Latest posts by Gea Elika (see all)
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Once you have found a reputable buyer’s agent, real estate attorney and figured out the financing, you’ve taken the first steps on a long, complicated and rewarding journey. Below is a detailed timeline of what you can expect on your quest for homeownership:
Image by Cristinel Anghelus / Flickr
1. Calculating 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 need to estimate how much it will cost to maintain an apartment, including monthly common charges, 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. Co-ops often ask for.
2. Mortgage Pre-approval
(Estimated timeframe: 3-7 days)
The next step in the real estate 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 require 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%.
3. Brainstorming your Wish-List
(Estimated timeframe: 1 – 2 days)
After you have decided how much you can afford for your monthly expenses and a down payment, you need to make a list of your priorities, preferences, and needs.
- How large should your apartment be?
- How many bedrooms do you need?
- What amenities do you need?
- Where would you like to live?
This list will help you determine how much your new apartment will cost. If you are using an Elika 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.
4. Deciding between a Condo or Coop
(Estimated timeframe: 1-3 days)
When choosing a property, you will need to decide whether to restrict your search to condominiums or cooperatives. 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 key information about different neighborhoods. In order to find a great property, you may have to consider dozens of homes, but an experienced real estate buyer agent will help you narrow your search down to properties that fit your lifestyle.
5. Hiring an Attorney
(Estimated timeframe: 1-3 days)
Buyers and sellers are represented by attorneys in New York City. 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.
6. Finding a Property
(Estimated timeframe: 1-6 months)
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 broker would be happy to represent you in your search if you do not have time. The broker can visit the apartments or set appointments for you to visit them. This can save you hours of searching through newspapers or online advertisements to find the perfect place.
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 Micro.
7. Offers & Negotiation
(Estimated timeframe: 24 hours to 2 weeks)
In New York City, an offer can be made verbally or in writing, however, we recommend an offer writing. When you find your ideal apartment, it is time to place your offer through your Elika agent. Your agent will submit your bid to the seller’s agent or directly to the seller.
The seller might think your offer is too low. In that case, you might receive a counteroffer. This negotiation can lead to a mutually agreeable price, terms, and a closing date. Negotiations are affected by market conditions. If the market is crowded with available apartments, negotiating is easier. If there are not as many apartments for sale, negotiations might not work. An Elika agent can help you with negotiations by generating a comparable market analysis report so that you understand the properties value and the likelihood of negotiations. Apartments are usually 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 apartment 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 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.
8. Contract Signing
(Estimated timeframe: 1-2 weeks)
The seller’s attorney draws up the contract of sale, and the buyer’s attorney does due diligence, reviewing minutes, financial statements of the building, etc. Once approved, the buyer signs the contract and forwards it to the seller’s attorney with a 10 percent deposit. At this point, the seller executes the contract, and it becomes binding on both parties. Possible contingencies include financing, approval by any co-op or condo board, closing dates.
9. Mortgage Application
(Estimated Timeframe: 45-60 days)
Mortgage applications cannot be processed before the contract is executed. Once the 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.
10. Condominium and Cooperative Application or Board Package
(Estimated Timeframe: 2-3 weeks)
Once your purchase contract is executed, your condo board will give you an application to complete. This application must 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 Coop 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 a comprehensive credit history.
11. Submit Condo Application and Board Package for Review
(Estimated Timeframe: 1-4 weeks)
Once EA completes your board package, we forward it to the building’s management agent, who reviews it for completeness. Then it’s forwarded to the condo’s board of directors, and they decide if they will meet the potential buyer.
12. Co-Op Board Interview and Decision
(Estimated Timeframe: 30-60 minutes)
Most co-op boards meet just once a month, and many do not meet in August. Frequently, meetings are in the evening on a weeknight. Keep in mind that an interview does not guarantee approval. The board will reach a decision up to a few days after the meeting. Understanding coop board interview questions that may be asked will help you prepare.
(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 closing. 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.
(Estimated Timeframe: 1-2 weeks after approval by the board)
The buyer, seller, and their attorneys must gather to sign the remaining documents for the closing. Once the closing costs are paid the title is transferred and the buyer is given the deed when the seller receives the certified check for the balance. The entire real estate purchasing process can take anywhere from two months to one year.