buyer's guide
NOTES ON PURCHASING

The face of apartment hunting in recent years has undergone a huge transformation. Transparency in the marketplace, universal co-brokerage agreements and standardized listing formats continue their evolution through the use of new technologies and oversight by the N.Y. State Division of Licensing Services and the Real Estate Board of N.Y. 

Access to almost every available listing is now possible through all broker brokerage firms’ databases, complete with pictures, floor plans, building and historical data. New York Private Realty Group holds contracts with all reliable and current sources of listings, priding itself on leaving no stone unturned in helping you make an informed decision. We trust you will find our agents to be steadfast in this regard, and true professionals in the compilation and dissemination of the information.

HERE'S WHATS AHEAD IN BUYING AN APARTMENT IN NEW YORK CITY:

The Search

We at NYPRG consider ourselves to be among the very best at understanding what it is you are looking for, and scouring all listings to find the most attractive options. These we can present to you in various forms, including e-mail, where you can comfortably review the selections, complete with floorplans and pictures, in the comfort of your home or office. Our expertise lies in our ability to delve into far more detail than readily available to the general public. Once apartments of interest are identified, we schedule showings and accompany you to see them, eager to hear your feedback and modify future searches accordingly.

The Offer and Acceptance

Once a property has been selected, an offer is made for the property. The goal here is to have your offer accepted. We are well versed in price negotiations, particularly in the recent economic climate, bringing to light advantageous strategies. We will work closely with you to produce an agreeable outcome. The offer is presented on your behalf by us to the seller or the seller’s broker. Once accepted, a deal summary (a.k.a. transaction information sheet) is prepared by one of the brokers summarizing the purchase price, terms, identifying the property and naming the parties and their attorneys. It is then sent to both attorneys and the managing agent.


Evaluating the Apartment

Except for new construction, a buyer of an apartment in NYC is purchasing a used apartment in “As Is” condition. Customarily, the only physical obligation of the Seller is to deliver the unit in “Broom Clean” condition and the appliances in “Working Order”. Therefore, see if things work. Feel free to view it again. Your goal is not to change your mind on the purchase but rather to determine what it is that you’re buying. Turn on the oven and microwave, open the refrigerator, try the lights, use the wall sockets, flush the toilets, turn on the shower, check the water pressure, use the blinds, open and close doors and windows, pick-up throw rugs (do not pick up a tacked down carpet), look at the walls and ceilings. Some issues may need to be addressed by the building, others by the seller. Bring these to the attention of the Broker and Attorney.


Attorney’s Review of the Building

Your attorney will perform a leveled due diligence to obtain information on the building. This is not an audit, but rather an effort to learn about the building and provide you with information. This is done before signing the contract. Recent financial statements and minutes from Board of Director meetings will be reviewed, and the managing agent contacted. He or she will look into such things as the reserve fund for capital improvements, account notations in the financials, unit owners’ defaults, lawsuits, anticipated capital improvements, progress of work, increases in maintenance, special assessments, and the like. This information will be reported back to you and you can then follow up with any questions that you may have.


Contract of Sale

After receiving the deal sheet, the seller’s attorney prepares a Contract of Sale and forwards it to your attorney’s office. The Contract starts with the standard form and both attorneys then add their own riders which contain any provisions deemed necessary. Once the Contract is approved, you will be presented the Contract to sign. At the time of signing, you will also present a check of 10% of the purchase price. This money will be held jointly in an escrow account set up by both attorneys. The Contracts and check are sent to the sellers’ attorney for signature by the seller. Once the seller signs, the Contracts are dated, a set is returned to your attorney and your check for the contract deposit is deposited. The deal is not enforced until both sides have signed the fully executed contract in hand. We will be on a standby to provide assistance wherever needed.


The Loan Commitment

If you are buying a Co-Op, the building will have restrictions on how much of the purchase price can be financed. A Condo will not have restrictions. The deal may or may not be contingent upon you obtaining a loan. If it is not contingent, you may still finance, but you can not opt out of the deal if you fail to arrange financing. In this case, get an assurance from your mortgage broker or banker that you will not have a problem with the loan. Ask if they have ever done a deal in the building before – is the building on their approved list?
You typically need 20 to 30 days to obtain a Commitment Letter, which is an offer by a bank to issue a loan. If you have been pre-approved (which means the bank has reviewed your credit and income and is prepared to lend a sum of money, contingent upon approval of the property being purchased), the process will be shorter. It takes about a week or two to get an Appraisal.
Please note that if the deal is contingent on financing, it is best to direct your mortgage broker not to issue a commitment that contains conditions unless the broker is 100% assured that you will be able to clear the conditions. The effective term is “Firm Commitment” – that is what is needed.
The mortgage bank or mortgage broker will give you a good faith estimate of your closing fees (bank fees and title fees). Since there may be a considerable amount of time between the date the commitment is issued and the closing date, you will need to ask the bank or broker when it is advisable to lock in an interest rate. It is worth noting that in the current economic climate we are seeing countless changes to the qualifications needed to secure loans.


Title Work

Part of your attorney’s job is to make sure you receive clean title to the apartment. If you’re buying a Co-Op, a lien search is ordered. Your bank will also be hiring an attorney (at your cost – usually around $600) to represent the bank. Either that attorney or yours will order the lien search. The cost is around $275. The attorney will also ask you to sign and return an authorization permitting them to pre-file a UCC-1 Lien on the unit prior to closing.
If you’re buying a Condominium, your attorney will order a title report for you from a title company. Unlike a Co-op, there are title fees to be paid by you, insuring you that you are receiving clean title and that the bank is receiving a first priority lien on the unit. The fees are set by the state. Exact amounts of these fees will be given from the title company.


Board Approval &/or the Waiver of the right of first refusal

If you are buying a Co-Op, board approval to the transfer of stock is required. Boards vary greatly in their requirements and opinions about who they will approve to purchase in their buildings. The board approval process is a very “New York” experience, and can be an unpleasant experience for a number of reasons. What is best to remember is that this security is intended to protect fellow shareholders in their obligation, and that patience helps. In Condos, the seller must obtain what is called a “Waiver of the Boards Right of First Refusal”. In both instances, you need to prepare and submit a board package application and pay certain application fees. We shall assist in the preparation of the package, which can at times be cumbersome and somewhat intrusive. Confidence in the process and in the privacy of information is essential. There may also be deadlines by which the package must be submitted. In the event of a denial or election by the board to purchase the unit, provided you acted in good faith, the contact deposit is returned to you. Upon acceptance by the Co-Op Board, or the issuance of a waiver by the Condo, a closing may be scheduled.


The Closing

The closing date is coordinated between you, your attorney, the seller’s attorney, the managing agent (for Co-ops), your bank attorney (if needed), the sellers payoff bank (if needed), and the title company (for Condos Only). We shall coordinate a walk-through of the apartment prior to closing to see that it is free of furniture, broom cleaned and otherwise in proper condition at contract signing.
Please note that most bank attorneys bring “Net Funds” to closing. That means that the costs of the loan are deducted from the loan amount. The typical deductions are for your processing fee, underwriting fee, bank attorney fee, short interest (i.e. prepaid interest for the month in which you close), and the appraisal fee. You will not know the exact amount of these fees, and consequently the net amount being brought to closing, until the day before closing (That is when the bank attorneys get the figures from the bank). They are then given to your attorney and included in the final closing statement (estimate), which is the basis of what (certified) checks you will need to bring to the closing. Exact amounts are known sooner in all-cash closings.
The maintenance/ common charges for the month of closing are adjusted between you and the seller. For a condominium, real estate taxes are also adjusted.
The 10% paid at contract signing is credited to the seller and the balance plus/minus adjustments are paid according to the directions of the seller. If the seller has a loan, the seller will direct that a portion of the balance be paid to their bank. The 90% balance is paid by your personal funds and from your bank loan.
At the closing, the bank loan documents are singed. For a Co-Op, a new Stock Certificate is issued to the buyer with an assignment of the lease. The original Stock Certificate and Lease are given to your bank as collateral for a loan, if taken. The seller’s Stock and Lease are then canceled. For a Condominium, a Deed for the unit is given from the Seller to the Buyer. The Seller signs it and pays applicable transfer taxes and broker commissions. If your purchase is $1 million or over, you are obligated to pay a 1% NY State Mansion Tax. You may also pay a financing fee to the managing agent, a move-in fee &/or deposit, and possibly a flip tax (a.k.a. Transfer Tax for Co-ops). Who pays this tax will have been determined in the negotiation stage of the purchase. If you are buying a Condo, you will have title and mortgage (if any) recording fees. NYS Title fees are based upon a tiered schedule set by the New York State. Mortgage Recording Tax is 1.75% for mortgages under $500,000, and 1.875% for mortgages $500,000 and over. For a Co-Op, you will also be obligated to pay a fee for the lien search.

The closing ends with you getting the keys to the apartment and hopefully everyone leaves the closing with a smile. You may expect our continued assistance and support in establishing your new home or investment.

New York Private Realty Group with you every step of the way

FOREIGN BUYERS:

In general, foreign purchases of Manhattan residential real estate is often of individual (entire) buildings or of condominiums. Requirements for the alternative, co-operatives, can be prohibitive for non-U.S. citizens. These residences also often place limitations on subleasing and tenancy. Condominiums allow subleasing and in general cannot refuse tenants or applications, though reassurances must be provided through an application process, acknowledgement of house rules, waivers of immunity and the like. Common charges (noted CC on listing sheets) vary depending on the level of service and the efficiency of the managements and Boards. Real Estate Taxes (noted RET) are paid to the city directly, usually bi-annually. For an apartment of 650sf, for example, one may expect approximately $350-450/mo. in common charges and a similar amount in R.E. taxes.

The Condo Market:

Doorman buildings dominate the condo market. Non-doorman condos are rare. Per-square-foot prices are generally $1,150 ($12,000/m2), with top tier buildings fetching up to $2000/sf ($21,500/m2) and beyond. Preferred residences can be obtained in the $1,300-$1,400/sf range ($14,000/m2). At $1150/sf, $650 K will result in a studio apartment, and perhaps a one bedroom of 500-600 sf, (~47m2). Condominium studios sell well because they have appeal to investors, first time buyers and persons wanting a pied a terre here in the City.

Property types are as follows:

  • Pre war (typically built in the late 20s/ early 30s): These buildings are noted for their robust construction, of brick and cement, and aesthetic values such as beamed ceilings and gracious layouts. Most prewars are co-ops, though there are a handful that are condos. Very ‘New York’.
  • Post war (1950-present): As implied, a wide range of dates- 50’s/60’s construction was cement and steel, 70’s was the advent of drywall and ‘lightweight hi-rise’ construction methods, and 80’s better versions of the same.
  • New Developments: This next wave began in 2000, buildings like the Trump Tower, Grand Beekman, Time Warner Center and a multitude of others throughout the city. This trend continues today with over 200 approvals given and 300 pending new construction projects taking up every bit of land in Manhattan. Pricing for these has leveled off in the past year, though we are hard pressed to find any new development offered at under $1350/ sf . The best exceed $2500./sf.