First time home buyers are anxious to start life in their new place. After all, navigating the concrete jungle is not easy, particularly in this seller’s market. There are certain things that must happen for you to close, and the average time to close on a New York City property is 60 to 90 days.
Each situation is different, and unique circumstances can result in an altered time frame. However, we provide a roadmap for home buyers so they know when they officially become homeowners after reaching an agreement with sellers.
Naturally, co-ops typically have a longer closing time than other New York City properties, including condos. On top of the usual steps, which include an inspection, title search, and your lawyer’s due diligence, a buyer needs the board’s approval. Your lawyer needs to conduct due diligence on the building, too. You should prepare for the extra time these steps take.
Generally, a condo sale takes a shorter period of time to close. If you are paying cash, you do not have to wait for the bank to approve your mortgage, further shortening the time.
Hurdles to closing
There are typical steps needed after the seller accepts your offer. These usually go smoothly, but any delay pushes back your closing date.
The closing stage happens once you sign the offer, send the check to your real estate attorney, and the seller signs the offer. You are in control of the first two items, but there are cases where the seller drags his/her feet. It should take one or two business days. If it takes longer, you and your agent need to question the seller and his/her agent since they could use your offer as a bargaining chip in the hopes of receiving a higher bid.
Once the seller signs the offer, the listing is “in contract.” Several things happen, including an appraisal, which you need for your mortgage. This can delay your closing if the appraisal falls short. If this happens you need to come up with additional funds or renegotiate a lower price. Assuming this goes smoothly, the bank grants a commitment letter. At this time, you find out your interest rate, which you can lock in for a certain period of time, typically 60 or 90 days.
We also strongly advise an inspection. If there are any negative surprises, you may want to negotiate with the seller to pay a portion. Major repairs could delay your closing. Your lawyer will order a title search, although these usually do not turn up an issue and present an obstacle to closing.
If this is a co-op, you have to contend with the board, and the extra steps this entails.
You do not have to worry about paying the closing costs, which can either get added to your mortgage or paid when you close, at this point.
Real Estate Closing
There is a bunch of documents for you to sign on your closing day. Under the Consumer Financial Protection Bureau (CFPB) “know before you owe” rule, you will receive the Closing Disclosure three business days prior to your closing date, allowing you to review the mortgage terms and costs. Additionally, your lawyer should explain all the documents as he/she presents them to you.
Typically, the actual closing takes two to three hours, and you receive the keys to your new apartment at the end.