sales guides

Buying An Apartment:

Preston specializes in helping navigate the complex and sometimes frustrating process of buying a property in New York. Our hands on approach and direct communication keep our buyers supported throughout the whole deal.

The Buying Process:

Speak to a mortgage broker, bank or financial advisor.
Know what your budget is before you even begin your search. Financial requirements vary from building to building, so keep that in mind.
1 - 2 days

Find an apartment.
1 day - 6 months

Negotiate on the apartment.
3 days - 2 weeks

Sign a contract
Both the buyer and seller are represented by real estate attorneys. The seller's attorney draws up the contract for the buyer's attorney and, upon receipt, the buyer's attorney performs “due diligence” (e.g., reading minutes, reviewing financial statements of the building, etc.). Once all terms are agreed upon, the buyer signs the contract and returns it to the seller's attorney with a 10% deposit, after which the seller executes the contract. Possible contingencies may include financing, board approval and closing dates.
3 days - 2 weeks

Apply for a mortgage and receive a commitment letter from your lender.
Mortgage applications cannot be processed without a fully executed contract, and if an apartment is being financed, the board requires a commitment letter from the lender.
3 - 6 weeks

Complete your board package or condo application.
Your real estate agent will ensure that your board package is thorough and completed in a timely manner.
1 - 2 weeks

Submit a board package or condo application to the managing agent.
Once the board package is complete, it is given to the building's managing agent. The package is then forwarded to the Board of Directors, who decides whether or not an interview will be granted.
4 - 6 weeks

Meet with the co-op board for an interview.
Every co-op board is unique to its building, but they typically meet once a month on a weekday evening. An interview does not mean you have been approved.
30 minutes - 1 hour

Receive approval from the board.
The managing agent will let the seller's agent know whether or not you've been approved by the board.
1 day - 1 week after the interview

Schedule a closing.
The managing agent sets the closing date, and the buyer's and seller's attorneys then coordinate with the appropriate banks for available dates and times.
1 - 2 weeks after board approval

Board Package Preparation

One of the most important aspects of purchasing a co-op apartment is completing a purchase application and assembling a board package—a comprehensive presentation of financial documents and references. The primary purpose of the board package is to assure the corporation of your financial ability to support the apartment and to give them confidence that you will be a “cooperative” shareholder and welcomed member of their community.

Each co-op has its own set of requirements and application forms, which we will obtain for you from the managing agent of the building. The most common elements are the following:

Purchase Application: This should be typed. Fill in all blanks and answer all questions (even with, if necessary, “not applicable”).

Credit Release Form: This allows the managing agent to obtain a credit check for each applicant.

Financial Statement: This is a statement of all assets and liabilities and supporting documents. It is very important that the sums on the statement reconcile with the attached supporting documents. Every item on the statement (except personal property) must be documented. Don't forget to add earnest money (deposit on contract) in the asset column.

Reference Letters: A combination of personal and business reference letters are needed. These letters give the board an opportunity to know you. Have your friends and associates write wonderful things about you-but do ask them to include some basics: How long have they known you? In what capacity did you meet? Why do they think you will make a great neighbor? If they live in a co-op or have served on the board at their building, it is a good thing to mention. Letters should be addressed to the Board of Directors, on letterhead and with their contact information.

Tax Returns: Most co-ops require two years' worth of tax returns including all schedules and W-2 forms.

Landlord Reference: This verifies your prompt payment of rental or maintenance charges.

Bank Reference Letter: Just ask a banker at your local branch. They do this all the time and will know what you are talking about.

After you've gathered together all your documents, we will have them copied and submitted to the managing agent for you. As a rule, if you are applying for a mortgage, managing agents do not accept any papers without a written commitment letter from the bank.

Condos and Co-ops and the Differences between them:

Owning a condo is like owning a house; that particular piece of real estate is exclusively yours and you receive a deed to the property, which is considered “real property”. Co-op owners, on the other hand, own shares of stock in the corporation that owns the building and they receive proprietary leases for their apartments.

Both condos and co-ops require board approval, though a condo board has a less rigorous approval process and will rarely turn potential buyers down. However, the condo board does have the first right of refusal, which enables the condominium to protect itself from deflated values and prices resulting from unusually low sales in the building. If the board feels your price and terms aren't favorable, it may take over as purchaser in your sales contract, thereby cancelling your purchase. The co-op board also has the ability to determine how much of the purchase price may be financed, as well as minimum cash requirements.

All prospective purchasers must interview with the co-op board. Prior to the interview, you will have to present your financial situation with supporting documentation. The following is a partial list; further details are available from your agent. Co-ops generally require a purchase application, financial statements, letters of personal reference, financial letters of reference, a letter from your current landlord, an employment verification letter, business letters of reference, copies of your tax returns from the last few years, a credit search, lead paint disclosure and financing information.

Subletting a co-op can be difficult; each co-op has its own rules, which should be reviewed carefully before application to purchase. Condo buildings in New York, however, despite having recently tightened their sublet policies, allow you to rent out your home at any time, though many condos now require the subletter to fill out a complete application disclosing financial and credit information in order to rent from an owner in the building. There are sometimes also minimum lease terms (i.e., six months to a year.)

Closing Costs for CONDOS:
  • For the Seller
  • Broker: Typically 6%
  • Own Attorney: Consult your attorney
  • Processing Fee: $450+
  • NYC Transfer Tax:
    Residential:
    Up to $500,000 = 1%
    $500,000+ = 1.425%
    Residential Deed Transfers = $75
    Commercial Deed Transfers = $165
  • NY State Transfer Tax: $4 per $1,000 of price
  • NYS Equalization Fee: $75
  • Pick-up/Payoff Fee: $250-$500
  • UCC-3 Filing Fee: $100
  • For the Purchaser
  • Buyer’s Attorney: Consult your attorney
  • Bank Fees: $350-$750
  • Application Fee: $350
  • Processing Fee: $330
  • Appraisal Fee: $300-$1,500 (depending on sales price)
  • Credit Report Fee: $50 -$100
  • Bank Attorney: $650-$750
  • Tax Escrows: 2 to 6 months
  • Recording Fees: $250-$750
  • Fee Title Insurance: Approx. $450 per $100,000 of sales price under 1M, +15% on $1M or more
  • Mortgage Title Insurance: Approx. $130 per $100,000 of mortgage amount
  • Municipal Search: $350-$500
  • Mansion Tax: 1% of entire purchase where price is $1,000,000 or more.
  • NYC Mortgage Tax (paid by borrower):
    a. Mortgage less than $500,000 = 1.80%
    b. Mortgage $500,000+ on 1-3 family residential dwelling = 1.925%
    c. Mortgage on all other property over $500,000.00 = 2.80%
  • ADDITIONAL REAL ESTATE EXPENSES
  • Common Charge Adjustment: Pro-rated for the month of closing
  • Real Estate Tax Adjustment: Pro-rated depending on when the tax is collected
  • Miscellaneous Condominium Charges: Vary by building
Closing Costs for CO-OPs:
  • For the Seller
  • Broker: Typically 6%
  • Own Attorney: Consult your attorney
  • Co-op Attorney: $450+
  • Flip Tax: Typically 1% to 3% of price (if applicable)
  • Stock Transfer Tax: $0.05 per share
  • Move-out Deposit/Fee: Varies by building
  • NYC Transfer Tax:
    Residential:
    Up to $500,000 = 1%
    $500,000+ = 1.425%
    Admin. Fee:
    Non-Deed Transfers (i.e., Co-ops) = $50
    Residential Deed Transfers= $75
  • NY State Transfer Tax: $4 per $1,000 of price
  • NYS Equalization Fee: $75.00
  • Pick-up / Payoff Fee: $250-$500
  • UCC-3 Filing Fee: $100
  • Miscellaneous Coop Charges: Vary by building
  • For the Purchaser
  • MORTGAGE CLOSING COSTS
  • Buyer’s Attorney: Consult your attorney
  • Bank Fees: $350-$750
  • Application Fee: $350
  • Processing Fee: $330
  • Appraisal Fee: $300-$1,500 (depending on sales price)
  • Credit Report Fee: $50 -$100
  • Bank Attorney: $650-$750
  • Lien Search: $250-$350
  • UCC-1 Filing: $100
  • Mansion Tax: 1% of entire purchase price where price is $1,000,000 or more.
  • ADDITIONAL REAL ESTATE EXPENSES
  • Miscellaneous Co-op Charges: Vary by building
  • Recognition Agreement Fee: $200+
  • Maintenance Adjustment: Pro-rated for the month of closing
  • Short Term Interest: Equal to interest for balance of month in which you close

FAQ:

What do I need to facilitate the buying process so I do not miss out on a great deal?
The New York City real estate market is extremely competitive. The most desirable and affordable properties can go to contract in a matter of days. The most important factors in getting a deal to closing include the following:

Annual Income - Generally you can borrow up to about 2xs gross annual income. Monthly mortgage and maintenance payments should not exceed 1 week’s gross salary. If you have significant liquid assets you may be able to borrow more.

Financial Statements - should be prepared by an accountant. It should list the net worth including assets, liabilities, salary, bonus, etc. Your Preston agent will submit offers with financial validation. The most qualified buyers are usually the ones whose offers are accepted. Having a complete financial statement is very important when there is an apartment or property with multiple bids.

Asset Valuation - A down payment alone does not qualify a buyer for a coop or a condo in Manhattan. Usually, a coop board or condo association wants guarantees for mandatory maintenance fees. They want assurances against unexpected loss of income. Many coops require liquid assets totaling 1 year's worth of maintenance and mortgage payments after closing. Also, some buildings require liquidity up to three years of combined costs. Ask your Preston broker to assist you with specific requirements.

What is the importance of a credit check and how does it fit into the buying process?
A credit check is generally performed by a mortgage broker and pertains to your credit history. Resolve disputed claims and have them removed immediately from your credit report. Keep all pertinent documentation which illustrates that the issue is resolved. Also, we recommend buyers choose a mortgage broker because mortgage brokers can save time and money. We work with various brokers throughout the New York Area; if you are interested ask your Preston broker for more information.

Question: What does being pre-qualified mean?
Pre-qualified, also called pre-approved, is when a perspective buyer tells a lender income level, debt and credit information, so the lender can provide an estimated loan amount, based on these criteria. Being a pre-qualified buyer will reassure a seller that any offers made are bona fide and that a buyer can actually make the purchase. In fact, most offers submitted by Preston are often accompanied by a buyer's pre-qualification letter; this letter notify sellers that financing is an option.

Ask your Preston broker to provide you with information about financing, estimated monthly mortgage payments, and any other necessary qualifications. Pre-approval letters make for strong offers because the lender has already pulled a credit report, checked debt/to/income ratio and done an analysis of your finances. Also, it is preferable to be pre-approved so that there will be no surprises when the credit report is received.

Why select a real estate attorney?
The real estate market in New York City is a very dynamic market. Having a real estate attorney who specializes in the NYC market is very important. First, they know the intricacies of the laws and regulations. Second, they can respond quickly to any problems that arise and can therefore expedite the closing. Ask your Preston broker to assist you in selecting a qualified real estate attorney.

What is a closing?
A closing is where a buyer gives the seller money in exchange for ownership and title to a particular property. This bargained for exchange, or consideration, transfers ownership of the property. The seller also needs to sign different documents including a deed. The place of closing is normally at the bank attorneys office. The parties present will be: seller, bank attorney, brokers, sellers attorney, buyers attorney and title closer.

What are the steps in the application process?
For mortgage applications and for coop or condo boards, buyers need to gather relevant financial documentation. Required documentation includes 2 months of most recent bank statements, brokerage statements and any other assets. In addition to current income verification, boards and banks require a minimum of 2 years of federal income tax returns. Self-employed buyers need to provide at least 3 years of federal tax returns and a letter from an accountant verifying income.

When do I need to move?
Find a target date for moving. If looking to finance, expect to take about 3 months from purchase to close. Buyers, begin your search 4-6 months before prior to an estimate moving date.

What is the best way to win over sellers?
If you really want to buy a particular property that has a lot of interest, sell the seller on the fact that you are a qualified buyer. It doesn't matter whether you plan to buy a studio or a building; chances are that there is a limited number of properties available in your price range. In a competitive market attractive properties can be in contract before they appear in the classified ads.

Brokers tend to notify serious buyers first. Make sure that you are ready to buy; have all your paperwork in order including financial documentation and pre-qualification for a mortgage. Communicate yours needs, budget, timetable, and neighborhood preferences.

Make yourself available to view properties. By being flexible with viewing properties during the work week, you can avoid weekends shoppers, congested open houses and a lot of the best buildings tend to show properties between 10-3, M-F.

How do I make the deal happen?
After finding the property you want, immediately make a verbal offer. Consult your Preston broker for the best ways to extend an offer to a seller. There are a lot of different reasons, other than money, that influence a seller in choosing the right buyer. If the verbal offer is accepted, have your broker get confirmation of the offer and acceptance in writing. Once the written offer is accepted and signed, your Preston broker prepares a transaction summary. This is sent to the seller's and to the buyer's attorneys for review. Using the signed offer and acceptance, the seller's attorney then prepares a contract of sale. After the buyers attorney reviews the contract, negotiates terms and evaluates the property's financial statements, the buyer then signs the contract and presents the down-payment check. Generally, down-payments range from 10% - 20% of the contract of sale. This money is often held in the selling attorney's escrow account to be sent to the seller's attorney. The seller then executes the contract.

Note*: Verbal offers are not legally binding. In fact, in the New York City area an offer is legally binding when both the buyer and the seller sign a contract of sale. Sometimes sellers are tempted by higher offers. To avoid problems, be prepared and have your attorney move quickly through reviewing financials and completing the contract.

Selling:

Preston has a highly respected team that will price, market and close on your property when it is listed with us. We believe that it is not only the agent you choose that will sell your apartment but the people and processes behind that agent that help get the job done. We offer a personalized listing meeting with you that will outline our custom approach to selling your home. Preston prides its self on integrity and transparency of communication throughout the deal and it starts from when you first meet us to discuss your property. Please contact Thomas Walker at twalker@prestonny.com to discuss listing your apartment with us.