and co-ops NYC real estate.

Qualified Condo Buyer’s Agent

While some buyers are bogged down by paperwork when buying a home, Elika buyer’s agents make the process hassle-free. We understand why different properties appeal to different buyers and how to present you with condo apartments that fit your lifestyle. We make sure that our clients understand the purchasing timeline. By doing that, and keeping them informed every step of the way, we keep the process hassle-free.

Being one of the most culturally diverse cities in the world, it’s not hard to see why NYC is such an attractive place. Here you have hundreds of beautiful neighborhoods to choose from and all with their unique selling point. The food options are limitless, the entertainment never ends, and property values continue to remain relatively stable. Since our agents know these neighborhoods so well, you’ll have no trouble finding the right one for you. Whether it’s the initial search, negotiating, financing, or applying, we know our way around the block.

Great buyer’s representation from Elika is far more than a gentle touch. It’s a vital tool that can help buyers deal with stress and get the best deal possible. Without proper representation, the buying process in NYC can months or even years. With an exclusive buyer’s agent by your side, you can expect a far shorter and more comfortable experience.

Choosing a Property

A lot goes into deciding on what property is right for you. First off, you’ll have to decide whether or not to restrict your search to one particular type of property. Do you go with just co-ops or do you include condos in the search? Along with deciding whether the property is right for you, you’ll also have to think about the neighborhood. Does it fit your lifestyle? Is it easy to get around from there? Does it have all the services and amenities that you desire? Dozens of homes are, consider which is why having a buyer’s agent is so essential in narrowing down your choices.

As a member of the Real Estate Board of New York (REBNY), we have access to all available NYC real estate listings. Our agents will work to find the right properties for you and keep you updated at all times. We don’t like to waste our clients time, so we make sure to check up on all potential properties first. Unless it matches what our client is looking for, we won’t waste their time with a viewing. Once an apartment located, that we feel you would be happy with, with your confirmation then schedule viewings for your convenience. We’ll then provide our clients with all the facts on the property such as investment potential, market value, and more.

Mortgage Financing

For most people, buying a home means getting a mortgage. Mortgage applications tend to be the most challenging step in the buying process. You’ll need to consider what lender to choose, the type of mortgage and compare them for the best deal. A point when a lot of buyers undergo a great deal of stress and confusion. But with an experienced buyer’s agent at your side, that needn’t be the case. We’ll help you choose the right lender, give advice on the best mortgage for you, and explain anything in question. We can even help you start this process while negotiations are still going on. Meaningless time to complete the purchase and more time in your new home.

Negotiating

In most cases, the negotiating process will go something like this. After deciding on a reasonable offer price, you’ll make your bid, usually accompanied by several contingencies. These are terms of the deal that will protect you against ending up with a lemon. They may also include a request for certain repairs that the seller must fix before the deal can go forward. The seller may come back with a counteroffer, leading to a bit of back and forth that can go on for several days or weeks. An Elika buyer’s agent will give you advise on the best offer to make and help move things along of the negotiations get stuck. Thanks to our agents performing a comparable market analysis, you’ll know approximately what the property is worth and what the right offer should be.

We’ll also make sure that any counteroffers are fair. Because we know NYC real estate so well and know the fair value of any one apartment, you can be confident with our advice. We only provide buyer’s representation, and we have a strong incentive to help you get the best possible deal on your new property. Once the negotiations are complete and both parties have signed an agreement, we’ll help you through the rest. Buying a home means dealing with a lot of paperwork, and our agents will help you navigate the red tape and get you organized.

Application Process

New York City buyers usually face a lengthy application process unless purchasing in a New Development, as each cooperative’s Board of Directors decides whether to approve a new building resident. The Board may deny a buyer who has insufficient proof of income or for other reasons, depending on the building’s rules.

Filling out an application correctly, is often a time-consuming process, especially if you’re not sure what to include. However, approval from a Board is one of the final steps that buyers need to take to purchase properties in New York City successfully. As with all other steps in the purchasing process, a real estate agent can help.

You can plan better for an application if you know what to expect. That’s precisely what Elika Associates buyer’s agents will do by keeping you informed so you can apply successfully. You’ll need to include two years of tax returns, personal and professional information, proof of financing, a signed purchase contract, and other detailed financial documents. Depending on the policies of the Board of Directors, you may have to submit further documents.

We will help you assemble an attractive application package and submit it to the building’s managing agent. Co-op applicants will also need to perform an in-person interview with the Board of Directors. Elika buyer’s agents will help you prepare for your co-op interview by eliminating much of the associated stress and improving the chances of a fast, successful purchase.

Condo vs. Co-op: What is the difference?

Condo vs. Co-op the debate begins to help you decide which is right for you. In Manhattan, there are two primary real estate options to choose between Condo vs. Co-op. Before buying an apartment, you’ll want to fully understand these two options and what each has to offer. Most of what you will find for sale in Manhattan are cooperative or condominiums.

The most crucial distinction between condo vs. co-op is that with a co-op, you do not own the property.  The corporation owns the property, and you are considered a shareholder. You own shares in the corporation, much like you would in a business venture.

Our Condo vs. Co-op guide walks you through the considerations from start to finish.

Deciding between Condo vs. Co-op

Since you’re buying shares in the co-op, you do not own your apartment; you own a part of the corporation that owns the building. The Board of Directors for the corporation sets the value for each apartment based on shares. The larger and better the real estate, the higher the number of shares the co-op will be worth.

The Board of Directors runs each co-operative building, paying for its mortgage, taxes, and upkeep. The money you spend on your shares covers these expenses and contributes to the building’s reserve funds. The Board of Director’s vets all applicants and ensure the co-op remains financially healthy. Each owner must be able to pay for his/her obligations. For that reason, the Board must approve each new member.

Condominiums make up the other available real estate choice in New York. They are a more traditional choice for that buyers actually, purchase the real estate itself. That means that the expectations and responsibilities are different than a co-op. For example, if you buy a condominium, you will have to pay the real estate taxes on the property separately.

Available inventory

Another point of fact to consider is that in New York City, there are fewer condos vs. co-ops. About 70 percent of the apartments in New York are co-operatives. Co-ops, however, are less expensive than condos. The good news is that the gap between the two is narrowing. Currently, the ratio of cooperatives to condos is 75 to 25 percent. In the 1990s, the rate was 80 to 20 percent.

In the 1980s, it was 85 to 15 percent. This gradual shift has been taking place because apartments in newer buildings tend are sold as condos. In areas with more modern developments, there are higher numbers of condos available for purchase.

Condo vs. Co-op Considerations

Most people who already live in Manhattan have a relatively firm understanding of the real estate market and how it differs from other cities. Particularly true in regards to the trade-offs between condo vs. co-op. However, if you’re new to New York City, or are thinking of moving there soon, you may want a better understanding of what type of real estate will work best for you.

For example, depending on the neighborhood, there may be more co-ops than condos available. The co-op ownership vetting process can be strict, but that usually translates to greater financial security for the building. It can also be highly discriminative, especially when finances are concerned.

Although most people coming to New York feel like they must buy a condo, there are many factors to consider so that you end up purchasing the property that best fits your needs. Understanding the difference between a Condo vs. Co-op is an essential step before beginning your home search. Home Buyers or investors looking to purchase in New York City face a choice that those interested in other real estate markets don’t have to consider.

Pros and Cons

Each choice offers its pros and cons, but many new to the city’s real estate market often ask themselves, “Why on earth do co-ops even still exist?” Those that already own property in the town – whether it be condo or co-op – however, don’t have such a flippant attitude. The coop ownership structure in the New York City effectively added another layer of regulation to the city’s housing industry, thus saving it from the subprime crisis to an extent experienced by no other city in the US.

In all, somewhere between 70% and 80% of all housing in New York City is co-op housing. While that share is falling steadily, the market will continue to be dominated by co-ops for some time to come. That said, the co-op ownership structure did not precisely rise from the best of traditions: It was a mechanism for large apartment buildings to screen out unwanted applicants of various types, usually of class or social lines – or even racial lines, though never explicitly.

Co-op vs. Condo boards continues to be somewhat snooty, especially the wealthier ones. The process of applying to live in such a place is often more rigorous than trying to get into an Ivy League college. Fortunately – and perhaps ironically – this snootiness curbs demands for coops, and so their prices are, on average, 10 – 30 percent less than the typical condo regarding price per square feet.

What are the prices for a Condo vs. Co-op?

Another barrier to entry that keeps the average price of co-ops vs. condos is lower than is that they often require more money to be put down up front. Sometimes there are even clauses saying this money cannot be money from a bank loan but has to be the buyer’s pre-existing cash reserves thus purchased 100% in cash. One good thing about co-ops, though, is that the money you pay your share of the building’s taxes and mortgages is deductible from your income taxes.

Also, once you are actually in one, the arduous admissions process that you went through will have to be completed by all other potential neighbors, thus saving you from the possibility of living next to Kid Rock or some other similarly lovely character. Also, some of the oldest, most prestigious buildings in Manhattan are co-ops.

The same is right about condos, but the point is that many co-ops have a certain old-money flare to them that condos often eschew. Other than those benefits, though, there’s little to say in the way of cooperatives. Condos are notably better as investments. They are easier to buy and sell thus are a considerably more a liquid asset.

How Long Does It Take to Buy an Apartment?

Those who have never purchased a New York City apartment tend to underestimate how long it takes to buy a condo or co-op apartment. From finding a reputable buyer’s agent, real estate attorney, financing, viewing properties, and board application to closing day. Unless you are buying a new development condo or townhouse with all cash, you will need to cultivate the virtue of patience. With a knowledgable buyer’s agent, proper planning, and foresight, you can streamline the process.

Below are the process and timeline of what to expect on your quest for owning a condo or co-op apartment in New York City.

NYC Real Estate Purchasing Process Timeline

Estimating Your Budget

(Estimated timeframe: 1 – 3 days)

Before you start searching for the perfect home, you need to calculate how much of your weekly or monthly salary you can spend on a mortgage payment. Once you have a figure in mind, you also need to consider how much it will cost to maintain an apartment, including standard monthly common charges or maintenance fees, repairs, taxes, and utilities. Then, you have to factor in closing costs and your down payment, which can run from 10 percent to as much as 20 percent in the case of a co-op.

Mortgage Pre-approval

(Estimated timeframe: 3 – 7 days)

The next step in the purchasing process is to contact a mortgage broker or banker to help you get pre-qualified for a loan. To prove that you are a serious buyer, get a pre-qualification letter to show your financial standing, which will prepare you to start searching in earnest. You can’t start shopping until you know what you can afford. Keep in mind that your final mortgage approval is contingent on having the necessary down payment. Condo apartments typically require 10 percent down, while co-op apartments need at least 20 percent or more.

In Manhattan, approximately 20 percent of the buildings are condominiums, and the other 80 percent are cooperatives. Although Condominiums allow for 90% financing since the financial crisis, most lenders require that the buyer put down 20%.

Brainstorming your Wish-List

(Estimated timeframe: 1 – 2 days)

After receiving your mortgage pre-approval, you will need to decide how much you can afford for your monthly expenses and down payment.  Your wish-list is next required, make a list of your priorities, preferences, and needs.

Your wish list will help you determine how much your new apartment will cost. If you are using a buyer’s agent, your representative can take this list into account while matching you up with as many of the better apartments as possible that fit your budget and priorities.

• How large should your apartment be?
• How many bedrooms do you need?
• What amenities do you need?
• Where would you like to live?
• Do you need a washer/dryer?
• Do you need or prefer to have a doorman?
• Are you ok with a walk-up building or elevator is a must?

Deciding between a Condo or Coop

(Estimated timeframe: 1 – 3 days)

When choosing a property, you will need to determine if you prefer condos or coops. You will also have to understand property value to avoid a bad deal, and whether you are buying a home or an investment property. You will also need to know essential information about different neighborhoods. To find a great place to call home, you may have to consider dozens of options, but an experienced buyer agent will help you narrow your search down to properties that fit your lifestyle best.

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.

Co-op

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. Co-op residents will often describe themselves as owners, but this isn’t entirely accurate. Residents of a co-op do not actually “own,” the real estate; instead they are shareholders in the corporation. This relationship includes a “proprietary lease,” which gives the entitlement to use the apartment. The size of your co-op apartment tends to govern the number of shares you own in the corporation: the more significant the co-op, 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 be 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.

Expect a larger downpayment

Another part of the co-op structure is that there is a more substantial down payment 20% or higher, 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 the down payment should be. These payments are exceptionally 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% approx. While cooperatives have their shortcomings, condos, tend to be more expensive overall.

Condos

Condos are becoming more popular as they have more financing options, a more manageable application usually, and acceptance rates. However, condos are more expensive as there are fewer available, although this is changing as more new construction buildings rise around the city.

A condo is a “real” ownership deal, as the owner gets a deed and a single 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.

Hiring an Attorney

(Estimated timeframe: 1 – 3 days)

Attorneys in New York City represent buyers and sellers. The seller’s attorney will put together a sales contract. Your attorney is needed to review the buildings financials, bylaws, and legal structure to assure that you can accept the terms. An Elika broker can help you find a real estate attorney who has experience in Manhattan.

Finding a Property

(Estimated timeframe: 3 weeks to 3 months on average)

If you want things to move fast, you have to know what you want while also being realistic. Your budget will be a significant factor, the more cash you doe a down payment, the more options you’ll have.

The length of your apartment search can take days, weeks, or even months. It depends on how selective you are and how stringent your preferences may be. Most buyers will see 15 to 20 apartments before making an offer. An Elika buyers agent would be happy to represent you in your search if you would like someone advising you on your purchase. The broker can preview apartments or set appointments for you to visit the better options that match your needs; this can save you time while searching to find the perfect home.

If an Elika agent is searching for you, ask for a short list of the most promising apartments. You or your agent should visit as many properties as possible. Do not be fooled by advertisements. You absolutely must see the apartments first-hand before making an offer. To find the right property, you might want to read our article: Forget about Location, Location, Location, Think Macro.

Expect a lot of competition from other interested buyers if your budget is below $1.5 million. Other factors that will influence how long your search takes include:

The Neighborhood

The more popular the neighborhood, the longer the search. Communities with high demand and low inventory include top-market areas like Tribeca, SoHo, Nolita, and Greenwich Village. In Brooklyn, people are drawn, to the quaint, tree-lined streets of Brooklyn Heights, Carrol Gardens, Fort Greene and Park Slope. The usual workaround is to find apartments in areas that are close to, but not in, these areas.

Your Real Estate Agent

Hiring the right buyer’s agent for the job can mean the difference between success and failure. The right agent is one who knows the neighborhood in question, is familiar with the inventory, understands your needs and wants, and, just as importantly, is someone who can get along. Be sure to ask the right questions when interviewing potential agents.

Your ability to compromise

It’s sporadic for a buyer to find everything they’re looking for in a deal. NYC real estate is all about compromise. Decide early on what you need and would like but do not need. Do you need a building with top-of-the-line amenities like a doorman, pool, and gym? You might need to forgo a one-bedroom in place of a studio. What about having a lot of space? You may need a bus to the nearest subway. If you don’t want your search to take forever, you need to be flexible in your wants and needs.

From Offer, Negotiation to Acceptance

(Estimated timeframe: 2 days to 1 week)

In New York City, an offer should be submitted, in writing. When you find an apartment that hits 80% of your wish list, we would recommend proceeding with an offer. Your agent will send your offer to the seller’s agent or directly to the seller.

If you’re going to be making a lowball offer, make sure you have reasons to back it up. Sellers want to know that you’re serious and you can do this by having all the paperwork and team of professionals including real estate attorney and banker etc. in place and ready to go. Include your mortgage pre-approval letter and your, submit offer form, along with the contact details of your attorney and lender.

Including a “Love Letter” can also help sweeten the deal if you’re facing a bidding war with other interested buyers. Also, be wary of negotiating mistakes that could stall the process, or tank the whole deal.

Buyer’s Agents can help

A Buyer’s agent can help you with negotiations by generating a comparative market analysis so that you understand the properties fair market value and the potential of negotiating. Condos and Co-op, are generally sold, as-is. That means how you see it is how it will be sold to you. If you want, perhaps the furniture in the condo or different fixtures, you need to negotiate for them before the sale.

Once you finalize the price, your agent will put together a deal sheet that lists the sales price and the agreed-upon terms of the sale. Remember that nothing is guaranteed and additional offers may still, be entertained until a contract has been countersigned by the seller even if you have a negotiated price.

Negotiations are also affected by market conditions. If the market has an excess inventory, negotiating is easier. If there are not as many apartments for sale, negotiations might not work.

Due Diligence, Contract, and Signing

(Estimated timeframe: 5 to 7 days)

Once an offer is accepted, a deal sheet will be distributed between the brokers and attorneys. After this, the seller’s attorney will prepare and send a contract of sale, along with the building financials and by-laws to your attorney to review. This due diligence period between both sides can take one to two weeks, depending on the specific issues that come up during the attorneys’ evaluation and back and forth regarding contract rider notes if any.

Assuming that the home inspection turns up no issues and both parties are happy with the contract of sale, the buyer signs the contract and makes the 10% escrow down payment which, is delivered to the seller. Once the seller countersigns it and sends it back to your attorney, you now have a binding contract of sale.

Possible contingencies include financing, approval by any co-op or condo board, closing dates.

Mortgage Application and Commitment

(Estimated timeframe: 45 – 60 days)

Mortgage applications cannot be processed before the contract finalized. Once the mortgage application is complete, your lender will release a commitment letter. This letter is required to complete your board package/condo application if you are financing an apartment.

If you’re financing, now is the time when you pass on your fully executed contract to your lender. You’ll need to submit bank statements, pay stubs, W2s, tax returns, and whatever else is required, for the audit. Along with this due diligence on both your financials and the building, a home appraisal will be, conducted. On average, the process can take 30-45 days but can make for longer, depending on the process and how many follow-ups are required.

Compile and Submit Board Application Package for Review

(Estimated Timeframe: 30-45 Days)

Necessary: When buying in a New Development or a Sponsor Sale, please disregard this step.

Once your purchase contract is; countersigned, your condo board will give you a board application to complete. This application requires to be completed and approved before closing takes place. If there is no mortgage involved, it takes about 2-3 weeks to gather all the information needed for the application.

Co-ops, however, require a Co-op Board application be completed, an exhaustive list of documents and information. Most co-ops require the following in a board package: Complete financial disclosure with supporting documentation, detailed employment history, current salary, personal and business references, two years of tax returns, and comprehensive credit history.

Board Approval

Board approval can be subject to numerous delays that are entirely outside your control, such as their schedules to meet and procedures for reviewing board packages. If you’re fortunate, have a superb board package and ace the board interview, you will receive the green light to close. More often it can take up to 45days in total from the date of board application submission.

While condos also require board approval, this is more of a formality as they have much less power to refuse your application. Assuming you’ve provided all the necessary paperwork, all you’re waiting on is a waiver that declines their right of first refusal. Condo board approval can take anywhere from a few days to a month.

Co-Op Board Interview

(Estimated Timeframe: 30 – 60 minutes)

Most co-op boards meet once a month, and many do not respond in August. Frequently, meetings are in the evening on a weeknight. Keep in mind that an interview does not guarantee approval. The board will decide up to a few days after the meeting. Understanding coop board interview questions that may be asked will help you prepare.

Walk-Through

(Estimated Timeframe: 30 – 60 minutes)

Best to be done the day before or the day of closing. It is essential to inspect the property before the closing date. Verify that the appliances, faucets, light fixtures, plumbing, and outlets are all working. Make sure the seller has left or is preparing to move. Your Elika agent can help you complete the walk-through.

Preparing for Real Estate Closing Costs

When negotiating towards a final offer price on an NYC property, both buyers and sellers should have a reasonable idea of what their closing costs will be. This is difficult to estimate, potentially running into hundreds of thousands of dollars which will be added onto the purchase of the property. Worst of all is that buyers tend to underestimate those final closing costs.

New York City has a plethora of co-ops and condos. There are distinct differences between the two. It is not discussed often, but with the different ownership structures, there is a vast disparity between the closing costs for a co-op and condo. Purchasers should prepare to pay a markedly higher amount for condos.

Condos most closely align with what one thinks about home ownership. That is, owning real property. Co-ops are more akin to owning shares in a corporation. We provide a breakdown for buyers to understand better where the difference lies.

Condo Costs

Co-op Closing Costs

Closing Costs Explained

Closing costs in NYC are usually 2-6% of the purchase for buyers. The final bill is based on several factors such as property type (co-op or condo), level of financing, purchase price, and whether or not the property is new construction.

If your purchasing a condo the closing costs will be higher, for a start, you’ll need to cover title insurance. This is set by New York State and comes with several administrative charges which all together come to about $3,000 to $4,000. Then there are the extra costs if you’ll need a mortgage. Bank fees run from $2,000 to $3,000 while bank attorney fees and the appraisal go from $500 upwards. If the loan is over $500,000, you’ll need to cover a mortgage tax of 1.925%, for loans under $500,000 it’s 1.8%, something which only applies to condos.

Whether you’re buying a co-op or condo, you’ll need to pay your attorney’s fees, which can range from $2,000 to $3,000. The deal can be more complicated than usual if you would set up an LLC to purchase a condo as an international buyer. Then the attorney costs will increase and require additional work in filing the LLC.

Extra expenses

Mansion tax

If the property is purchased; at over $1,000,000 an, additional 1% mansion tax is added, to be paid by the buyer. For instance, a property sold for 1.87 million would have a mansion tax of $18,700. It’s not uncommon in negotiations for the purchase price to get knocked just below the $1 million thresholds to avoid this tax. The mansion tax has also just risen; please refer to our Mansion Tax article for a full breakdown of the increased mansion taxes.

Mortgage recording tax

Typically a condo buyer most substantial closing cost. The state and city both impose a charge on both new and refinanced mortgages, with the percentage increasing with the mortgage balance.

The tax rate ranges from 2.05% for mortgage balances less than $500,000 and increases to 2.175% for loan amounts more significant than this amount. The tax rises to 2.8% for mortgages greater than $500,000 on specific properties, but this does not apply to condos.

For instance, assuming the $945,000 price and a 20% down payment, buyers owe more than $16,000.

Co-op buyers do not have to pay this tax since they are not buying real property. Instead, you purchase shares in a corporation and receive a proprietary lease that allows you to live in the unit.

Title insurance

Lenders require condo buyers to buy title insurance to protect against future claims that arise from title disputes. The insurance company bases the premium amount as a percentage of the purchase price.

Aside from the lender’s title insurance, an owner can also purchase title insurance. The former’s premium declines as the mortgage balance decrease while the owner’s policy protects you for the full purchase price or, if you choose, the property’s market value.

However, lenders do not require co-ops owners to buy title insurance.

Real estate taxes

While only condo owners bear responsibility for mortgage taxes and title insurance, both pay real estate taxes. If you choose to pay the property taxes on your own, you do not have to set up an escrow account. Meaning you have to budget accordingly. However, if you roll it into your mortgage payment, the lender is going to require you to put a certain amount aside at the time of your closing. Means you have to come up with potentially several months’ worth of taxes.

A co-op’s taxes are based; on the number of shares you own. Hence, you pay this with your monthly maintenance fee.

Building Fees

Each co-op and condo is different in the fees they apply. Most co-ops and condos have move-in and move-out fees that range in price from a few hundred to a couple of thousand dollars. Board application fees range on average from $500 to $700. When making your board application, they will send you a list of what’s needed, and the fees involved. Buyers should read this carefully, so they fully aware.

The sponsors closing costs

A significant expense for buyers of new construction properties is that they are responsible for the developers closing costs. This includes transfer fees, the attorney’s fees and, if applicable, their units share of the sponsor’s apartment. This also applies to sponsors in co-op apartments. Depending on the purchase price, this can all add up to hundreds of thousands of dollars.

Other items

It is a minor amount, but mortgage and deed recording fees are generally lower for co-ops. Co-op buyers are likely to save a couple of hundred dollars, but you are likely to spend any savings you realize on higher board fees.

Final thoughts

Buyers should carefully consider all potential closing costs. Even with the best research, you’ll only get an approximate estimate. You won’t know the final bill until closing day.

Schedule the Closing

(Estimated Timeframe: 1 – 2 weeks after approval by the board)

The closing date all depends on the parties involved. Assuming that everything is in order and everyone is eager to close, it can take about one to two weeks to schedule a closing. Your attorney needs to coordinate with the title company, confirm with the bank that they’re ready to show up with the checks, and find a date that works for all the parties involved.

Our useful calculator allows you to get an estimate and comparison of closing cost quickly.

Closing Day

(Estimated Timeframe: 1 – 3 hours)

On closing day, it will finally be time to hand over the remainder of the payment and receive the keys to your new home. The average timeframe in NYC from an accepted offer to closing day is 60-90 days. But with so many variables in play, it can sometimes take longer.

Considerations for Home Buyers Before Buying

Regardless of your price range, attractive, well-maintained properties never stay on the market long. You’ll want to develop a basic understanding of NYC’s tight inventory market before you even begin. Helps you negotiate the best price later down the road and reduce your risk of losing out to other bidders.

Essential considerations

Mortgage Pre-approval

Get Mortgage Pre-Approval or provide Proof of Funds if paying cash. Sellers are more willing to negotiate with buyers who have proven their ability to purchase a home.

Consider a Buyer’s agent

Talk to your buyer’s agent regularly to stay on top of new listings as soon as they hit the market. Also, make time to visit properties you are interested in promptly.

Be Ready

Be ready to make a decision. That means knowing exactly, what you want and what you can afford. That way, you can recognize and act on any great opportunity when you see it.

Compromise

Be willing to compromise. Whether you currently reside in New York or you’re relocating from another state, most buyers experience a bit of sticker shock when they realize the usually modest size of condo or coop units they can afford. For this reason, compromise is an integral part of the home-buying process in New York City. The question is, just how much should you compromise?

Buy what you need

You don’t want to overextend yourself by buying too big. That said, you also don’t want to be forced to sell down the road because you didn’t allow room for growth. In a buyer’s market, you should accept a place that satisfies 90% or more of your wish list. In a seller’s market, you should buy if a home has 80% or more of what you want. When you make out a list of pros and cons for the places you view, consider including a column for compromises, so you stay flexible in your demands.

When making an offer

Even in a competitive market, protect your interests by insisting on proper inspections.
Before you make an offer, do due diligence on the property with your agent. Get sales data on the property you are interested in, as well as on comparable properties in the neighborhood. Develop a three-tiered price target: The lowest price you could reasonably offer without offending the seller, the offer price that you and your agent think the seller most likely to accept, and the maximum sales price you’re willing to pay for the property. Make your offer based on the lower price target and stick to your limits if the negotiation takes the sales price beyond that limit.

When financing ask for a mortgage contingency

If financing, ask for a mortgage contingency clause, but if you’re in a competitive bidding situation, consider dropping it. It may give you an advantage with the seller. Don’t place restrictions on the sale, such as a delayed closing date, or a contingency clause on the sale of your existing home. If your home hasn’t sold, talk to your lender about a bridge loan to cover both mortgages for a short period.

Be accommodating to the seller by offering him the opportunity to choose a closing date at his convenience. Some sellers haven’t lined up a new place to live by the time their house sells. When it comes time to make an offer, don’t panic if the seller rejects your first offer, or if it turns out, you’re in a very competitive market. Some buyers are tempted to buy a property at any price if they’ve lost a bidding war in the past. While you want to make your offer as attractive as possible, don’t work against your interests.

Market sentiment

On the other hand, depending on market sentiment, it may also be worth paying a reasonable premium to win the property. For most buyers, their home is their most significant investment. Whatever you choose to do, make sure your investment is a sound one.