Most Common Home Buyer Questions
Any decision to buy a home will mean asking a lot of questions. At Elika Real Estate, we understand that each answer will have its nuances and finer points. To help you in your journey, we’ve prepared this FAQ section to answer any questions you might have about buying a home or investment property with ELIKA.
Table of Contents
- How much does an apartment cost in NYC?
- What is the difference between luxury, super luxury, and ultra-luxury condos in NYC?
- What is more important when buying a home in NYC: location or amenities?
- Should I buy a condo or co-op?
- Can all-cash buyers in NYC get better prices?
- What are some key things I should look for when buying an NYC home?
- Should I buy new construction?
- What does it mean when a home is “in-contract”?
- Why do I need a lawyer to buy a home in NYC?
- Can a foreigner buy property in NYC?
- What is a mansion tax?
- What is a board package?
- What is the REBNY financial statement?
- What is the difference between a mortgage preapproval and prequalification?
- What is PMI Insurance for Mortgages?
- What is a non-conforming mortgage?
- How can I find out which public schools are in the area I’m interested in?
- What is Comparative Market Analysis?
- Can you tell me the history of a buyer’s agent?
- What is an “Exclusive Buyer’s agent?”
- So, that other real estate agent I found does not represent me?
- What are the responsibilities of a buyer’s agent?
- Why hire a buyer’s agent in New York City?
- Why not go to the market alone?
- Does choosing a buyer’s agent avoid conflicts of interest?
- What is the NAEBA?
- What can I expect from working with Elika?
- How are Elika Buyer’s Agents Paid?
- Wait, so if I buy a more expensive home, you will make more money?
- Why will I still pay a commission if I go without agent representation?
- What are the Advantages of Hiring Elika?
- How do I Hire an ELIKA Buyer’s Agent?
- Still, Have Questions?
How much does an apartment cost in NYC?
According to the REBNY residential sales report, the average apartment in NYC in Q2 2020 was $975,806. The number includes all types of homes and takes into account all sales across the five boroughs. When broken down, the citywide averages were:
- Condominiums – $1.6 million
- Cooperatives – $724,983
- One-to-three family homes – $860,631
The COVID-19 pandemic has had an undoubted impact on average sales prices across the city, as well as sales volumes. We can expect these numbers to change as the pandemic lessens in impact.
Condo and Co-op average and median sales prices year-to-date
What is the difference between luxury, super luxury, and ultra-luxury condos in NYC?
The word luxury often gets overused in the NYC market, and it will mean different things to different people. Simplified, any luxury home worthy of the name falls into the top 10% of the market transactions. Those homes in the top say 1-2% range is considered ultra-luxury homes.
What is more important when buying a home in NYC: location or amenities?
The old real estate adage of “location, location, location” has never lost its glow or sense of truth. Location really is the most important attribute when looking for a home and what you’ll pay top dollar for.
Should I buy a condo or co-op?
Deciding on whether a condo or a co-op is right for you is a personal decision. But it largely comes down to whether you want a new home and/or are planning to rent it out. If you want to rent out, then you should stick to looking at condos. Cop-ops rarely allow sub-leasing, and when they do, there are so many limitations that it’s just not practical. But if you’re only looking for a primary home and aren’t concerned about it being new, then a co-op is the best option. They tend to be a lot more affordable than condos.
Can all-cash buyers in NYC get better prices?
Generally, yes, but it really depends on the seller. If they’re dealing with multiple offers, an all-cash offer will usually be at the top of the list. It means one less step in the process (the mortgage approval) and a reduced chance of something going wrong. However, as much as 50% of the Manhattan market is made up of all-cash buyers at any time. The means the benefits may not translate into lower prices.
What are some key things I should look for when buying an NYC home?
- A laid out floor plan
- Nice views
- Good lighting – south and west-facing light is the preferred choice in Manhattan.
- Corner apartments – they almost always offer expanded views.
- If you can, avoid fixer-uppers unless ready for the renovation process and the costs associated.
Should I buy new construction?
New construction refers to any building that has been recently built and never lived in before. They can come with some very nice perks like modern amenities, energy efficiency, and no scratches or blemishes. New constructions also tend to come with lower maintenance charges for the first ten years or so as everything is new. However, before buying, you have to take careful consideration of the offering plan. There may be less room for negotiating on price than a pre-owned home, and not all new construction is built to the same level of quality. This is one area of the market you definitely do not want to go into without buyer representation.
What does it mean when a home is “in-contract”?
All homes become “in-contract” once the buyer and seller have signed the purchase and sales agreement and once the buyer has paid their deposit (usually 10% of the purchase price). It’s a legally binding term that locks both parties into completing the transaction. The only way out is if a contingency gets activated, allowing the buyer to exit the deal and get their deposit back.
Why do I need a lawyer to buy a home in NYC?
State law stipulates that only an attorney can close on a real estate deal in New York. Their respective attorneys must represent both sides. Buyers should be careful only to choose an attorney that specializes in real estate.
Can a foreigner buy property in NYC?
Absolutely! As a global destination, New York City attracts buyers from all over the world, lured by its stable price appreciation and investment potential. There are no extra stamp duties or taxes levied on foreign buyers. The only minor cost is that the buyer will have to set up a limited liability company (LLC) to hold the property. However, some U.S. citizens also do this, so there’s really no extra cost.
What is a mansion tax?
The mansion tax is paid by the buyer on properties equal to or greater than $1 million. It ranges from 1% to $2 million to 3.9% for up to $25 million. Its name is a joke among real estate circles in NYC because even a studio apartment here can cost more than $1 million.
What is a board package?
All condos and co-ops in NYC have a board of directors. It’s an electable position and can only be held by residents of the building. The board sets the rules for the building, including how they select new buyers. Every buyer will be required to provide a board package for their review, including financial information, personal information, and anything else they require. For condos, this is usually nothing more than a formality; they can’t actually stop you from buying the property unless they agree to buy it themselves.
For co-ops, it’s a lot more different. Co-op board packages require a lot more information and will include an interview. Unlike condos, co-op boards have the power to reject a buyer for whatever reason they choose. You won’t even be told why you were rejected. This is one reason why many buyers prefer to go for condos if you’re buying a co-op, having a buyer’s agent that’s handled transactions in the building before can make things a lot easier and more predictable.
What is the REBNY financial statement?
Most condo and co-op boards will require buyers to complete the REBNY financial statement. Essentially, it’s a personal and financial statement that will include details about the buyer’s assets, liabilities, income, and expenses. Supporting documents such as bank statements and investment holding statements will be required.
What is the difference between a mortgage preapproval and prequalification?
A prequalification is a preliminary determination by a bank or lender to determine whether a buyer can obtain a mortgage. It’s not very thorough and doesn’t look into whether any buyer’s statements are actually true. The buyer is asked to state their level of credit, assets, liabilities, income, and expenses. Based on this, the bank will estimate the loan amount they can expect to borrow.
By contrast, a pre-approval is a far more thorough assessment. An underwriter will review all of the buyer’s financial and personal documents to determine if they meet their financial requirements or not. Compared to a prequalification letter, a preapproval letter is a far better indication to a seller of your ability to purchase a property.
What is PMI Insurance for Mortgages?
The market today is full of products related to mortgage insurance. Some of these work to help you save money to purchase a home; others serve to make your mortgage payments in the event of ill health, death, or loss of work due to disability.
Often a lender offers mortgage life insurance. This type of mortgage insurance ensures that your mortgage financing will be entirely paid off in the event of your death or your spouse’s loss if you are both named on the original mortgage.
The best deals on this type of insurance are directly from the insurance companies. Lenders commonly offer package deals that cost you more and don’t provide many benefits. So while your bank may try to get you to purchase mortgage life insurance, it is usually more cost-effective to buy it from someone else.
Mortgage life insurance
Buying mortgage life insurance through your lender can be up to three times the expense of a term life insurance policy in the same amount, yet the effects are the same; in the event of a death, you will be able to pay off your mortgage. If you are going to buy an additional insurance policy to pay off your mortgage in the event of a death, then you want to compare the cost of getting two policies versus a single package policy through your lender.
However, if you have a history of bad credit, your lender may require you to have insurance. If this is the case, then you will need to get additional insurance coverage. Typically, this type of policy will be for private mortgage insurance. However, it is a different type of insurance.
If you don’t have the complete 20% down payment for a New York City apartment, you may be required to get another type of coverage. While this insurance policy means you can buy a home, it is an additional cost that will not benefit you.
What is a non-conforming mortgage?
Non-conforming means a mortgage that doesn’t follow the standard underwriting practices of other mortgages. Because an individual has either bad credit or no credit history, don’t be concerned if someone mentions this to you. Meaning you may have to pay higher interest, but you will still be able to get a mortgage.
However, if you are, offered a non-conforming jumbo mortgage loan, it is essential to get several quotes first, whether from an online source or several mortgage brokers. Be sure to consider all your available options. Remember, lenders are competing for your business, allowing you to get the best possible deal.
How can I find out which public schools are in the area I’m interested in?
Fair Housing Laws prevent real estate agents from divulging information about which schools lie in which zones. However, we can point you in the way of where you can find such information. Two great websites to check out are InsideSchools and GreatSchools.
Before signing a purchase contract, make sure you contact the school you’re interested in to confirm that they are within your school zone. Not all information available online is up to date, so be aware of this.
What is Comparative Market Analysis?
In the real estate world, prices are always changing. Determining how much a property is actually worth is almost an art as much as it is a science. A comparative market analysis (CMA) is a set of variables that agents use to determine the current market value. To work this out, we use the following five areas:
How motivated is the seller to close? Determining this will tell us how open someone is to negotiations. A savvy buyer’s agent can easily determine what a seller’s financial and personal situation is like. For instance, if they’re going through a divorce, have already purchased a new home, or face foreclosure, that’s a good indication that they’ll be flexible on the price or other terms like the closing costs.
Current market conditions
The next area to look at will be the current market conditions. As experts in this field, our agents can often determine the real-time circumstances before the widespread press reports. Market dynamics can change on a dime, which is why our agents always keep their ears to the ground for any sudden changes.
Another variable we consider is the property’s condition, which includes the building itself.
This is a complex area with a lot to consider, such as the building’s profile, age, unit mix, and electrical and plumbing quality. How good or bad the state of the apartment and building is will, of course, affect the value.
Improvements and upgrades
Has the home received any recent renovations or upgrades? If so, then this could make a big difference to the home’s value. Kitchens and bathrooms tend to be where most renovations are focused, as both these areas promise the highest returns on investment. If the home hasn’t received many upgrades, then we’ll look at the potential renovation cost, another factor to consider.
Lastly, we turn to sales comps. The comparison has to be meaningful for this work, something we work hard for at Elika Real Estate. We start by looking for recent closing prices in the same neighborhood, preferably the same building. Making this more meaningful by finding like-kind sales that have similarities to your unit. We also look at the listing price and price trends for similar units as well as recent transactions.
By condensing all of this information and using our in-depth market analysis, we can quickly develop a competitive bid to make your chosen property.
Can you tell me the history of a buyer’s agent?
It may surprise some to know that buyer’s agents have always been a feature of the real estate world. The problem was that most buyers weren’t aware of this, and they sure as hell weren’t going to learn about them from the seller’s agents. Completely unaware that the agent they were dealing with was duty-bound to represent the seller, this led to a lot of distrust between agents and buyers.
It wasn’t until the FTC began pressuring the real estate world to provide clients with written disclosures stating who represented who that thing began to improve. By the 1990s, this pressure had spread to most states, and in 1993 the National Association of Realtors (NAR) finally admitted the need for representation disclosures. All real estate agents are now compelled to be honest about who they represent in any transaction.
There are four types of real estate agent, each with its own definite role:
- Traditional Sellers Agency – Agents working for a seller’s company who agree with home sellers to get them the highest price possible. Many of these companies also serve buyers, though not as clients but instead as customers.
- Dual Agency – A company that tries to work on both sides of the fence by representing buyers and sellers. Conflicts of interest often arise when one agent works as a buyer’s agent and another as a seller’s agent.
- Buyer’s Agency – An exclusive buyer’s agency whose only interest is getting their clients the lowest price and best terms available. They understand the importance of referrals and repeat business, which can only come from satisfied clients.
- Single Agency – Agents represent either the buyer or seller, as long as two agents don’t work on opposite sides of the same sale.
What is an “Exclusive Buyer’s agent?”
When most people hear the words “real estate agent,” they may conjure an image of a conniving dealer that claims to work for you but actually represents the seller. Their aim, of course, is to make you pay the highest price possible. Thankfully, with the advent of exclusive buyer’s agents, that’s no longer the case. These agents work solely for the buyers to get them the best price on the best terms. By hiring one, you’ll be confident in knowing that you’ve got someone on your side. Elika Associates is always here to provide that service for you.
So, that other real estate agent I found does not represent me?
Not in the least. Any agent can help you find a home that matches your budget and needs. But only an exclusive buyer’s agent will work directly for you and take your best interests to heart. By contrast, non-exclusive agents are bound by local and federal codes, as well as real estate license laws, to meet the seller’s needs first and foremost. Not many buyers know this, which is why many of them feel cheated once a deal closes.
If you want fair and honest service, you should only work with a member of the National Association of Exclusive Buyer’s Agents (NAEBA). Only they can deliver full loyalty and fiduciary duty to you. If an independent buyer’s agent or brokerage is not available in your area, then seek out the next best thing, an agent who has earned an Accredited Buyers Representative (ABR) designation.
These are the two most important qualifications in choosing a buyer’s agent. Finding an agent with these will give you full peace of mind that your interests are being looked after.
What are the responsibilities of a buyer’s agent?
Every real estate buyer’s agent has the sole purpose of representing the buyer with 100% loyalty, full disclosure, and fiduciary duty. This is crucially important when dealing with any seller that has listing agent representation. The listing agent, also called the seller’s agent, will owe all of their loyalty to the seller. This is bad news for unrepresented buyers who will be at a severe disadvantage when negotiating a sale. By hiring a buyer’s agent, you’re adding a counterweight that will ensure your best interests are protected.
As a member of the National Association of Exclusive Buyer’s Agents (the only one in NYC), Elika Real Estate works exclusively with buyers and knows the buying process better than anyone.
Why hire a buyer’s agent in New York City?
Any home purchase in the U.S. is a significant milestone. But the prices found in NYC make any purchase there a far more significant one. Besides, getting from offer to closing in NYC is rarely a straight road. There are numerous bumps, unexpected turns, and roadblocks along the way that can tire out even the most committed buyer. By hiring a buyer’s agent, you’re not only getting someone who can fight for you in negotiations, but you’re also getting someone who can act as a guide and confidante in the journey towards homeownership.
Why not go to the market alone?
You could, but you’re only setting yourself up for disaster by doing so. New York City has always been a tough market for buyers. But it’s even more so now since the COVID-19
pandemic started. You can expect no mercy if you go in there alone and unrepresented.
Furthermore, whether you hire a buyer’s agent or not, you’re still going to be paying for one in the real estate commission form. This is roughly 5-6% of the sales price and is always paid by the buyer. Ordinarily, this is split 50/50 between the buyer’s agent and seller’s agent. If the buyer doesn’t have an agent, then the seller’s agent collects the full commission. So, it makes little sense to go without representation, as you’ll still be paying for it either way.
Along with negotiating for your best interests, Elika also has an extensive range of resources and expertise to help you make the right decision. You’ll never have to worry about getting shanghaied into buying a property that doesn’t fit your needs with our agents. Additionally, our agents can also handle the paperwork, find unlisted properties for sale, navigate the buying process, and help you secure financing. Buyer’s agents do a lot more than just finding you a home. They help you find the perfect one on terms that suit you right.
Does choosing a buyer’s agent avoid conflicts of interest?
Absolutely. The biggest problem with dual agents is that they’ll rarely introduce themselves as such. You have to find out for yourself who they represent, usually by reading the fine print on the buyer agency agreement or checking the paper for listings placed by the agency. If an agency has many listings, you can take that to represent both buyers and sellers. In this situation, it’s better to walk away and find another agency as they’ve already shown that they’re dishonest.
Any transaction in which both the buyer’s agent and seller’s agent work for the same brokerage (referred to as an in-house sale) is almost always a bad deal for the buyer. Smart buyers know this, which is why they chose instead to work with an exclusive buyer’s agent. Reputable sources such as Business Week, Money Magazine, Kiplinger’s Personal Finance Magazine, and U.S. News and World Report also support the use of a buyer’s agent over a dual agent.
What is the NAEBA?
Unlike traditional real estate brokerages, members of the National Association of Exclusive Buyer’s Agents exclusively represent buyers. NAEBA brokers owe their clients complete loyalty, obeisance, confidentiality, accounting, reasonable care and skill, and full disclosure along with full fiduciary duty. By contrast, traditional brokers owe their fiduciary duty entirely to the seller and cannot reveal anything detrimental to their interests.
This turns the typical buyer-agent relationship on its head, providing the buyer with a far more level playing field. For instance, exclusive buyer’s agents can advise you on how much the property is worth, not just by sharing comparable sales data but by also providing information that could influence the price to your advantage.
For example, if the sellers are going through a divorce or a pending foreclosure, the buyer’s agent would be required to inform you of this. Using all the information at their disposal, your buyer’s agent will fight to get you the best price and under the best contingencies.
All NAEBA members have a strict code of ethics that they must follow. As a whole, NAEBA’s ethical standards surpass both legal and industry standards. So, you can be sure of getting only the best when you work with NAEBA brokers.
Why it might be right for you
Founded in the 1990s, the NAEBA was created to find a better way for the real estate industry to conduct its business. While the creation of dual agencies did seem like a positive step at first, as they allowed agents to collect commissions through buying and selling, this created the problem that agents were incentivized to obtain the highest price possible for the seller. As a result, the NAEBA was founded to provide a better alternative for buyers.
Most people will only conduct a couple of real estate transactions in their lifetime. The exception being if you’re a real estate investor. Since most people won’t have much experience conducting real estate transactions, you’ll want to have someone by your side who does. As professionals, buyer’s agents will know far more about both the buying process and the local market than anyone can hope to know, even with weeks of studying. Knowing how to spot red flags and conduct negotiations requires hard-won experience. The sort that you’ll only get from a trained and experienced agent like Elika can provide.
Additionally, searching for a home takes a lot of time. Few people have the time to visit 10, 20, or 30 separate listings searching for the right one between their job and personal lives. A buyer’s agent will do all this footwork for you and weed out those listings that don’t match your needs. Once they’ve narrowed down your options to a few listings that they believe fit your requirements and budget, they’ll arrange for a private viewing so you can see them in person. It just makes everything so much easier, and, in this business, you really need to take all the help you can get.
What can I expect from working with Elika?
At Elika, our goal is to take the stress out of the buying process and provide our clients with a level of service that they’ll never find with a more traditional agency. As exclusive buyer’s agents, we put your interests first above all else. We’ll make offer recommendations, handle tough negotiations, and prevent high-pressure sales agents from leading you into a bad deal. By drawing on decades of experience in the NYC market, you can be sure of getting a full understanding of each property and the market as a whole when you work with us.
Also, best of all, it costs you nothing extra to do so. Since a sale commission still has to be paid for the listing agent, it makes little sense to forgo a buyer’s agent’s services. Not only can we get you a better deal than you would by going it alone, but we’ll also do it at no extra cost to you.
How are Elika Buyer’s Agents Paid?
Based on the Real Estate Board of New York, NYC’s sales commission is about 5-6%. Like all other real estate agents, Elika agents earn their living through this commission, which is paid at closing out of the proceeds of the sale. This is then split 50/50 between the listing brokerage and the buyer’s brokerage. It’s an unavoidable part of any transaction and will still have to be paid even if you go without agent representation.
Wait, so if I buy a more expensive home, you will make more money?
Perhaps, but that’s not how we do business. We understand that a satisfied customer leads to referrals, which leads to more business. This more than makes up for any financial losses we take from steering you towards that less expensive home that you actually want. Our goal is always to build long-lasting relationships based on trust and transparency.
Why will I still pay a commission if I go without agent representation?
As mentioned, the real estate commission is paid by the seller out of the sale’s proceeds, with the commission being split 50/50 between the buyer’s agent and listing agent (it actually goes to the brokerages, not the individual agents). Most sellers will bake this into the listing price, so, in effect, the buyer is actually paying it.
Now, you might think that if you go without agent representation, you’ll be able to avoid this. But that still leaves the seller’s listing agent. In a transaction where the buyer is unrepresented, the listing agent (or rather, their brokerage) collects the full 5-6% commission. So, it makes little sense to go without representation since you’ll be paying for it anyway. The only party that benefits from no buyer’s agent being involved is the listing agent.
What are the Advantages of Hiring Elika?
As an exclusive buyer’s agency, Elika aims to bring its clients only the best in service. We help you cut through the marketing copy, home staging, and other sales techniques that can mislead you about the true value. We’ll then walk you through every step in the buying process, from initial offer to closing.
We can do what we do so well because we take the time to understand what our clients are looking for. Expect us to ask many questions as we try to understand your lifestyle preferences, financials, and long-term goals. Using this information, our agents will then comb all the listings out there searching for your dream home.
Additionally, our exclusive agents will also:
- Provide unbiased expert knowledge and services, saving you time & money.
- Connect you with reputable attorneys, mortgage lenders, architects, etc.
- Sort through all of the properties and provide you with only the best options.
- Preview properties so you don’t have to.
- Negotiate on your behalf to get the best possible price and manage the purchase application process.
- Research and conduct a Comparable Market Analysis on the property, market, and area to ensure you do not overpay.
- Provide you with post-closing services assisting with your move and more.
- Help you spot misleading information in a property listing.
- Identify overpriced properties and discourage impulse buying.
- Professionally negotiate on your behalf to cut property prices.
- Speed up the closing process, board applications, and other frequent delays
How do I Hire an ELIKA Buyer’s Agent?
Contact us. Upon receiving your inquiry, we will contact you within 24 hours. You’ll be guaranteed the full range of our home buyer services in the search for your new home.
Still, Have Questions?
Contact an ELIKA associate, available Monday–Friday, 9:00–5:00 p.m. EST.