Archive for the ‘Tips for Home Buyers’ Category

Location, Location, Location

Monday, October 8th, 2012

Location, location, location.

Why bother living downtown? As my first Real Estate broker assured me, if you really like a neighborhood that you don’t live in, you can always take a $10 cab ride and you’ll be there in five minutes. Right?

Wrong.

The truth is that if you live in the Upper East Side, you live on the Upper East Side. After a long day at work, you’re not going to hop into a cab, navigate traffic, and go to the local bistro at the corner of Thompson and Grand. Shopping, dining, and bar hopping will, more often than not, happen within ten blocks of where you live. To think otherwise is naïve. And for a lot of folks, that’s just great. But there’s a reason why people pay big premiums to live downtown.

Case in point: I live in the northwestern SoHo. It isn’t cheap, but it’s s-o-o-o-o-o-o worth it. Steps away from Raoul’s,  Mercer Kitchen, Blue Ribbon, Lure Fish Bar, and Aqua Grill. Bars? How about Pravda, Merc Bar, Café Noir, Macao and 60 Thom, to name just a few. Shopping? Like Fifth Avenue, but cooler.

And what about the living space? No cookie cutter floor plans here. No way. You get genuine authentic cast iron buildings pre-dating 1900: Open floor space, high ceilings, and rarely more than six stories. I live in a loft built in 1850. It has 20-foot ceilings, a 14-foot window, and walls so thick that I never hear my neighbors. Try finding that uptown.

My advice? Pay the premium and be a downtowner. It’s worth it.

image courtesy adamina

Making the Impossible Possible

Tuesday, June 12th, 2012

Real estate is a tricky business. You see, buyers want everything. I don’t blame them. The thing is that they don’t want to pay for everything. Like I said, tricky… but not, as it turns out, impossible. What you need is a neighborhood expert who’s in the know. What follows is a mostly true summary of a conversation I had with a recent apartment hunter who was looking for the impossible.

Client: I’m looking for an apartment in the West Village.

Me: You’re in luck. I’m RealDirect’s downtown specialist. What kind of apartment?

Client: One bedroom. An affordable one.

Me: Shouldn’t be a problem. There are lots of affordable one bedrooms available in the West Village. May I suggest—?

Client: (interrupting) Yeah, yeah. I’ve heard it all before. And now you want to show me some 6th floor walk-up. Look at me. (Points to his belly) Do I look like the kind of guy that wants to deal with that?

Me: (attempting not to look at belly) The building I have in mind has two elevators.

Client: Okay, but you need to know I have a ridgeback.

Me: (aghast) I’m so sorry. But, you know, isn’t that treatable?

Client: (looking confused) Wha? No! It’s not a medical condition; it’s a breed of dog!

Me: (relieved) Ohhhhh! I mean, of course it’s a dog. Well then. No problem. Pets are allowed in the building, and there’s even a doorman if you need someone to accept your pet food delivery.

Client: Spike only eats steaks.

Me: Really? Is that healthy?

Client: Vet says it’s fine, so long as he gets exercise; that’s why I need my apartment to be near a park.

Me: It’s west of Washington Street. You’ll be one block away from Riverside Park. That close enough?

Client: Should be.

Me: If it’s not, the building has a courtyard.

Client: (stroking beard) Hmmm. Sounds pretty good. My only concern is that I might have to be out of the country for prolonged periods of time. I’ve recently invested in a Tasmanian wallaby farm, and you never know when business calls. What if I have to rent it out?

Me: This co-op is one of the most lenient boards for renting I’ve ever seen—there are no rental restrictions at all.

Client: Good. Now what about the financial condition of the building? If there’s one thing I’ve learned from investing in Tasmanian wallaby farms, it’s to make sure to do your due diligence!

Me: The financials look strong when you dig into the statements. The building’s mortgage will be paid of in 2014. That’s going to free up plenty of cash flow.

Client: (suspicious) Say… how do you know so much about this building?

Me: I own a unit. Plus I have a few listings in contract there right now, as well as three apartments available for rent, so I can answer virtually any question you have.

Client: Wow, that’s great… but we still have a problem.

Me: Still?

Client: My budget is $500,000.

Me: How about a newly renovated junior one-bedroom for $480,000?

And that’s how the impossible—or, at least, the improbable—was made possible. Would you like to see what’s available in this fantastic building in the heart of the west village? Give me a call today! 917.414.8240

image via wwarby

So You Want To Marry, I Mean Buy… A Co-Op

Wednesday, June 6th, 2012

Finding a co-op in Manhattan that you can live with is a lot like dating. First, you look to appearances; is the building attractive, does it offer large living areas, is there lots of light?
If it attracts you with all of its charm, then you zero in on substance. Does it offer security? Commitment? Does it mesh with your long-term goals? How are the financials?

By the time you get to the board package you know it’s serious. All of your financial history is laid out for inspection. Going to the board interview is akin to meeting the family.

A client recently asked me what do the co-op boards ask? The short answer is that the board may just want to verify for themselves that you are who you say you are, and that you’ll be able to get along with the other residents. Questions may be asked to clarify job history or financials. In the case of couples, as with meeting the family, it’s a good idea to establish beforehand who is going to answer which questions. It’s helpful to have one person answer the financial questions and and the other respond to personal questions. This can help avoid awkward moments and ensure that the interview flows and remains social.

And, just like dating, be sure to clean up your Facebook photos and Google your name because you know they’re going to be checking!

Empty Nest – Extra Bedroom

Tuesday, May 22nd, 2012

Florida. Arizona. Shuffleboard. Aquasize. Life expectancies have grown, quality of life has improved, and older adults are choosing to live life to the fullest. Instead of becoming snowbirds and heading off to warmer climes to join the weekly Canasta game, empty-nesters and retirees are ditching their suburban lives in favor of the excitement and opportunities afforded by an urban setting.

With the added financial stability that comes later in life, empty-nesters and retirees are in a perfect position to fully enjoy city living, including easy access to world-class restaurants, nightlife, museums, galleries, and theater. Green space is plentiful, with multiple small neighborhood parks and larger open spaces like Central Park and the High Line. City life has the added benefit of being able to enjoy green space without the exterior maintenance and lawn care that comes with a suburban, single-family home.

New York City consistently ranks among the top ten safest large American cities and transportation options are abundant (subway, trains, bus, taxi, and of course, walking), making it comfortable and easy to get anywhere one might want to go. The city also makes an excellent base for world travel, with three (EWR, LGA, JFK) major international airports. And for those who don’t feel like going out, everything imaginable is available for home delivery.

Empty-nesters and retirees should make sure they have an extra bedroom, because with all that New York City has to offer, children and grandchildren are sure to want to make frequent visits. Just be mindful that the guest room isn’t too comfortable; nobody needs grown-up birds getting any ideas about returning to the nest long-term.

From Offer to Close in 10 Easy Steps

Wednesday, May 16th, 2012

When talking about the process of buying and selling real estate, the conversation often revolves around listing your home, finding the perfect place, or negotiating an offer. A less glamorous, more stressful, but equally important part of the real estate process is what happens to get the deal done. Here’s the process, from offer to close for a NYC co-op, in ten easy steps.

Step 1: The Offer
Buyer and seller, either on their own if unrepresented, or via their brokers, negotiate an offer. This process includes disclosure of financials including loan pre-qualification if financing is involved and discussion of contingencies if any.

Step 2: Contract
If both parties can come to an agreement on price and contingencies, a contract will be drawn up by the seller’s attorney. This contract is based on a deal sheet written up by the seller’s broker (if there is a broker). The deal sheet contains information such as the property location, price, terms of sale, contingencies, and names of all parties involved in the transaction.

Step 3: Due Diligence
While the contract is being drawn up and negotiated by both parties’ attorneys, the buyer’s attorney will conduct due diligence on the standing of the building. This includes looking into the building’s financials, completing a title search, and reviewing board minutes and the offering plan. This is also the time for buyers to conduct a home inspection if they wish.

Step 4: In Contract
Up to this point, though there is an accepted offer, the buyer and seller are not technically “in contract.” This means that the seller can continue to show the home and entertain other offers. Often, these offers are accepted only as back-ups in the event that the initial contract falls through. Once the attorneys finish negotiations, both the buyer and seller sign the final contract. At this point, the buyer will pay a deposit to be held in escrow by the seller’s attorney until closing. Once the contract is signed by both parties and a deposit is made, the listing is considered to be “in contract,” and no longer available to the market at large.

Step 5: Financials
Once the listing is in contract, the seller’s attorney will order the payoff file from the homeowner’s existing lender. During this time, if the buyer is using financing, they will move forward with the process of obtaining a mortgage. Contracts will generally allow 30 days or more for the buyer to obtain a mortgage commitment. The bank offering the mortgage commitment will complete an appraisal on the property to ensure that they are making a secure investment.

Step 6: The Board Package
Concurrent to the buyer securing financing, the buyer and seller (with their brokers, where applicable) will work on assembling the board package. Required documents vary from building to building, but generally consist of the sales application and contract, verification of employment, two years of tax returns, bank and financial holdings statements, references, commitment letter for financing, and personal financing . Once the buyer receives a commitment letter from their lender, the buyer will submit the board package to the building’s board for review.

Step 7: The Board Interview
Though the process varies widely from building to building, the board interview generally occurs at the building, either in a shareholder’s apartment or a common space. The meeting can be similar to a job interview from appropriate attire to the questions that are asked. The buyer should be prepared to answer any and all questions asked and to bring their pet if requested.

Step 8: The Closing is Set
At this time, buyers have received the “cleared to close” from their lender and are able to complete the transaction with financing in place. If possession is to occur at close, sellers will vacate the premises if they haven’t already. 24 hours before the closing, the buyer will conduct a walk-through of the property to confirm that it is in acceptable condition and any mandated repairs have been completed.

Step 9: Closing
Generally the parties in the closing room include the seller, the buyer, their brokers, their attorneys and a closing agent. All paperwork is signed by both parties, funds are distributed, keys are turned over, and the transaction is completed.

Step 10: Post-Close
While the buyer and seller have completed their responsibilities and the property has been transferred, their attorneys still have a few more steps to make everything official. The attorneys record the sale, transfer the deed or stock certificates, and send out final paperwork to both parties.

Kids in the City – Raising a Family Without the White Picket Fence

Monday, April 2nd, 2012

According to 2010 Census Bureau data, 6.3% of New York City residents are children under age five. That means that more than 1 in every 20 people living in the city is a young child. Families that in the past would have chosen to move to the suburbs to raise their children are deciding with ever increasing frequency to stay in New York City. Apartments in the city are notoriously small and lacking in outdoor space. So, how are families managing to live and even thrive without the suburban yard with a white picket fence? (more…)

Investing in NYC – A Guide for Foreign Real Estate Buyers

Monday, March 26th, 2012

From understanding building types to passing a board review, buying an apartment in New York City can be a harrying process even for locals who have months to make a decision. For buyers who aren’t based in the United States and who may only have a few days to view properties and make an offer, the purchase of NYC real estate can seem like an overwhelming process. But, with solid guidance and an understanding of the market, investing in New York City real estate can be a rewarding experience for foreign buyers. We’ve pulled together this comprehensive guide for foreign real estate buyers who are interested in investing in NYC.

Building types
Condos, co-ops, cond-ops and more, our guide to New York City building types covers all the bases. We also have a list of classic apartment layouts and some tips for the pied-a-terre buyer. While it is possible for international buyers to purchase co-op property, most prefer to purchase a condo in order to avoid any difficulty that may arise with obtaining approval from the co-op board. Buyers who wish to use the property as a rental need to make sure it is allowed by the building’s rules prior to purchase.

Mortgage
While purchasing a property with cash can simplify the process and eliminate some fees, it is also possible (although not easy) for foreign buyers to obtain a mortgage for as much as 75% of the purchase price of their property. Look for a lender that specializes in programs for international buyers and plan to provide documentation such as proof of employment, a proven history of mortgage or rent payments (at least one year), proof of funds available for closing and credit references.

Expenses
Monthly maintenance / common charges – these monthly fees vary from building to building and can range from hundreds to thousands of dollars. As a general rule, the more amenities a building offers, the higher the monthly fee will be. These charges go toward maintenance of common areas such as the lobby, gym, or pool and to pay building employees.

Property tax – this is a tax assessed by local and state governments. Check for tax abatements and available deductions to try to minimize the amount of tax you will need to pay. In co-ops, the property tax is built into the maintenance fees.

Assessment – in some instances a building will charge a special assessment. This is an additional fee on top of the monthly common charges or maintenance and can be the result of a shortage of building funds, necessary repairs, or to pay off a law suit. Buyers can ask sellers to pay off any special assessments as a condition of purchase.

Working with brokers
As a buyer in New York City, you are not responsible for paying any fees to a real estate broker. Sellers have pre-arranged with their listing agent to pay all fees for both their agent and the agent representing the buyer of their property. When you work with RealDirect as your buyer’s agent, you receive up to 1% cash back at closing.

Contract & Attorney review
Once a property is selected and a purchase price agreed upon, a contract will be negotiated and agreed upon by the attorneys for both parties. This process usually takes 1-2 weeks. Until the contract is signed by both parties, the sellers can continue to show the property and entertain other offers. So even if the sellers have accepted your offer, neither party is bound to the transaction until the contract has been signed.

Deposit
When an offer is accepted and a purchase contract completed, buyers will be required to transfer a deposit equal to 10% of the property purchase price to an escrow account managed by the seller’s attorney. This insures that the buyer will act in good faith during the transaction.

Closing costs
When you purchase property in New York City, there are an assortment of costs that go along with the transaction. Some of these costs are paid by the seller and others are paid by the buyer, including:

New York City transfer tax – this tax ranges from 1-1.425% of the property purchase price.
New York State transfer tax – in addition to the city transfer tax, the state also charges a tax equal to 0.4% of the purchase price.
Mansion tax – on properties of $1 million or more, New York State charges a mansion tax equal to 1% of the purchase price.
Attorney’s fees – attorney’s fees can be ~ $2,500.
Title search – This process verifies that the seller has a right to convey the property and once the purchase is completed nobody other than the buyer will be able to claim ownership. Cost of title search is $450 per $100,000 of the purchase price.

It is also common to encounter a host of other smaller expenses such as document fees, mortgage application fees, building application fees, recording fees, appraisal, credit report and bank fees. Many of these mortgage related fees are avoidable by purchasing with cash instead of financing.

“We Have to Get a Bigger Place” – 5 Tips for Buying the Next Apartment

Monday, January 23rd, 2012

Tripping over toys? Wondering if a lack of closet space is going to drive you to divorce? Sick of cooking on a hot plate because your kitchen is just a shelf in the corner? Sounds like it’s time to buy a bigger place. Here are some things to keep in mind:

1. It’s important to try to sell your current apartment before buying the next, particularly if you’re planning to buy in a co-op, as a co-op board is unlikely to approve you if you still own another apartment. This can be managed by scheduling both closings within a few days of each other so you’ll be able to move directly from one apartment to the next, writing a “lease-back” into your contract, in which the new owners don’t take occupancy for a set time period and you essentially pay them rent, or by moving into temporary rental housing while you wait to find the right new home.

2. Explore the boroughs. If space is your top priority, you’re likely to get more bang for your buck if you move a little further out from Manhattan. There are larger apartments, brownstones with gardens and even single family homes available in many of the other boroughs. That said, some of the more trendy areas in Brooklyn and Queens are now exceeding some areas of Manhattan on a cost per foot basis, so do your homework. (more…)

Pied-a-terre: Condo or Co-op?

Friday, January 20th, 2012

When deciding to purchase a second home, or “pied-a-terre” in New York City, it’s important to consider whether you want to purchase a condo or co-op. Each has its benefits and difficulties, but both are viable options for buyers looking to get a “foot on the ground” in NYC.

If budget is important to you, then you may want to go with a co-op, as condos are generally priced higher than similar co-op units. Co-ops also make up the bulk of available inventory in New York City (around 70% of all available units are co-ops), so if you decide to go with a condo your choices will be more limited. Should you choose to purchase a co-op, it’s important to check out the building rules before you even go to see the apartment, as many co-op boards are only willing to sell to full-time residents and will not even consider pieds-a-terre. A co-op in New York City cannot be purchased without approval of the board. The co-op board may also have rules about how you can use your apartment (i.e. no guests while you’re out of town, no tenants, etc).

While more expensive on a per foot basis than comparable co-ops and not as abundant in inventory, condos offer many attractive benefits. Perhaps the most important upside to purchasing a condo is the fact that no board approval is required, and condo rules are less restrictive than co-ops. Condos are more likely to allow you to loan your apartment to friends and family or rent it out when you’re not using it. Condos also have lower down payment requirements than co-ops, which makes them appealing to people with an acceptable income level but not a lot of liquid assets.

That said, there are exceptions. Some co-op boards are open and welcoming to pied-a-terre buyers. And it’s becoming more common for condos to adopt boards and more restrictive policies. With these points in mind, it’s important before any purchase to be certain of building policies and look at total monthly outlay in addition to up-front costs and make an informed decision that works for you.

Can I Be My Own Agent and Collect 3%?

Tuesday, January 17th, 2012

For newcomers to the real estate market, there can be confusion about who is responsible for paying the agents involved in the transaction. As a general rule, the seller pays both their own agent and the agent who successfully brings them a buyer (the buyer’s agent). When a seller signs a listing agreement with a real estate agent, they establish how much the agents will be paid. While there is no set rate for real estate agent commissions, 6% is standard practice in a lot of places, with 3% going to the seller’s agent and 3% going to the buyer’s agent. This commission split is called a “co-broke.”

Among New York City real estate buyers, there is a train of thought that says “If I represent myself, the seller won’t have to pay a commission to a buyer’s agent. Therefore, I can expect to get the property for 3% less than what I would have paid if an agent represented me.” Or, “If I represent myself, I should be able to collect the 3% commission that would normally go to the buyer’s agent.” Unfortunately, there are some logistical and legal issues that prevent this from actually happening in practice. (more…)