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EP 28: Buying Property in NYC From Start to Finish

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Buying Property in NYC From Start to Finish: How To Purchase A NYC Apartment

The John and Jonathan Sell NYC Podcast: Episode 28

Welcome to the John and Jonathan Sell NYC Podcast, where experienced, expert NYC real estate brokers John Gasdaska and Jonathan Conlon break down what’s happening in the market, what you need to know whether you’re a buyer, seller, or agent, and their insight into the future, with a little bit of fun along the way.

How To Purchase A NYC Apartment

There are a few reasons NYC is different, one being that there is no public MLS. However, in the past few years, all the major brokerages started sharing listing information, which means you can see nearly all the properties available on any of the major brokerages’ websites. In this episode, we cover how to buy property in New York City from start to finish – everything from determining your wants and needs, to which neighborhoods to target, to what the board interview process is like.

Even before beginning your search for the perfect apartment, it’s important to determine your budget. NYC is expensive, so you’ll need to have a significant sum (no less than 10% of your target property’s purchase price) available for a down payment, plus closing costs and other fees. If you have that saved up, it’s time to find a broker!

Step 1: Find a Broker You Can Trust

  • We covered this in-depth in Episode 17: What To Look For In A Great NYC Real Estate Broker
  • This is a huge purchase – you should absolutely do your homework and make an educated choice about which broker you work with
  • Experience is important – you want someone with a strong track record
  • A good broker can help you find the right category of property and the right location because they have the experience to do so
  • Finding the right broker will save you a LOT of time in your search since they have more experience and knowledge of the market and neighborhoods
  • Knowledgable. Honest. Hardworking. This is what you should be looking for in a real estate broker

Step 2: Determine Your Budget and Choose Your Financial and Legal Team

  • Your broker will often refer you to a mortgage banker to help determine your budget
  • Down payments are generally 10% as a minimum, but you will need closing costs and funds for other fees above and beyond the down payment
  • Consider working with a mortgage banker to figure out what your real purchasing power is – it might be less (or more!) than you anticipated
  • You also need to find a great real estate transaction attorney – real estate brokers like our team can provide great referrals

Step 3: Choose Between Co-ops vs Condos

  • We covered this extensively in Episode 5: What Are The Differences Between NYC Co-ops and Condos When Buying?
  • Condos generally have great ease of transfer and ease of use, but they generally cost 15-30% more than co-ops
  • Co-ops are a lot like buying in a country club since you are buying shares of a corporation, not an individual apartment
  • Most of NYC’s apartments are co-ops, so if you decide you want to purchase a condo, you’ll be looking at a smaller pool of properties

Step 4: Determine Your Wants and Needs

  • What are the things that you really want and the things that you really need? Being clear on this can really help streamline the purchasing process
  • Write these down, and reference them often – this will help you stay focused on what you actually want and need
  • These wants and needs often change over time and change as you go through the purchasing process

Step 5: Location

  • Choosing a location or neighborhood is important to help narrow the search – we have tons of episodes diving deep into each
  • It’s hard to truly know a neighborhood until you’ve lived there for a while, so lean on an expert broker to help you determine where you’d likely like to live

Step 6: Go See Properties

    • Sometimes you have to see 5 properties, sometimes you have to see 100 – you won’t know the right one until you see it, and a good broker will stick with you no matter how many showings you need
    • We generally show 5-10 properties in each session
    • This is a huge purchase – it’s okay if you feel like you just need to see more properties in order to feel comfortable making an offer

Step 7: Make An Offer

    • ┬áThis is where working with a really great broker can make a huge impact – if the offer is incomplete or poorly crafted, it bodes very badly for both the broker and the potential buyer, and can easily kill a deal
    • Here’s the minimum of what you’ll need for a great offer:
      • 2 years of tax returns
      • Full financial statement
      • Bio for the buyer
      • Real estate attorney (name and address)
      • Pre-approval letter (if you are financing the transaction)
    • Your broker should counsel you on the offer itself – it is in your broker’s best interest to get you a great price so you should trust them

Step 8: Accepted Offer

    • Once the offer is accepted, the work transitions to the real estate attorneys
    • The buyers and sellers attorneys work together to draft a contract and bring it to the clients to approve
    • 10% deposit gets sent to seller’s escrow account (this is the first time that any money changes hands)
    • The mortgage application and commitment letters happen after the appraisal and underwriting, and this generally happens 3-4 weeks after you go to contract

Step 9: The Board Application and Interview

    • It’s best to get everything buttoned up on board applications and leave no room for questions
    • This is one of the places that buying a condo is different than a co-op because condos have the right of first refusal
    • Co-ops: If you get approved for an interview, you are likely to pass the board interview
    • Board interviews are a lot like job interviews, and they generally last 20-30 minutes
    • This is where our team shines – we write really great board applications
    • Official board approvals generally happen the day after the board interview, but sometimes it can take a few days

Step 10: Setting Up The Closing and Closing the Transaction

    • Once you have the official approval from the board, the attorneys get involved again to set up the closing, and it usually happens at the managing agent’s office
    • You need a clearance to close from the bank before setting up the closing
    • There are a lot of people involved at this stage:
      1. The buyer
      2. The seller
      3. The buyer’s attorney
      4. The seller’s attorney
      5. The mortgage banker
      6. The payoff bank
      7. The managing agent

Step 11: Final Walk-Through

    • The apartment should be in a very similar condition to when the offer was made
    • Holes in the walls (smaller than a dime) remain, but large holes need to be fixed
    • We test various things like checking the appliances, opening the windows, etc.
    • This generally happens a few hours before the closing
    • Finally, after lots of paperwork, you’ll get your keys!

Congratulations! Now you know how to purchase a NYC apartment – the next step is to reach out to an expert broker that can help you find the property of your dreams. Great brokers can help you navigate the often confusing and frustrating ins and outs that come with owning your own piece of NYC

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