BUYING PROCESS
Whether you are a New York local, from out of State or from overseas, the workings of the NYC real estate market can often be complex. The following information will help you better understand the details, provide answers to some questions and help you navigate the process.
Real estate in Manhattan has always been in high demand, as this vibrant city truly is the capital of the world. NYC is a hub for many industries including finance, banking, commerce, art, culture, fashion, advertising, film, TV and others. It’s a place people come from all over the world to live, work, attend events, and tour its incredible sights. All these factors greatly enhance the appeal, and the value, of NYC real estate, especially in prime neighborhoods.
Let me be your full-service real estate guide and resource in New York City. I will discuss your unique needs with you as far as what you want in a home, what you can afford, and what your lifestyle is, then hone in on the best options possible, and provide the info to help you make the right decision. I can also recommend an attorney and mortgage broker if you don’t yet have one, to help streamline the process with top professionals.
A. Quick overview of the buying process:
Once you find the right property, we’ll make an offer, which is not a binding obligation for either party. If your offer is accepted, you must hire a real estate lawyer who will advise you further and handle the legal paperwork.
If you’re buying a co-op or condo, a home inspection is optional, unlike buying a house where it is essential and you can negotiate some repairs, etc. prior to closing.
Review and sign the contract and make a down payment. This can range from 2 to 10% of the purchase price.
Get a mortgage. Selecting the right lender can have a major impact on your closing costs and closing date.
Submit your board package (for co-ops, and condos) along with any fees involved.
Schedule a closing. This occurs when your lender says you are clear to close, title issues are cleared, and all paperwork has been processed by your attorney. After the closing, you become the official owner.
B. Expenses of Purchasing in New York City:
Regardless of the type of property you choose, a condominium or co-operative building, there are certain expenses that go beyond the purchase price itself. Several are tax- deductible such as carrying charges, real estate taxes. Depending on the property, real estate taxes can be thousands of dollars, so it’s important that a buyer or investor consult with their accountant to discuss tax reduction options. Maintenance fees for co-op owners and common charges for condominium owners are paid monthly and based on a building’s amenities and operating costs.
1- Condominium, co-op, pros and cons:
Condominium:
New York City condos, which account for over 25% of the market, are typically foreign investor-friendly. Purchasing a condo means you own the apartment you bought and share the building’s common areas with other residents. Condo development has grown considerably in Manhattan over the past years, plus older buildings have been converted to luxury condos replete with modern amenities.
- Board approval is not as strict or complicated as in co-ops.
- Restrictions are minimal when it comes to subletting, temporary living, etc., unlike in co-ops.
- Buying and selling a condo is a much simpler process than buying a co-op, and therefore beneficial to foreign buyers.
- While more expensive, condos are often more flexible, convenient, well-designed and modern, making them a great investment.
Co-ops
Board approval is one of the major challenges of buying a co-op, where you own a certain number of shares rather than the apartment itself. Boards can be quite demanding for both US and foreign buyers, as they tend to look for the type of shareholder who will be a good neighbor, get along with others, follow the house rules, and be able to contribute financially to the building’s maintenance. References, financials, employment, and credit score are scrutinized, and for foreign buyers, not having a US tax return may be a deal breaker.
Pros and Cons
- Comprising three-fourths of NYC real estate, co-ops are great places to live. Many are charming prewar buildings with great features like fireplaces, high ceilings, gardens and amenities; others are sleek hi-rises.
- Prices are 10-20% lower than condos, however maintenance, mortgage, taxes and utilities may be higher. Real estate taxes and interest on the mortgage are the only tax-deductible expenses.
- The approval process can take months.
- Financing for a co-op unit rarely exceeds 80%. Some co-ops do not allow financing at all.
- There are specific regulations to a co-op’s usage like the amount of guests an owner can have at any given time, doing renovations, etc.
- Some co-ops prohibit subletting unless the owner has lived there a few years, which may not be good for investors.
- Board approval is needed if an owner wants to sell or rent a unit.
- A “flip tax” may be required when selling, a fee the board charges to give permission to leave.
Closing Costs
The closing costs in New York City are real estate transaction fees that are paid in addition to your down payment and, in case of financing, your mortgage amount.
If you are buying a co-op, these fees are: attorney fees, NYC mansion tax for properties priced at or greater than $M1, bank attorney in case of financing, flip tax (can be paid by the seller or the buyer), other fees totaling to approximately 1.5 to 3% of the purchase price. The fees will be on the lower side if you buy all cash.
If you are buying a condo, these fees are: attorney fees, NYC mansion Tax for sale price at or greater than $M1, Title insurance, bank attorney and mortgage recording tax in case of financing and other closing fees totaling totaling to 2 to 4% of the purchase price and to 5% or more if you are buying a condo new development. In this case closing costs will also include New York State and New York City transfer tax. Please see your attorney for more details.
While the market may fluctuate, buying real estate in NYC is one of the smartest investment moves you can make. Property here is not just in high demand, but is poised to increase in value over time.
I will help you navigate the entire process, so your transition and transaction are smooth.
RENTING PROCESS
If you’re looking to rent in New York City, it can be time consuming and competitive to find the right place. Working with a skilled real estate agent is the best option for exploring your options, getting to know the neighborhoods, and walking you through the process and paperwork involved. I will advise and support you through the search, step by step to help you secure the home you desire with the space, location and amenities you need.
When you rent, most building landlords and management companies require you to fill out an application form accompanied by several documents. The application package must show and document an annual income of at least 40 to 45 times the monthly rent. In preparation, when applying for a rental, the following documents are a must:
- Photo ID (valid passport and visa or driver’s license)
- Letter of employment (on company letterhead stating the job title, date of hire, salary
And benefits if applicable. - If you are international, proof that you have opened a US bank account
- Two most recent pay stubs (from your former employer in the US or from abroad)
- Most recent tax return from the US or from abroad
- Contact information for past landlord
- In some cases, Letter of reference from past landlord
Application Fee
Previously, prospective renters could offer a larger security deposit (more than one month rent) or pay rent upfront. Landlords labeled these funds as security deposit or rent paid upfront. But in 2019, the Statewide Housing Security & Tenant Protection Act and Housing Stability & Tenant Protection Act restricted this option, saying that application fees and security deposits must remain under a set amount of money. The maximum a landlord or management company can ask for is first month rent and one month security deposit.
As of September 2022, the “application fee” paid when submitting an application cannot be more than $20, which is not refundable if the application is not accepted.
Credit Check
Part of the application fee goes towards a credit check, which pulls your credit score for the landlord or management company to review. The best scenario is having a good credit score of at least 700 to qualify for an apartment. In the case of no US credit, if you just arrived in the US and have no personal guarantor, you will need the services of a third-party company to act as your guarantor for a fee.
Accepted Application
If your application is accepted, sign the lease as soon as possible. Make sure you understand what kind of lease you are signing, and read the entire document to become familiar with the terms and key elements such as rent amount and terms of the lease.
After the first month rent and security deposit have been paid, the lease is going to be countersigned by the landlord and you will then have a fully executed lease.