Buying Real Estate In New York City

Buying a co-op in NYC:

Most buildings in Manhattan are co-ops. When you find the co-operative apartment that you wish to buy, there is a procedure to follow before that apartment becomes yours. Most likely, these are the steps you will follow:

1. The offer and negotiation: You will make an offer on the apartment. That price will be accepted or rejected. The seller may make a counter proposal and then you will negotiate.

2. The mortgage: If financing is needed, go to several banks and inquire about how much money you can borrow on a "co-op loan" or a "personal loan" and at what rate of interest. If you are a foreign national, and you have most of your money in a bank in your home country, you can either transfer a portion of your money to an American bank or get an international banking reference.

3. The credit report: You will need a strong "credit rating" for the bank as well as for the corporation. The bank will be hesitant to lend you money until they check your rating. The Board of Directors of the cooperative will not approve you until they check your financial statement and your credit rating.

4. The real estate lawyer: Contact a real estate lawyer to represent you. He will check several things for you in order to be sure that the building and apartment are good investments.

5. The contract and deposit: The seller's attorney draws up a contract and gives it to the purchaser's attorney. When both parties sign the contract, the buyer gives a 10% deep-set or an agreed amount of money. This is called a down payment or a binder. The contract will include all the details about what is to remain in the apartment, such as furniture, appliances, carpets etc. Your deep-set is refundable. You get it back if you are not approved by the Board of Directors or if you cannot get the financing you need.

6. The interview: The buyer's real estate broker makes the appointment with the chairman of the Board of Directors for an interview. Try to find out, before the interview, from your broker, who is there to give you continuous advice and information, what the board wants to hear or likes to see. Don't take the interview lightly! It is not automatic that you are approved, even if you can afford the price of the apartment.

7. The approval: After you have all your finances together and you have been interviewed and approved by the Board of Director, the apartment is finally theoretically, yours. However, There is one more step left, and that is the "closing".

8. The "closing": The "closing" occurs when all the negotiations are finalized. At the time of the closing, you have a meeting at the office either of the seller's or the purchaser's lawyer. You will need to receive the "proprietary lease" from the seller. The proprietary lease is the document that gives you, the tenant-owner, the rights to use the portion of the building that is allocable to the shares of your apartment. Read the proprietary lease carefully. At the closing, you will need a bank check/s, to pay the seller for the apartment. You will need to pay the first month's maintenance. You may also need a check to pay your lawyer his fees. You may have some other expenses, as well, so come with a few extra checks.

9. The closing costs: Closing costs can be 5%-8% of the purchase price. This includes "points" to the lending bank or mortgage company, title insurance, title search, inspection and survey, recording tax and homeowner's insurance. Your real estate broker will have a list of these fees and should give them to you before the closing.

10. The real estate broker's fee is usually paid by the seller. The "flip-tax", a tax representing 2% of the sale price of the co-op, is paid to the city of New York by the seller.

After you have passed through the above steps, the apartment is finally yours!

Buying a condominium in NYC:

When you are ready to buy a condominium, the procedure is very similar to that of buying a co-operative. The prices, though, may differ. When you buy a condo, it is important, at the closing, that your lawyer requests a "title search" to make sure that the people who are selling you the property have proper title to it. Ask your lawyer to examine the condo's prospectus and financial statement and potential special assessments to make sure the building is financially stable.

In most cases, buying a condominium will not require you to face an interview and a board approval as in most Co-ops. Some condos will use the board of managers to review applications to buy an apartment and make a decision. In these rare cases the authority to do so will have to be empowered to the board by the tenants and be specified in the building's by-laws. All other steps are very similar to the co-op procedures.