Find Your Dream Condo
Leading New York City Buyer’s Broker with 20 Years of Condo Experience
Here at Elika, we focus on helping buyers find New York City condos throughout Manhattan and Brooklyn. We help people of all budgets by making the process as hassle-free and streamlined as possible. Whether it’s a beautiful Village studio you’re looking for or a luxurious condo residence, we won’t rest until we’ve found the right one for you. We start by assessing your needs so that we know your preferences. We then research and find that condo, perform a comparative market analysis, and negotiate on your behalf for the best price. We’ll then walk you through the financing stage and help you prepare your board application in the case of a condo resale.
When purchasing a condo in a New Development, no board application is required. While condos can be found, around lakes and golf courses in many parts of the country, New York City condos are situated in high-rise buildings, one atop another. But these condos are still considered real estate and, generally, the same laws on sales, financing, and taxes that apply to other properties also govern them. Before purchasing a condo in New York City, here are some things you need to know.
Block and Lot
In Manhattan, each condo unit in a multi-dwelling building has its block number and tax lot. Those parts of the building that are not part of your particular condo apartment are called common elements. These include the outdoor areas and the land the building is on, as well as inside areas like the lobby, hallways, and utility and laundry rooms. When you own a condo, you also own a specified percentage of these common elements.
Accordingly, the whole building is collectively owned by the unit owners. Each unit owner pays a standard maintenance fee called common charges. These go to the operating expenses for the building and; paid each month. However, each unit owner is required to pay their real estate taxes.
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Guide to Buying New York City Condominiums
Table of Contents
Estimated time to close a Condo purchase 1-2 months
Instead of owning shares in the cooperative, when people buy condos, they are purchasing real property. They receive a deed, and they pay taxes and ownership fees. They also have the right to sublet if they so choose or sell the property according to their desires.
As more new buildings are built in New York, condos are fast gaining market share and popularity. It is not surprising considering the ease of buying a condo vs. co-op. As opposed to a coop, a condo apartment is “real” property. A buyer receives a property title (deed) as though he or she were buying a house on an individual plot of land. Each apartment in a condominium gets a single tax bill.
Monthly Common Charges
There is also still a standard monthly common charge similar to the maintenance charges in a co-operative. These charges don’t include your real estate taxes and are not tax-deductible.
They also tend to be lower than in co-ops because there is no underlying mortgage for a condominium building. The straightforward nature of buying a condo, coupled with the fact that in some cases, you can finance up to 90% of the purchase price and sublet them at will, makes condominiums the number one choice for flexibility. Young buyers, International investors, and buyers that choose to use creative financing are urged to consider condos.
In a co-op, owners only own their unit and common grounds until they decide to move, at which point ownership transfers back to the corporation. They cannot transfer title or ownership at any point and, in reality, never indeed own anything. Condominiums are a different story. When buyers purchase a condo, they receive a deed and yearly taxes and other ownership fees. They can sublet their condo or sell it outright if they so choose.
Key Condo Factors
- Financing Options: Although condos allow for 90% financing, most banks in today’s market require 20% down.
- The Application Process: The acceptance ratio for condominiums is much higher than those for a co-op, and no board interview is required.
- Common Charges: There are often standard charges for a condo, but in most cases, they are considerably lower.
- Property Taxes: Must pay real estate taxes, which can be deductible in many cases if those deductions are carefully itemized.
Advantages of Condo
- Higher visibility and availability for buyers locally and international
- Flexible financing options, most condo buyers can finance up to 90% of the condo’s selling price
- The more natural application process with higher acceptance ratios
- Lower common charges usually
- Condos have flexible sublet policies
Disadvantages of Condo
- Closing Costs are higher for Condos
- Flexible financing and purchasing process can attract less qualified buyers and investors that could be forced to sell at a lower price during distress
- Flexible sublet policies can attract more renters that could cause more significant wear and tear on the building
- A disadvantage of purchasing a condo is the higher overall cost since there aren’t nearly as many condos as there are co-ops. This is changing quickly as new condo developments pop up all over the New York area.
Tips on Buying your First Condo
When buying your first NYC condo, you need to approach it as if buying your first home. There’s no need to stretch yourself financially, and you can buy one with as little as 20% down. It helps you avoid paying more than the condo is worth. It’s also advisable to obtain a fixed-rate mortgage so that your monthly expenses remain stable. If you want to be conservative, don’t spend over 35% of your pretax earnings on mortgage payments, property tax, and home insurance combined.
If you’re a first-time buyer in your 20s or 30s, it may be tempting to stretch yourself financially. You are doing so with the expectation that your income will rise in the coming years to cover the costs.
Things can change
However, keep in mind that things may change. For instance, if you start a family, then you can quickly find yourself boxed in paying a jumbo mortgage. When planning for the future, come up with a budget that takes account of your mortgage and latent variable. Even if you don’t plan on having children, it’s better to remain cautious.
Who’s to say that unemployment won’t spike in your industry, or that you won’t have a mid-life crisis that prompts you to change careers? Even professionals and government workers who feel their income is protected need to plan for the possibility of being financially derailed by unexpected circumstances.
How Condos Operate
When a building is put up as a condo or converted into one, the developer or building owner has to provide an offering plan. This must be submitted to the state attorney general’s office and give the specifics of how the building will be run. This document will detail the percentage of common elements for which each unit is responsible. It will also specify where a condo unit ends, and the common elements begin. Also, he or she must provide other documents, including the condominium bylaws and declaration.
House rules vary from building to building. In some condos, the unit owned includes the surface of the interior walls and everything that that surface wraps around. In others, units can extend as far as the center of any by the building’s bylaws. New York City condos are run by a board of managers that are elected by the condo owners during a yearly meeting. In some condo buildings, each apartment gets just one vote. But in many others, the number of votes is dependent upon the percentage of common elements that are owned. This, in turn, is assessed according to factors such as unit value, location, and size.
Unlike with co-ops, the condo board does not have the power to reject a prospective buyer, and the only way the board can head off a deal is to step in and buy the property themselves. This right of first refusal is seldom employed because it requires a vote from all of the other unit owners. Not to mention the fact that the board must come up with the money to buy the unit. That said, it’s not unknown to happen, and there have been some court cases that have revolved around the actions of condo boards.
The courts have held that the board cannot be held personally liable for the operating decisions they make as long as their members are operating in good faith. Still unresolved in the courts is whether or not the board can assess a flip tax on those who are selling their units.
Pros and Cons of Condos
Condos are a flexible and affordable option for some buyers, but there are distinct differences between condos and single-family homes. Here are some things to consider if you’re thinking of buying a condo. Storage space varies wildly in condo units. Some buildings have storage cages in the basement, but many don’t. If you need a lot of storage space, a condo may not be the best choice. Private outdoor space is also rare in condo developments.
This is great if you dislike maintaining a lawn, but if you love to garden or lounge outdoors, you may regret your condo purchase. If outdoor space is essential to you, consider purchasing near a park or a condo in a building with a roof deck.
Convenience and Amenities of a Condo
Most condo developments have luxurious amenities like on-site gyms, communal outdoor spaces (in some cases swimming pools), community lounges, and playgrounds, which are very attractive to a particular type of homebuyer. But keep in mind that the more amenities you have, the higher your monthly fees will be. So choose your amenities wisely by deciding on what is vital and not. Almost all condo developments have an onsite maintenance crew that handles any repairs to your home and maintains the common areas.
They often also arrange for deliveries to your home and even let approved workers into your condos, such as cable or phone technicians. Condos usually offer enhanced security, such as a doorman, multiple secure entry locks, and in some cases, round-the-clock security personnel. Helpful in the event of an emergency.
You’ll pay maintenance fees and dues to cover the costs associated with the amenities and security, even if you don’t use them all. The condo board sets the standard common charge fees, and they often increase periodically. These fees will be on top of your monthly mortgage payment.
The resale price on your unit often hinges on what other condo units are available in your development, as well as the prices for similar condo units. Condo units are very similar to one another, so the number of available units, views, finishes, and appliances often determine your asking price. Condo living is governed by the condo association and any rules and regulations they adopt, although in most cases, you will have a vote. Some condo boards restrict pets or noise levels.
Make sure you read all your condo rules and regulations before purchasing a unit. Condo residents live in proximity to one another. As such, it’s a good idea to meet your neighbors before you buy them.
Condo Purchasing Process
Crucial steps you’ll take in purchasing a New York City Condo.
- Estimated time frame: 1 – 3 days
It’s essential to understand how much you can afford to spend. Condo apartments typically require at least 10% down. Down payments can vary from building to building, with some allowing for as little as 5%. Despite many condo’s accepting 10%, most banks in today’s market require 20% down. If purchasing a condo in a new development, the down payment could also vary.
Submit a mortgage preapproval application with several lenders. Most sellers will not take an offer seriously unless you’ve, been pre-approved and by submitting mortgage applications to multiple lenders, you’ll have more choice in which one you choose. Knowing your preapproved rate will also let you know what your budget is. While it may be tempting to go for a property that matches the maximum preapproved rate, it’s better not to. The price may rise later in negotiations, so it’s better to give yourself a little breathing room.
Finding an apartment
- Approximate time frame 1-6 months
Depending on what you are looking for, the length of your search will vary. The average buyer sees 15-20 apartments before deciding on one. Our buyer’s agent will work closely with you to find out what your priorities are in finding a home. It’s sporadic to find a home that ticks all the boxes to make a list of those things you need and not so much. Our agents will then find condos that match your criteria and arrange for a private viewing.
- Approximate time three days to 3 weeks
The critical thing to keep in mind is that everything is negotiable. At Elika, we use a 4-6 data point analysis to estimate the approximate value. The fair market value of a condo on the current market. Our detailed report brings meaning to the numbers and helps you submit the right offer and start negotiations off on the right foot. With the advice and negotiating skills of our agents, you can expect to get your condo for a fair price. This stage can take a bit of time as offers and counteroffers go back and forth between both parties.
- Approximate time frame 1-3 weeks
Once a price is accepted, it’s time to write up a contract of sale. The seller’s attorney will draw up the contract of sale for your attorney. The buyer’s attorney will then complete due diligence. Involves reviewing minutes, financial statements of the building, and checking for any liens against the property. Upon review, the buyers sign the contract and forward it with a 10% deposit. The sellers will then execute the contract. Possible contingencies: Financing, Board Approval, closing dates. The quicker the contract can be signed, the better. It’s essential to keep in mind that in NYC, an agreement is only binding after both parties have signed.
- Approximate time frame 5 – 9 weeks
If you need financing, then you’ll need a Commitment Letter from a Lender to proceed any further. Since you’ve already been pre-approved, for a mortgage, you can start the application process right away. However, you will need to submit far more documents this time, and the process can get frustrating if anything is missing. An Elika agent will help you navigate this part by making sure everything is in order before you submit. Mortgage applications cannot be processed without an executed contract. These letters are, in most cases, the last items to complete a condo application.
Condominium Application or Board Package
- Approximate time frame 3 – 9 weeks
Condo resales require an application to be submitted and approved before a closing can take place. For the board to review a potential purchaser, Condo applications are given to prospective buyers to fill out after a contract has been countersigned. If there’s no financing, it generally takes about 2-3 weeks to gather the information for the application. When working with an Elika buyer’s agent, we assist in this process by making it as hassle-free as possible. Our agents have been through this process many times and may even have experience working with this particular board. If not, then they’ll make a few inquiries to find out more about their requirements.
Most Boards request the following information:
- Full financial disclosure with supporting documentation
- Employment history
- Current salary
- Personal and business references
- Tax returns for the previous two years
- Credit history
Submit Application for review
- Approximate time frame 1-4 weeks
After Elika completes your Board package, we’ll forward the finalized application to the managing agent of the condo building. The managing agent will then inspect the package to ensure it is complete. The application package will then be forwarded to the Board of Directors of the Condominium. After the board reviews the application, they will approve and issue a waiver to close. You’ll be glad to know that there’s no board interview with a condo purchase as there is with a co-op.
Schedule a Closing
- Approximate time frame 1-2 weeks
After board approval and once the waiver to close has been received from your lender, you can start scheduling a closing day. Your attorney will arrange this with the seller’s attorney to find a date that suits both parties. Before closing day (or on the same day), you’ll do a final walk-through of the condo to see that everything is as you last saw it. On closing day, you’ll meet with the seller’s attorney to finalize all documents and hand over any outstanding checks.
A representative from your lender will also be present. Both real estate agents are usually not present on the closing day as their job is finished. They’ll show up at another time to pick up their commission checks. Once all documents have been signed, you’ll receive your deed of ownership. Congratulations, you are now the proud owner of an NYC condo.
Questions to Ask a Building Before Buying
Before you make an offer on a condo apartment, you’ll want to get some essential information from the management company/board. Here are some crucial questions to ask, no matter where you’re trying to buy.
Unit Ownership Percentage: Primary User vs. Investors
What percentage of the units are owner-occupied, and what percentage is rented out to tenants? Generally, buildings with a higher rate of owner-occupants are more marketable when it’s time to resell the property.
Ask for a copy of the house rules and by-laws. If possible, review them with your buyer’s broker and attorney. Be aware of any grandfather clauses that govern the property. You may find that residents who bought the property after a specific date can’t rent out their unit while those who bought earlier can do so.
Condo Building Financials
Ask for a copy of the building’s financials. How much money does the association or board keep in reserve, and how is it invested?
Current or Future Assessments
Are assessments keeping pace with inflation? Is the board raising condo assessments each year to build reserves to fund future repairs? Compare building assessments to other condo developments and co-ops in the area to determine if they are reasonable.
Reason for Assessment
What is covered by the assessment? Maintenance of the common areas, recreational facilities, Local Law 11 building repointing, trash collection, and snow removal are everyday activities paid by condo associations and co-op boards. Be sure also to find out what is not covered.
Historical Frequency of Assessments
Were there special assessments mandated in the past five years? How much was each owner’s share? Some building assessments are unavoidable, but frequent, costly assessments may be a red flag indicating a building in poor condition. Or it may be a sign of imprudent financial policies with the board itself.
Sales Turnover in Building
How many apartments have sold in the building in the past 12 months, and how often do they sell?
Is the board involved in any litigation? Lawsuits involving homeowners or developers can rapidly deplete association reserves.
Quality of Buildings Construction
Has the building’s developer worked on other projects? If your development was converted from something else to a condo, ask for an engineer’s report. If the roof, windows, and bricks are in poor repair, they will affect the value of your housing investment and possibly your quality of life.
This information will help you decide if the condo unit is right for you. It will also give you some insight into the condo board’s cooperation, organization, and helpfulness.