2018_09_Carlin_Wright_Buyers_Guide_FlipBook

Buyer’s Guide

New York City

Owning a home
in New York City

New York City is one of the most diverse
and competitive real estate markets
in the world and we understand that
making the decision to buy a home here
can be a particularly overwhelming
experience. There’s a lot to learn—from
mastering the difference between condos
and co-ops to planning for closing costs
to surviving the board approval process.

We created this buyer’s guide to set you
on the right course to owning a New
York City home of your own.

How to
Buy a Home

New York City

1 3 5

The buyer submits a verbal offer Once an agreement is reached, The buyer’s attorney then reviews
to his broker to be conveyed to the broker collects the information all building documents, as well
the seller. This is followed up in for the Deal Summary: the seller’s as the contract of sale sent by
writing with a financial statement and buyer’s names, the attorneys’ seller’s attorney. If necessary,
and background information so names, the terms of the deal negotiations regarding terms of
that the seller can evaluate the including closing date, amount the contract take place between
offer and its strength. being financed and inclusions and the two attorneys. During
exclusions of personal property this Due Diligence period, the
2 in the apartment. The Deal buyer’s attorney usually goes
Summary is distributed to the to the managing agent’s office
The seller comes back with buyer, seller, and their respective and reviews the recent board
a counter-offer. This process attorneys. In addition, documents meeting minutes. At that time, any
continues until an agreement on relating to the building’s structure questions on the building and its
price, closing date and financing and finances are delivered to the finances are typically answered.
amount is reached. This stage buyer’s attorney for review—this Be aware that unforeseen issues
normally takes 3-5 days. includes the original offering can arise and a skilled attorney
plan and all amendments, and and broker will assist in navigating
3 the last 2-3 years of financials. this time period.
Typically the seller’s broker assists
Once an agreement is reached, in procuring these documents, 6
the broker collects the information should the seller not have them.
for the Deal Summary: the seller’s Following the review, the buyer’s
and buyer’s names, the attorneys’ 4 attorney will have the buyer sign
names, the terms of the deal the contract and write out a
including closing date, amount The contract is prepared by check for a 10% down payment,
being financed and inclusions and the seller’s attorney, and then is usually made out to the seller’s
exclusions of personal property sent to the buyer’s attorney. This attorney’s escrow account. The
in the apartment. The Deal usually takes 1-2 days. process from accepted offer to
Summary is distributed to the contract signing typically takes 1-2
buyer, seller, and their respective weeks if there are no major issues.
attorneys. In addition, documents
relating to the building’s structure 7
and finances are delivered to the
buyer’s attorney for review—this The contract and down
includes the original offering payment are delivered to the
plan and all amendments, and seller’s attorney, who has the
the last 2-3 years of financials. seller countersign the contract
Typically the seller’s broker assists and return it to the buyer’s
in procuring these documents, attorney who then sends a copy
should the seller not have them. to the buyer.

Key Terms

8 APPRAISAL LIEN SEARCH

If the buyer is financing Assessment of the property’s A background check on the property
the purchase, then he must market value, typically done for the and the seller to ensure there are no
immediately apply for the loan. purpose of obtaining a mortgage. outstanding debts or claims upon
The contract generally specifies the property.
a time period for this process. COMMON CHARGE
A standard contract allows 5 POST-CLOSING
business days for the buyer to Monthly maintenance fee paid
apply to a bank. by condo owners. Property taxes The amount of cash the buyer must
are not included in the common have on hand after deducting the
9 charge. down-payment and closing costs.

If there is a need for Board CONTRACT DEPOSIT PRE-APPROVED
Approval, either in a co-op or
an condo, documents required A percentage of the agreed-upon Advanced approval from a bank or
for the application must be purchase price paid by the buyer other lending institution for a home
submitted by the buyer within at the time of signing the contract. mortgage.
2 weeks (standard language in
contract is 10 business days) or CO-OP SHAREHOLDER PRE-QUALIFIED
any time period specified in the
contract. The documents are set Owner of a co-op unit, since Potential buyers provide an overall
to the buyer’s broker who reviews, what they are actually purchasing financial picture and mortgage
collates, and submits them to the are shares of stock in the co-op brokers provide an estimate of what
seller’s agent, who does a final corporation. level of loan you will likely be pre-
review before sending them to approved for.
the managing agent. The broker’s DEBT-TO-INCOME RATIO
responsibility is to ensure that the RECORDING FEE
application is complete, compiled The percentage of an individual’s
correctly, and presented properly. monthly gross income relative to A fee paid to the local government
The managing agent reviews the the amount of debt owed. to officially report a sale of a home;
papers and distributes them to usually paid by the buyer.
the Board of Directors (co-op) or ESCROW DEPOSIT
Board Managers (condo). TAX ABATEMENT
Deposit of funds to be transferred
Board Interview upon completion of the deal. Newly constructed buildings
sometimes receive abatements so
10 FINANCIAL STATEMENT that owners do not have to pay
taxes on their units for a specified
a) In a Co-op, a board interview A formal record of all your financial amount of time.
date is set, and the buyer meets assets, debts, and liabilities.
with the Board at the appointed SPONSOR
time. This is usually set within 3-4 FLIP TAX
weeks of receipt of the papers but The entity responsible for developing
in some cases (often summer is A tax levied by a co-op and paid a new building or converting an
a slower time) it can take up to 2 by the seller when a sale is made. existing rental building to a condo
months to coordinate an interview. They are designed to generate or co-op.
funds for the co-op’s cash reserve.
b) In a Condo, the Board needs to
waive its “Right of First Refusal”, MAINTENANCE FEE
which can take up to 30 days
from receipt of the papers. Fees paid by co-op shareholders
that contribute to building
operations.

Closing PLEASE NOTE: In the case of
either a co-op or condo, the
11 Board will not review documents
until a mortgage commitment
As soon as there is an approval or letter is received. A mortgage
waiver, the buyer can close within commitment letter may take
1-2 weeks. The attorney arranges between 4-8 weeks to procure.
the closing and make sure all Please check with Carlin about
parties necessary to the closing specific timing.
are available. They include: the
buyer’s and seller’s lawyers, the
managing agent, and, if financing
is involved, the lawyers from the
banks representing the buyer and
the seller.

Co-op Condo

Cost Typically cheaper. Typically more expensive.

Supply 75% of NYC’s housing. 25% of NYC’s housing.
Built before 1980s. Built after 1980s.

Culture Most units are owner-occupied. Mix of owners and renters.
More controlled and stable. More laid back.

Approval Very strict and thorough. Less rigorous—no interview.
Process Personal interview required. Quicker to approve.

Ownership Indirect. Direct.
Type Stock certificate and lease. Buyer owns real property.

Monthly Maintenance fees. Common charges. Co-op vs. Condo
Payments Amount includes taxes. Taxes paid separately.

Tax Benefits Some tax deductions can Tax abatement programs keep
be taken for owner’s share. taxes low for about 10 years.

Renting Out Limited, if allowed at all. Easy and unrestricted.
Your Unit

Re-Selling New buyer must be approved. New buyer can
Investor Seller must pay flip tax. rarely be denied.
Friendly
Rarely. Yes.

SF ASP BO
SB
HA
LA/OC NYC
SD CHI

DC

DAL

NPLS

Our Reach MIA

As Compass expands, we aim CURRENT OFFICES
to bring smarter real estate UPCOMING OFFICES
experiences to renters, buyers,
and sellers in major markets
across the nation.

Our Technology

Access real-time data from
anywhere using our Compass
Homes and Compass Markets
apps, both designed to deliver the
industry’s most valuable insights.

Carlin Wright

Licensed Real Estate Salesperson
Licensed as Carlin Kathleen Wright
[email protected]
M: 917.275.4714