Buying Guide

Our Buying Guide provides our New York City clients, who wish to buy quality New York City apartments, coops, condos or commercial properties within their budget, with quick and general guidelines to follow. The Guide offers our clients with useful information about buying property. See sections on Standard Fund Requirements, General Closing Procedures, Typical Questions Answered, Suggested Mortgage Company Links and Real Estate Terms Defined.

Standard Fund Requirements

The Budget

: Location, size, amenities, building type, school locations and proximity to public transportation are crucial to determining what a property will cost. We suggest buyers review financing options to determine how much they can put toward a deposit and then determine their monthly mortgage payment. Most people should pre-qualify for a mortgage with a lender to know for certain what budget they have.

Coop Purchase

: Buying a coop is daunting to some, but Exit Realty Landmark's team of qualified agents can help. When purchasing a cooperative apartment the purchaser owns shares in a corporation. The shares correspond to the unit in which you live. Coop fees include a monthly mortgage payment and maintenance fees for the building.

Buying a Coop? Here are some benchmarks (which may vary depending on the building) to help you understand what closing costs could be.

  • Buyer's Attorney: $1,750
  • Coop Transfer Agent Fee: $750
  • Credit Check: $100
  • Purchase Application Fee: $750
  • Appraisal Fee: $450
  • Bank Attorney Fees: $750
  • Recognition Agreement: $100
  • UCC Filing Fee: $150
  • Lien Search: $300
  • Discount Points Paid to Lender to reduce Borrowing Rate: Varies

Condominium Purchase

: Condo owners buy the apartment and also own a percentage of the common building areas, i.e. entrance areas, hallways and recreational areas etc. The condominium is considered real property; because of this fact, owner's have the right to do use the property any way he/she sees fit. Owners are subject to pay property taxes which can either be escrowed into a part of a monthly mortgage payment or which are paid annually as an expense. Monthly maintenance fees are generally paid to the building's condominium association.

Buying a Condo? Here are some benchmarks (which may vary depending on the building) to help you understand what closing costs could be.

  • Buyer's Attorney: $1,750
  • Management Company's Processing Fee: $250
  • Credit Check: $100
  • Purchase Application Fee: $750
  • Appraisal Fee: $450
  • Bank Attorney Fees: $750
  • Recording Fee: $450
  • Title Search: $300
  • Title Insurance: 0.5% of Purchase Price
  • Mortgage Recording Tax: 2% of Loan Amount
  • Discount Points Paid to Lender to reduce Borrowing Rate: Varies

General Closing Procedures:

What is a closing?

A closing is where a buyer gives a seller money in exchange for ownership and title to a particular property. This bargained for exchange, or consideration, transfers ownership and title of the property. The seller also needs to sign over other documents including a deed. The place of closing is normally at the bank attorney's office. The parties present will be: seller, bank attorney, real estate brokers, seller's attorney, buyer's attorney and title closer. Buyers need to apply for a mortgage as soon as the contract is signed by both parties. The mortgage process takes up to 45 days and can involve several procedures:

  • The mortgage broker compiles the buyer's financial information and then presents the loan application
  • The bank sends an appraiser to assess the property
  • The underwriters review the loan and issue a commitment letter.

If buying an apartment, coop, condo or any other property with a board or association, prepare your application package with your Exit Realty Landmark broker. These packages tend to vary from building to building. Most boards use the same financial requirements as the bank. Keep an extra copy of your mortgage application and any related documentation. Buyers, are required to get personal, professional and financial letters of reference. If renting, get a letter of reference from your current landlord. Ask what information is needed and for copies of sample reference letters. The board package is important, therefore, answer all questions in a clear, concise manner and give an accurate description of your financial qualifications. Before submitting your application package, write a cover letter, organize the presentation and review it with your Exit Realty Landmark broker.

The board package is submitted after a buyer receives his/her mortgage-loan commitment letter; it is submitted to a building's Managing Agent. The Managing Agent checks the application, evaluates credit and references, and then submits the package to the board. The board then reviews the completed package. Additional information may be requested or if the package is passed, an interview is scheduled. There is either an interview committee that approves new applicants or a board will do it during its monthly meetings. Your Exit Realty Landmark broker can assist you as to the date, time and any other preparations for your interview.

Closing is scheduled after the board approves an application package and completes the interview process. This generally takes 2 weeks for final approval and can vary depending on the availability of the parties involved; i.e. managing agent, buyer, seller, lawyers and banks.

General Closing Costs to Consider:

Additional Fees:

Sometimes borrowers are required to pay additional fees. Some of these including Wire Fees, Tax Service, Survey Costs, Flood Certification, Settlement Charges, Messenger Fees, Sub-Escrow Fees, and Transfer Tax. Ask your broker to explain these fees.

Appraisal Fee:

Fee charged which estimates whether or not a property is worth enough to support a loan. A qualified appraiser will look over the property and produce a report.

Attorney Fee:

Fees paid to attorney representing you in real estate purchase (some closes require you to pay bank attorney fees or with condos, sponsor fees for sponsor attorney maybe required. Fees vary according to type of property and $ value of the property.

Condo Board Application or Co-op flip tax:

Fees charged for processing condo applications or coop shares.

Credit Report:

Generally between $25 - $100 per report.

Document Preparation Fee:

Fee charged by bank or mortgage company for preparation of paperwork.

Escrow:

Money set aside in a mortgage to ensure the funds are available for certain conditions like taxes and insurance etc.

Inspection Fee:

Voluntary service fee for inspection of property to find defects in the space.

Homeowner's Insurance:

Protection from financial devastation due to property damage from unpredictable hazards; i.e. fires, floods etc.

Mortgage Insurance:

Loans made from a down payment of less than 20% require mortgage insurance. This protects a lender if a borrower defaults on home loans when loan amounts are higher than 80% LTV.

Origination Fee/Points:

Depending on the type of a loan and the rate a mortgage seeker chooses, he/she may pay points. 1 point equals 1% of the total loan amount.

Prepaid Interest:

This amount pays the interest due from the date of funding to the end of the current month.

Recording/Transfer Fees:

This covers the costs of changing the property title in official government records.

Title Insurance and Search:

Fees that are charged for a title search and insurance fees. A title search is used to verify that that the seller is the true owner of the property being sold and that the seller has the right to sell it. Title insurance protects a lender in the event of a lien or other problems with the title for the property in question, that was not disclosed at the time of sale. Time Until Closing:

Generally sales take between 3-5 months to close depending on various factors. The most common factors affecting closing include: mortgage & financing, condo/coop board approval and negotiation.

Recommended Amount To Put Down:

The amount needed to purchase property varies according on the type, size and location of a property. For example is the property a single or two family dwelling, coop or condo. Exit Realty Landmark recommends being prepared to pay about 10-20% of total price. Some properties may accept a smaller percentage for qualification. You will also need to set aside additional monies for closing costs.

Typical Questions Answered:

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 - Monthly mortgage and maintenance payments should not exceed a certain multiple of gross salary. If you have significant liquid assets you may be able to borrow more.

Financial Statements - should list net worth including assets, liabilities, salary, bonus, etc. Exit Realty Landmark submits offers with financial validation. Having a complete financial statement is very important, especially when there is a listing 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 seeks assurance that the purchaser is qualified to pay maintenance fees. They want assurances against unexpected loss of income. Some coops require liquid assets totaling 12 to 24 months worth of maintenance and mortgage payments after closing. Also, some buildings require liquidity up to three years of combined costs. Ask your 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 who has a proven track record, in order to save time and money. We work with various brokers throughout the New York Area; if you are interested ask fora referral.

What does being pre-qualified mean?

Pre-qualified buyers have had their income level, debt and credit information reviewed, so the lender can provide an estimated loan amount based on these factors. Being a pre-qualified buyer will reassure a seller that any offers are made with the help of the buyer's team of advisors.

Ask your Exit Realty Landmark broker to provide you with information about financing, estimated monthly mortgage payments, and any other necessary qualifications.

Pre-approval letters make for stronger offers because the lender has already pulled a credit report, checked debt/to/income ratio and done an analysis of your finances. It is a certification that the lender is willing to lend to the buyer based on the information that the lender 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. Additionally, they can respond quickly to any problems that arise and can therefore expedite the closing. Ask your Exit Realty Landmark Broker to assist you in selecting a qualified real estate attorney.

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. Prepare the financial statements and answer the interview questions of your broker and mortgage banker to get a head start on the questions that any seller will ask their buyers.

Look like a "serious buyer": Make sure that you have all your paperwork in order including financial documentation and pre-qualification for a mortgage. Communicate yours needs, budget, timetable, and neighborhood preferences early and often.

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 consult your Exit Realty Landmark 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. Once the written offer is accepted and signed, your Exit Realty Landmark broker prepares a transaction summary. This is sent to the seller and buyer attorneys for review. Using the signed offer and acceptance, the seller's attorney then prepares a contract of sale.

After the buyer's 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 are in the range of 10% of the contract price. 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.