Taking the leap from renting to owning can seem a bit stressful. Knowing the ins and outs when purchasing real estate is essential. Below you will find an informative guide and the necessary game players to help you facilitate your transaction.
Steps to Purchasing
- Prepare - have your essential documents prepared, and speak with your attorney and mortgage broker.
- Agent - finding the right agent is important in a successful search. Gama Group has many experienced and trusted agents available to assist you.
- Mortgage - get pre-approved for a mortgage through a bank or mortgage broker to better understand your budget.
- Criteria: Narrow your search by creating a list of search criteria and must-haves.
- What kind of property are you interested in?
- What neighborhoods will you be looking at?
- What is your budget?
- Educate: Understanding the market and value of property in the neighborhoods you are looking at can help in your search.
- Make an offer - your Gama agent will help you with a negotiation strategy and offer preparation.
Types of Properties
It’s very important to understand your options when it comes to the variety of properties that are available for purchase in New York City.
- Co-op (Co-operatives) - these are buildings owned by corporations in which you are a shareholder. The shares correspond to the unit in which you live. This entitles you to a proprietary lease. Co-op shareholders contribute to a monthly maintenance fee.
- Condominium (Condo) - these are multi-unit buildings, which are individually owned as real property.
- Condop- these are hybrid apartment buildings that include both condominium and cooperative ownership structures, wherein the residential portion is treated as a single condo.
- Townhouse - this type of property most often refers to a single-family or two-to-four units attached row house.
- Single Family Home - this type of building is intended to house one family (it is usually a detached stand-alone home).
- Multi-Family Home - This building houses more than one family in several separate units and is often managed by an investor or tenant owner.
Co-op Tips
When applying to a co-op, you will be asked to submit a co-op package and also go through an interview process with the co-op board. The interview is an opportunity for the board to get to know you, ask you specific questions about your application, and determine if you are a good fit for the co-op. Here are a few tips for the interview process.
- Dress to impress.
- Be prepared for questions.
- Familiarize yourself with the details of your application.
- Answer questions as simply as possible.
- Never volunteer any information you are not asked for.
- Do not ask questions of the board.
- Do not expect an answer at the end of the meeting.
Timeline
- Mortgage Pre-Approval (1-2 days)- A mortgage professional will calculate your financials so you can determine your budget.
- Find an apartment/home (1-6 months)- This will vary greatly, but with our online system, you have access to all properties on the market, making narrowing down your search easier.
- Negotiations (1 hour- 6 months)- Once you found the property that you are going to make an offer on, it’s time to negotiate on property details and price. Your agent will be key in helping to guide you through these negotiations.
- Sign Contract (1-2 weeks)- It is typical that a real estate attorney draws up contracts which both buyer and seller review, and sign upon approval of terms.
- Apply for and get a mortgage (3-8 weeks).
- Complete a Co-op or Condo Board Package (1-4 weeks)- Your agent will guide you in the process of completing a board application package.
- If purchasing a Co-op, complete a board interview (30min- 1 hour) – See our tips for a co-op interview.
- Receive approval from the board (1 day- 1 week)
- Schedule a closing (1 week- 2 weeks)- The managing agent will assist you with closing, and your attorney will provide you with a list of checks to bring to the closing meeting.
- Closing (1 -2 hours): Ensure you are prepared for the closing meeting with extra checks and any completed paperwork.
Information Needed to Facilitate the Process
It is important to be prepared for buying a home since the New York real estate market can be very competitive.
- Proof of Annual Income - Generally, you can borrow 2x gross annual income.
- Financial Statements - These documents should be prepared by an accountant and should include assets, liabilities, salary, bonus, etc.
- Asset Valuation - Asset valuation is important for those applying to a condo or coop because a board or condo association wants guarantees for mandatory maintenance fees in the occasion of loss of income.
Closing Costs
Closing costs depend on the type of property you are purchasing. To better understand the costs involved, we have put together an estimate of some costs.
For the Purchaser
- Own Attorney $1,700 + up
- Managing Agent Fee $250 – $500
- Credit Report Fee $50 – $100 per applicant Lead-Based Paint Disclosure Fee $0 – $50
- Transfer Fee 0.5 – 2% of sale price (may be payable by seller and/or negotiable), Processing Fee $250 – $750 to Management
- Mansion Tax 1% of the purchase price where $1 million and over
- Move-in Deposit $500 – $1,000 (usually refundable if no damage)
Mortgage Associated Fees
- Origination Costs – points 0 – 3% value of the loan
- Application, Credit Check, etc. $500 + up Appraisal $275 + up
- Bank Attorney $500 + up UCC-1 Filing $50 + up
- Mortgage Recording Tax Up to $500,000 is 1.8% of the mortgage. Over $500,000 is 1.925% of the mortgage
- Title Insurance, Title Search and Recording Fees Approximately 0.5% of purchase price Building Searches $200 – $400
- Recording Charge $17 per document plus $5 per page Real Estate Tax Escrow 2-6 months (verify with bank)
If Purchased Directly from Sponsor
NYC Real Property Transfer Tax 1% of the purchase price up to $500,000 1.425% of the purchase price over $500,000. NYS Real Property Transfer Tax $4 per $1,000 of purchase price, Sponsor’s Attorney Fee: $1,500.
