Purchasing a home is a highly detailed and personal undertaking. At NY Living Solutions, we make it our business to help you find the right fit for your lifestyle. We are prepared and determined to assist you in discovering the ideal property and neighborhood for your needs. Establishing a purchasing plan allows us to better equip you for this undertaking.
When do I need to move?
Find a target date for moving. If looking to finance, expect to take about 3 months from purchase to close. Buyers, begin your search 4-6 months before prior to an estimate moving date.
What should I know before beginning this process, so I do not miss a great deal?
The New York City real estate market is extremely competitive. The most desirable and affordable properties can go to contract in a matter of days. The most important factors in getting a deal to closing include the following:
• Annual Income - Generally, you can borrow up to about twice your gross annual income. Monthly mortgage and maintenance payments should not exceed 1 week’s gross salary. If you have significant liquid assets, you may be able to borrow more.
• Financial Statements –An accountant should prepare your statements. It should list net worth including assets, liabilities, salary, bonus, etc. New York Living Solution submits offers with financial validation. The most qualified buyers are usually the ones whose offers are accepted. When there is an apartment or property with multiple bids, having a complete financial statement is very important.
• Asset Valuation - A down payment alone does not qualify a buyer for a co-op or a condo in Manhattan. Usually, a co-op board or condo association wants guarantees for mandatory maintenance fees. They want assurances against unexpected loss of income. Many co-ops require liquid assets totaling one year's worth of maintenance and mortgage payments after closing. Also, some buildings require liquidity up to three years of combined costs. Ask your New York Living Solution broker to assist you with specific requirements
Establish a Budget
Location, size, amenities, building type, school locations and nearness to public transportation are crucial to determining what a property will cost. We suggest that buyers review financing options to determine what amount of money they can put toward a deposit, and then determine what they can afford for a monthly mortgage payment. Some people may want to see if they pre-qualify for a mortgage to determine their budget.
Choose a Property Type
Next, you must determine what type of property interests you most.
• Apartment-For apartment purchases there is no approval process, besides normal financial inquiries. Buyers have complete control over and responsibility for any renovations, maintenance and repairs. Transferring deeds or reselling an apartment does not require approval. The size of a property can vary according to a budget and location.
• Condominium: Owners have ownership of the purchased unit, along with a percentage of the common building areas, i.e. entrance areas, hallways and recreational areas, etc. Owners are entitled to use the property any way they desire. Condos are “real” property. Upon purchase, owners receive a deed, and subject to property taxes (that are either included in the monthly mortgage payment, or paid as an annual expense). Monthly non-deductible maintenance fees are generally paid to the building's condominium association.
• Co-Op: When purchasing a cooperative apartment, the buyer acquires shares of a cooperative. The shares correspond to the units in which you live. The size of the apartment determines the number of shares. Co-Op fees include monthly mortgage payments, along with building maintenance fees. Maintenance fees are sometimes high; however, both mortgage payments and maintenance fees generally result in higher tax deductibles. Purchasing a Co-Op requires an interview with the Co-Op board and an extensive personal, financial and professional review. The board grants ownership, determines the purchasing price, and establishes the building rules and regulations.
Where do I want to live?
New York City is a city of diverse neighborhoods, all with their own unique appeal. Before beginning your search, decide what is important to you (ex: proximity to public transportation or proximity to your job). Do you prefer a quiet residential neighborhood, or a bustling hub of activity and nightlife? Try to be open to different areas, as sometimes neighborhoods other than your first choice are more affordable and offer many of the same features. Visit our detailed neighborhood guide for information on all our neighborhoods. Also, ask your New York Living Solution broker for recommendations, for you may not be aware of them and they may best suit your needs.
Obtain Mortgage Pre-Approval
What does being pre-qualified mean?
Pre-qualified, also called pre-approved, is when a perspective buyer shares their income level, debt and credit information with a lender, so the lender can provide an estimated loan amount, based on this criteria. Being a pre-qualified buyer will reassure a seller that any offers made are bona fide and that a buyer can actually make the purchase. In fact, most offers submitted by New York Living Solution are often accompanied by a buyer's pre-qualification letter; this letter indicates to sellers that financing is an option.
Ask your New York Living Solution broker to provide you with information about financing, estimated monthly mortgage payments, and any other necessary qualifications. Pre-approval letters make for strong offers because the lender has already pulled a credit report, checked debt/to/income ratio, and done an analysis of your finances. It is preferable to be pre-approved, so that there will be no surprises when the credit report is received.
Select a Property
Based on your selections and budget, our specialists will arrange a tour the properties that best fit your needs and lifestyle. The length of the search process is determined by your criteria, but usually lasts 3-6 months.
What is the best way to win over sellers?
If you really want to buy a particular property that has a lot of interest, share with the seller on the fact that you are a qualified buyer. It does not matter whether you plan to buy a studio or a building; chances are that there are a limited number of properties available in your price range. In a competitive market, attractive properties can be in contract before they appear in the classified ads.
Brokers tend to notify serious buyers first. Make sure that you are ready to buy; have all your paperwork in order including financial documentation and pre-qualification for a mortgage. Communicate yours needs, budget, timetable, and neighborhood preferences.
Make yourself available to view properties. By being flexible with viewing properties during the workweek, you can avoid weekend shoppers, congested open houses. Many of the best buildings tend to display properties between 10-3, M-F.
Negotiate and Finalize Sale Contract
How do I make the deal happen?
After finding the property you want, immediately make a verbal offer. Consult your New York Living Solution broker for the best ways to extend an offer to a seller. When considering the right buyers, besides money, various factors influence sellers. During this stage, you may negotiate every aspect of the apartment with the seller, including the fixtures, floor/carpet, fireplaces, appliances, windows, etc.
If the verbal offer is accepted, have your broker get confirmation of the offer and acceptance in writing. Once the written offer is accepted and signed, your New York Living Solution broker prepares a transaction summary (also known as a “deal sheet”). This is sent to the seller's and buyer's attorneys for review. Using the signed offer and acceptance, the seller's attorney then prepares a contract of sale. After the buyer’s attorney reviews the contract, negotiates terms and evaluates the property's financial statements, the buyer then signs the contract and presents the down-payment check. Generally, down payments range from 10% - 20% of the contract of sale. This money is often held in the selling attorney's escrow account to be sent to the seller's attorney. The seller then executes the contract.
Note*: Verbal offers are not legally binding. In fact, in the New York City area an offer is legally binding when both the buyer and the seller sign a contract of sale. Sometimes sellers are tempted by higher offers. To avoid problems, be prepared and have your attorney move quickly through, reviewing financials and completing the contract.
Why select a real estate attorney?
The real estate market in New York City is a very dynamic market. Having a real estate attorney who specializes in the NYC market is very important. First, they know the intricacies of the laws and regulations. Second, they can quickly respond to any problems that arise, and therefore, expedite the closing. Ask your New York Living Solution broker to assist you in selecting a qualified real estate attorney.
Obtain a Mortgage
Once the sales contract is finalized, you may apply for a mortgage. After the mortgage is approved, you will obtain a verification letter from the lender to include in your board package. Buyers should apply for a mortgage as soon as both parties sign the contract. The mortgage process takes up to 45 days and can involve several procedures:
• The mortgage broker compiles the buyer's financial information and then presents the loan application.
• The bank sends an appraiser to assess the property
• The underwriters review the loan and issue a commitment letter.
Obtain Board Approval
With your specialist’s aid, you will finalize your board package, complete your application, and prepare for your personal interview with the board directors. Your package should include a complete financial review of your assets and credit history, your past three tax returns, disclosure of your past and present employment (including salary), and professional and personal references. After your personal interview, you will be notified of the board’s decision within three days.
If buying an apartment, coop, condo or any other property with a board or association, prepare your application package with your New York Living Solution broker. These packages tend to vary from building to building. Most boards use the same financial requirements as the bank. Keep an extra copy of your mortgage application and any related documentation. Buyers are required to get personal, professional and financial letters of reference. If renting, get a letter of reference from your current landlord. Ask what information is needed and for copies of sample reference letters. The board package is important; therefore, answer all questions in a clear, concise manner and give an accurate description of your financial qualifications. Before submitting your application package, write a cover letter, organize the presentation and review it with your New York Living Solution broker.
The board package is submitted after a buyer receives his/her mortgage-loan commitment letter; it is submitted to a building's Managing Agent. The Managing Agent checks the application, evaluates credit and references, and then submits the package to the board. The board then reviews the completed package. Additional information may be requested, or if the package is passed, an interview is scheduled. Either an interview committee approves new applicants, or the board will do so during its monthly meetings. Your New York Living Solution broker can assist you as to the date, time and any other preparations for your interview.
Before closing, your NY Living Solutions broker will assist you in inspecting the property, to assure all is working properly and as agreed on the “deal sheet.”
What is a closing?
A closing is where a buyer gives the seller money in exchange for ownership and title to a particular property. This bargained for exchange, or consideration, transfers ownership of the property. The seller also needs to sign different documents including a deed. The place of closing is normally at the bank attorney’s office. The parties present will be: seller, bank attorney, brokers, seller’s attorney, buyer’s attorney and title closer.
Generally, sales take between 3-5 months to close depending on various factors. The most common factors affecting closing include mortgage and financing, condo/coop board approval and negotiation.
General Closing Costs Defined:
• Additional Fees: Sometimes borrowers are required to pay additional fees. Some of these including Wire Fees, Tax Service, Survey Costs, Flood Certification, Settlement Charges, Messenger Fees, Sub-Escrow Fees, and Transfer Tax. Ask your broker to explain these fees.
• Appraisal Fee: Fee charged which estimates whether or not a property is worth enough to support a loan. A qualified appraiser will look over the property and produce a report.
• Attorney Fee: Fees paid to attorney representing you in real estate purchase (some closes require you to pay bank attorney fees or with condos, sponsor fees for sponsor attorney maybe required. Fees vary according to type of property and $ value of the property.
• Condo Board Application or Co-op flip tax: Fees charged for processing condo applications or coop shares.
• Credit Report: generally between $25 - $100 per report.
• Document Preparation Fee: fee charged by bank or mortgage company for preparation of paperwork.
• Escrow: (Taxes, Insurance) - In this case money figured into a mortgage for certain conditions like taxes and insurance etc. (see real estate terms defined for a more complete definition).
• Inspection Fee: fee for inspection of property to make sure it is up to code and livable
• Homeowner's Insurance: is required to protect against property damage from hazards; i.e. fires, floods etc.
• Mortgage Insurance: Usually loans made from a down payment of less than 20% require mortgage insurance. This protects a lender if a borrower defaults on home loans.
• Origination Fee/Points: Depending on the type of a loan and the rate a mortgage seeker chooses, he/she may pay points. 1 point equals 1% of the total loan amount.
• Prepaid Interest: This amount pays the interest due from the date of funding to the end of the current month.
• Recording/Transfer Fees: This covers the costs of changing the property title in official county records.
• Title Insurance and Search: Fees that are charged for a title search and insurance fees. A title search is used to verify that that the seller is the true owner of the property being sold and that the seller has the right to sell it. Title insurance protects a lender in the event of a lien or other problems with the title for the property in question, that was not disclosed at the time of sale.