Buying a Condo in NYC – Step by Step Guide for 2024
Living in New York City is the dream for millions of people, and with rents steadily rising and space becoming evermore limited, it’s no wonder that many people are flocking to buy apartments.Owning a condo in NYC allows you to enjoy all the benefits of living in the city without the stress of wondering when and where you’ll have to move next. To make the process of buying a condo in NYC a bit easier, we’ve created a step-by-step guide to assist prospective homebuyers in their journeys. This guide will walk you through the buying process, covering essential steps, insider tips, financial considerations, and the benefits of using a buyer's agent.Find Your Dream Home (1 to +4 Months)If you plan to finance your purchase, obtain a mortgage pre-approval or pre-qualification early on to ensure you are operating inside a budget you can afford.Think about what features you are specifically looking for (neighborhood, beds, baths, etc.) and which amenities will matter most in your eventual condo. It can be difficult to find an apartment that checks every single box on your wishlist, so determine which items to prioritize in your search.Understand the differences between co-ops, condos, or single-family homes, to determine what this means for your budget and which one might be best for you. Also, be sure to familiarize yourself with market trends for condos in your favorite neighborhoods - include price trends and the level of competition you will be faced with from other buyers.Prevu’s digital buying platform will send you curated listings that meet your criteria. Plan to visit the properties that catch your eye, and also be sure to attend open houses. You can book private showings online through Prevu’s platform.Our customer success team and local buyer’s agents are here to help throughout the process, don’t hesitate to reach out with any questions or concerns! A knowledgeable real estate agent can guide you through the apartment hunting process, providing market insights and helping you prioritize your needs.Prepare an Offer (1 to 2 days)Fill out a REBNY financial statement, as this is a common requirement when making an offer in NYC.Rely on local data for comparable sales in your neighborhood to determine the fair market value of a property. Prevu’s expert agents will analyze the data to help you come up with a competitive offer.Sometimes it’s an art as much as a science, and Prevu’s local agents will help evaluate more nuanced aspects of homes that the data may not capture. Hiring an attorney who specializes in real estate transactions is crucial to ensure a smooth process.Discuss contingencies.Get an Accepted Offer (1 day to several weeks)Our licensed agents will negotiate a fair price for the apartment based on local market data and their experience. Some negotiations happen quickly, while others take time as sellers may remain firm in an effort to get the highest price.Condo buildings generally have more amenities and a less intense approval process compared to co-ops.While waiting for an accepted offer, it’s a good idea to line up your next two professionals:A local real estate attorneyA home inspector should you plan to do an inspection.Once the offer is accepted a deal sheet will be circulated. A deal sheet outlines all of the specific terms of the transaction.Time kills all deals so it is important to be prepared to move quickly once the offer is accepted. An accepted offer means very little until the deal is in contract.Legal Contract Review and Due Diligence (3 to 7 days)Once the deal sheet is finalized, it will be sent to both the buyer’s and seller’s attorneys. The deal sheet will be used to start the due diligence process on the building. Your attorney will investigate the building, its finances, condo rules and regulations, and the unit itself (e.g. are there any open permits, lawsuits, etc.), asCo-op owners purchase shares of a corporation and abide by strict financial requirements and rules set by the co-op board, which is different than that of a condo.Your attorney will negotiate the terms of the contract and ensure the contract reflects the terms of the deal as well as your best interests with buyer protections via appropriate contingencies.Typically your attorney will provide you with a summary of the due diligence they have compiled. Assuming no issues, at this point you would sign the contract and wire 10% of the purchase price as the contract deposit to be held in escrow. Once the seller and their attorney receive the signed contract, the seller will countersign and send back a fully-executed contract.The seller’s attorney will also confirm receipt of the escrow funds into their escrow account. The contract deposit will eventually be applied to the down payment and money you will need to bring to closing.Mortgage Process (30 to 45 days)Once you have a fully executed contract (commonly referred to as being “in contract”) and if you are planning to finance your purchase, the next step will be to work with your mortgage broker or lender to obtain a commitment letter. Be proactive here as you want to make sure the lender has everything they need so this part of the process moves quickly.Make sure that an appraisal is scheduled as soon as possible.Note that many attorneys will advise you not to lock in a mortgage rate until your lender knows from the contract “on or about” when the property should close. Closing dates can be delayed and can result in extra fees paid to the lender to maintain a rate.The lender will eventually issue a commitment letter (different than a preapproval or prequalification). The commitment letter requires a deeper look at your financial situation than a pre-approval. The commitment letter essentially is a letter that states that the lender will fund the loan for your new home.Note this letter may have some additional contingencies for the lender (e.g. that you keep your job). A commitment letter usually isn’t binding until the property appraisal is completed and satisfactory versus the purchase. The appraisal can occur after the commitment letter is delivered.It is a good idea to get going straight away once your contract is fully executed because many times if your contract is contingent on financing, you will have a certain window, usually 30 days, to submit your commitment letter to the seller side.If at the end of the window you are not able to secure the commitment letter in good faith you are able to cancel the contract and receive your deposit back. Alternatively, you could ask for an extension to allow for more time.Title Report & Title InsuranceAfter a fully-executed contract, your attorney will begin work on the title report. Lawyers will use outside companies to do title searches on the land, building, and unit. The title search is completed to make sure there is confidence that a clean deed will be able to be delivered at closing. Your title insurance policy will protect against any issues that may arise in the future relating to your home’s title. Condo Board Application (If Applicable)Even though you are buying in a condo building, there is still typically a condo board application (except for new developments). Condo board packages are typically much less rigorous than in a co-op building.Condos tend to be found in newer developments, have more amenities, and are generally more expensive than co-ops.A condo board has much less power than a co-op board. Typically a board can only prevent you from buying the condo if they execute their “right of first refusal”. What does this mean? It essentially means that the condo has the right to buy the condo ahead of you for the same price. Rest assured, they almost never exercise this option.The package will mainly include financial statements and documents but may require letters of recommendation as well.Preparing to CloseAfter the condo board has decided not to elect its right of first refusal and you have “passed” the board, the condo board will approve the sale/transaction. This will come either through your Prevu agent, the management company of the building, or your attorney. The next step is to get the “clear to close” from your lender. This will come from the bank, likely from the bank’s attorney. Your attorney will be in close contact with the bank attorney during this process.After getting both the clear to close from your lender and the approval from the condo board, you can proceed to scheduling a closing date. There will be many peoples’ schedules to coordinate with, so you may have to be flexible in the timing or take what you can get. Should you not be able to attend the closing in person, it is not unusual for buyers or sellers to use a Power of Attorney and skip the closing altogether. If you haven’t already, make sure that you have secured homeowner’s insurance for your new home effective on the closing date. This is especially important if you’re financing the purchase with a mortgage, as homeowner’s insurance is often a requirement.The Actual Closing and Closing CostsCoordinate with your Prevu agent for a final walkthrough of the apartment to make sure everything is in good order before closing. This typically occurs the day of closing or a day or two before closing. Be on standby in the final days prior to closing. You will likely only receive your instructions a couple of days beforehand, and there are two things you will need to pay special attention to: 1) your closing disclosure or statement (by law, this must be sent to you three days before closing, otherwise you can’t close until that time has elapsed) and 2) check instructions. If you are financing, the bank will be bringing the lion’s share of the money to closing, and you will be bringing the rest. Checks are important, pay special attention to instructions from your real estate attorneyAll checks need to be certified or official bank checks, from a bank that is a member of the NY Banking Clearinghouse.The best way of avoiding the headache of getting checks yourself is to simply wire the amount to your attorney and have them take care of this task for all the remainder of your down payment and closing costs. The closing can take a couple of hours. Make sure your hand is rested and don’t forget to bring a comfortable pen with you as you will have a lot of papers to sign. Get your new keys, and congratulations! You just bought a new home!Condos for sale in NYCBrowse NYC condo listings by boroughManhattan condos for saleBrooklyn condos for saleQueens condos for saleBronx condos for sale
6 Expert Tips for Winning a Bidding War in NYC
It’s no surprise that NYC real estate is one of the most competitive markets in the world, particularly for homebuyers. It happens all the time – you think you’ve found your dream home only to be informed that you’re in competition with other buyers. This may seem daunting, but not to worry.Below, the team from Prevu Real Estate highlights the key things you need to know to give yourself an advantage during a bidding war in NYC.How to win a bidding war in NYCOperate within your budgetEvaluate comparable salesBe flexible with non-financial termsPersonalize your offer with a letterBenefit from a commission rebateBuy all cash, take a mortgage laterOperate within your budgetBy the time you’re making an offer, you probably have a good idea of your budget. However, when encountering a bidding war NYC buyers can sometimes easily get carried away by their desire to win and lose sight of the bigger picture. Draw a line in the sand with your budget so that you don’t overextend yourself financially. There are plenty of homes in NYC. There will be other opportunities. Evaluate comparable salesMake sure your buyer's agent runs comps to justify the approximate value of the condo or co-op you are hoping to buy and evaluate that relative to the asking price for the apartment. It is important that you make an informed decision. As with any investment, you want to have a clear, well-research strategy to ensure you don’t let your emotions get the better of you during a negotiation.Be flexible with non-financial termsPrice and value are not the only points to consider when preparing your offer. Non-financial terms are a great way to make your offer stand out without having to dig deeper in to your pocket. A few examples of non-financial terms include timing of possession, flexibility on target closing date, and the option for a short-term lease-back. For sellers that want to sell their apartment but haven’t lined up their relocation, offering a short-term lease back can remove a lot of stress during the home sale process. In some cases, you will find that sellers prioritize flexibility with timing over a higher price.Personalize your offer with a letterWhether you have strong ties to a community, are a first-time buyer, or are experiencing a life event, telling your story can help create a personal connection with the seller. Writing a heartfelt personal offer letter about yourself and what buying that property means to you can position you favorably in a bidding war. Benefit from a commission rebateReceiving a commission rebate can provide additional buying power relative to your competition. At Prevu, we are a technology-driven, full-service brokerage in NYC, passes a significant rebate along to our customers. With Prevu’s Smart Buyer™ Rebate, you receive a commission rebate up to half of the commission Prevu receives for representing you as a buyer's broker. For example, if you buy a $2 million condo or co-op with a 6% commission (3% paid to seller’s broker and 3% to the buyer’s broker), your buyer commission rebate totals 1.5% of the purchase price. That’s a savings of $30,000 that you can use to help offset your closing costs or increase your buying power.Buy all cash, take a mortgage laterBeing an all-cash buyer allows you to seem like the better, safer option for a seller looking for a smooth transaction. If you are fortunate to have enough liquid assets sitting around to purchase the apartment all cash, its is not uncommon for wealthy buyers to purchase the property all cash and take out a mortgage after closing. This is sometimes referred to as delayed financing or a cash-out refinancing.For those buyers that are in the financial position to pursue such a strategy, it is best to speak to your mortgage professional and accountant to understand how much you'd be approved for in a delayed financing as well as any timing requirements to complete such a financing after closing.Interested in buying an apartment in NYC? Browse listings and see how much you can save with Prevu's Smart Buyer Rebate.
From Co-op to Condo: Working With NYC Property Types
Disclaimer: The contents of this article are industry best practices which were sourced from StreetEasy data and interviews with our Agent Advisory Board, unless noted otherwise. Any scripts provided are only meant to act as examples and are not required. Nothing in this presentation is intended to be legal advice. For specific questions about any duties or obligations arising out of a real estate transaction, check your local and state licensing laws and regulations, contact your broker, or an attorney.As an agent, you get to help people fulfill their dream of owning a home - and in NYC, that typically means a co-op, condo, or townhouse. To help your clients achieve their real estate goals, it's a good idea to understand these three property types, their unique markets, and how their differences impact the buying and selling process.What is a co-op?When a buyer purchases a co-op, short for "cooperative," they're actually purchasing shares of a corporation that owns the building. Typically, the bigger the unit, the more shares the buyer will own.What is a condo?Unlike with co-ops, a condo buyer purchases the unit outright and receives a deed of ownership. They also co-own the building's shared spaces, such as parking lots, elevators, pools, and hallways.What is a townhouse?A townhouse is a home that's attached on one or both sides to another townhouse or building. They are typically one- or two-family homes, and the owner is responsible for the entire structure.Market differencesCo-op marketAt any given time, the majority of homes for sale in New York City - around 75% - are co-ops. They're typically less expensive than condos, but buying one requires getting approved by the co-op board, which can be a challenge. Therefore, co-ops can be more difficult to buy and sell.Condo marketCondos tend to be more expensive than co-ops, but the approval process is less arduous. As a result, they're often easier to buy and sell. There are fewer of them in NYC, but whenever a new development is built, it's more likely to be a condo building.Townhouse marketTownhouses are one of the most sought-after property types, but there are few of them on the market and not all neighborhoods have them. This makes them highly expensive and competitive. There are also several different types of townhouses found in NYC, and the market can vary for each.Stay up to date on the latest market trends using StreetEasy's Data Dashboard, where you can filter metrics by property type (use "Single Family" for townhouses), borough, neighborhood, and more. Read our market reports, too, to get in-depth insights from our experts.Differences in the application processBuying a townhouse is like buying a traditional house in that there's no application or approval process. Co-ops and condos, on the other hand, do require applications - although there are major differences between the two.Co-op applicationsCo-op buyers have to go through a strict application and approval process. To start, they must submit an application and all required documentation, such as financial information, reference letters, and employment verification. This may be referred to as a co-op board package.Buyers then undergo an interview with the co-op board. A board may choose to reject a buyer for any number of reasons - from unsatisfactory financials to job history to simply "not the right fit." The entire process can take as long as several months.Condo applicationsThe application process for condos is far less demanding. Most buyers simply need to submit an application along with financial documents if they're financing. Condo boards do have what's called the "right of first refusal," which means they can override a purchase and choose to buy the condo at the same price, but few exercise this right.Maintenance fees vs. common chargesEach month, co-op owners pay maintenance fees, which go toward the building's operating costs such as insurance, staff, trash removal, and more. It also covers property taxes and any underlying mortgage payments. These fees are in addition to an owner's monthly mortgage payments.Condo owners pay monthly fees called common charges. They cover building operating costs, but they don't include property taxes; each condo owner pays taxes for their own unit.Subletting and pied-à-terre rulesCo-ops tend to have strict rules about whether owners can rent out their units or use them as a pied-à-terre (secondary residence). Some co-op boards ban subletting entirely, while others impose a fee or limit on how long a buyer can rent the unit out. Some co-ops allow pied-à-terres, but they may restrict owners from allowing others to live in their unit when they're not there.Condos, on the other hand, tend to be more relaxed on whether you can use your unit as a rental or pied-à-terre. However, they typically don't allow rentals shorter than six months.Closing costsFor co-op closing costs, buyers generally pay around 2-6% of the purchase price. Condo and townhouse closing costs tend to be higher due to mortgage recording taxes and title insurance. For any sale over $1 million, buyers must also pay a mansion tax, and the rate increases with the purchase price.What to expect when selling a co-op, condo, or townhouseSelling a co-op can be more complicated and take longer due to the approval process. They also tend to have strict open house rules, and some ban them entirely.Selling a condo is usually less complicated. But bear in mind that a deal can fall through if the condo association feels the accepted offer is too far below market value. Selling a townhouse is the least complicated since there are no boards to answer to, but fewer buyers can afford them.Whether you're selling a co-op, condo, or townhouse, be sure to take advantage of StreetEasy's Listing Insights tool. You can track your listing's activity over time, compare the property to others that have sold recently, and share the insights with your seller.NYC's fast-paced, ever-changing market can be tough to navigate, and your clients need your expertise to buy or sell successfully. By understanding the city's property types and their differences, you're better equipped to advise your clients and position yourself as their go-to agent.
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