Advice For Buyers
A condominium is real property, and a purchaser is given a deed. Besides owning the apartment, you also own a small percentage of the building’s common elements like the halls, stairwells, etc. Each individual apartment gets a separate tax bill from the city. There is also a monthly common charge for building expenses. Financing and subletting terms can be more flexible in a condo than a co-op.
Buyers should consult their real estate attorney or financial advisor for specifics. Those buying in new development projects should pay particular attention to these numbers as you will likely be paying NY City and NY State transfer taxes (1.825% or more of the purchase price) as well as other seller fees and expenses like the cost of the seller’s attorney.
A complete list of closing costs can be found here.
Prepare the Offer: 1 day
Negotiate the Offer & Acceptance: 2-5 days
Loan Application & Appraisal, Loan Approval and Commitment Letter, Sign
Contract/Escrow Deposit: 2-4 weeks
Co-op Board Package & Interview/Condo Application: 4-6 weeks
Bank & Attorney Prep Closing: 1-2 weeks
Final Walk Through: Day of Closing
Transaction Closing: 3 hours
Get pre-approved for a mortgage, look into your credit report, FICO score, type of mortgage, and shop for best rates and programs.
Identify your timeline for moving.
Find a real estate agent who specializes in New York City real estate.
Determine your needs and prioritize your wants: style of home, size, location, building amenities, condo, co-op or house.
Explore different neighborhoods to determine which ones suit your needs.
Evaluate access to transportation and commute time to work in selected neighborhoods.
Evaluate building amenities and house rules in terms of your needs (e.g., washer/dryer permitted, doorman, gym, pet policy, storage facilities, etc.).
Discuss with your agent how much to offer and leave room to negotiate. Your agent will be able to advise based on how long the property has been on the market, condition of home, other offers that have been presented, and how the asking price compares to similar, recently sold properties.
Let your agent prepare your offer and apply trained negotiating skills during the buying process. Your agent will advise you of any final negotiating factors that may benefit you in the purchase.
Once you have chosen an apartment, have both your agent and your attorney evaluate the building’s financial statements.
Once your offer is accepted, work closely with your agent to gather materials for your mortgage application and/or board package.
Find a local real estate attorney to prepare the purchase contract before you sign and represent you at the closing.
Before you move in, obtain homeowners insurance. Get quotes, compare and secure an insurance policy with appropriate coverage.
- First and most important is that unless the project has been built already and is ready for move-in, you should be flexible on your closing timeline. Construction always equals delays. Be prepared to wait 6 months and up to 12 months from the closing projections that you are given by the sales team. From fire alarm inspections, to Con Ed installing the gas meters, you are at the mercy of various city agencies and construction teams and, of course, those custom windows being shipped from Italy never arrive on time. The good news is that the finished product is usually pretty spectacular and worth the wait.
- Second, expect to pay slightly higher closing costs. It is customary in NYC new development purchases for buyers to be asked by the sponsor to pay NYC and NYS Real Property Transfer Taxes of 1.825%, the sponsor’s attorney fee (which varies but usually around $2750), a capital contribution to the new condominiums reserve fund of usually one or two months of common charges, and on occasion, a Residents Manager contribution to pay for the live-in super’s unit. Instead of your closing costs being 3 to 4% as they would in a normal resale purchase, you can add another 2% in a new development purchase. Fret not, all of this at the end of the day is negotiable.
- It’s never a bad idea to read the offering plan when purchasing a new home. In the case of a new development that is not yet completed, it is pretty much mandatory that you and your seasoned new development attorney read the offering plan. The offering plan is your projection as a consumer and it has been submitted to the Attorney-General and approved by them stating what the developer is expected to deliver. Anything significant that varies will have to be approved by the AG in an amendment filed by the developer. The OP is essentially the buyer’s way to hold the developer accountable for their promises to build a world-class residence. It is crucial to read it because there is a wealth of information in there about the risks involved (see “Special Risks” section of the plan). Another section that is full of great information is the Architects’ or Engineers’ Report, which talks about everything from the materials used in the lobby, what model of air-conditioners will be installed to the color of paint in the common areas. You will be given a very complete and detailed look at what the final product will look and feel like. As for the architect of record, Google them as well. See what other projects they have put their names on. Finally, read about the building’s retail space and what are the permissible uses under the plan. Can you resell your apartment immediately after closing? Or, are there restrictions built into the plan so that you are not competing with the developer’s unsold inventory?
- Look into the developer’s track record for success. What other projects have they done? What was the result like? How many projects have they done? What kind of financing do they have in place to ensure the project gets finished? Who is actually building the project? Don’t be afraid to ask and Google them. Some developers, like Extell, have such a long track record of success there is almost no risk. If you are purchasing in a project with a developer that is somewhat green, then ask for an outside closing date in your contract whereby if the project gets delayed past a certain point, you can just walk away and get your money back.
- Work with a broker on the buy-side who has done a significant number of new development deals. They will help educate you, and alert you to pitfalls or opportunities along the way. When it comes time to negotiate the best possible price, having a broker on your side that has completed deals in the building or with that developer is always a plus. They will help you understand what inventory is left that remains unsold and not listed, and what that means in terms of you getting a discount and will be your advocate in the process. Most importantly, if you are trying to decide between two units in the same building, having an outside broker who is experienced in new development and resales on your side will be worth their weight in gold when it comes to identifying which unit will be easier to sell down the road.
Thinking about Purchasing? Let us put together your dream team.
There is no reason to approach this process alone. With a team behind you, everyone will be working together with your best interest in mind. At the end of the day a team is always better than one.
Susanne Columbia and Todd Vitolo are full-service NYC real estate brokers who handle a wide range of residential real estate transactions, including the purchase of co-ops, condos, townhouses, and new developments.
Whether you’re looking to buy a penthouse on Central Park West, a townhouse in the West Village, or a loft in Soho, or just need some solid real estate advice Susanne and Todd know every niche of the Manhattan and Brooklyn market and are happy to serve you.
From recommending the best attorneys, providing referrals for architects, lawyers, engineers, and contractors, we will put together a team of proven players all working together under our management with one goal in mind…YOU. We are always working with you and for you.