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Buying a property in New York is a daunting task, and first-time buyers should be prepared before they enter one of the most challenging markets in the country.
1. Save
This advice may seem obvious. Everyone knows to save before attempting to purchase a home.
But, what people don’t realize is how much is needed. To successfully purchase a property, buyers should be prepared to put 20% of the purchase price down in cash. With apartments in Manhattan averaging around $1 million, saving for a 20% down payment while renting elsewhere is no easy task.
In addition, buyers will need to pay for several fees throughout the process, including appraisal fees, lien search fees, processing fees, and a laundry list of other hidden costs.
For properties over $1 million, there is also a “mansion tax” applied, which is 1% of the price of the home.
2. Research Credit Scores
Credit scores matter greatly when it comes to buying a home. A good credit score will increase the amount of money that a lender is willing to loan to a buyer toward the purchase price of a home.
Before entering the market, buyers should be aware of their credit score and fix any known problems. There are some things that can be resolved on a credit score easily which will provide an easy boost, such as paying off old liens or getting items expunged which should have been removed.
Buyers can obtain a copy of their credit score from credit reporting bureaus directly, and many banks can assist buyers in obtaining copies of credit scores.
3. Understand The Difference Between A Co-Op And A Condo
Most New York residential real estate is in the form of a condo or a co-op. A condo is a space that is owned outright by the buyer, while a co-op is owned by a corporation.
When purchasing a co-op, the buyer is purchasing a proprietary interest in the building where the apartment is housed, rather than in the apartment itself.
Co-ops and condos also differ because of their upfront requirements. Many co-ops require more financial security than condos. For example, some co-ops will request to see a bank statement which shows that the buyer has enough to cover the mortgage for a full year before they will sell.
They may also require more cash up front for the purchase. Co-ops also tend to be more interested in the personal life of the buyer. A co-op can deny selling to an individual for any purpose that is not illegal discrimination.
An experienced agent can help first-time buyers navigate these requirements and understand the more nuanced differences between the two types of properties.
4. Be Wary Of New Agents
Even though New York real estate is one of the most challenging and competitive markets in the country, the requirements to become a real estate agent in New York are not difficult to achieve. Agents are required to take a 75-hour course and pass an exam before obtaining a license.
This means that after about two weeks of training, they can handle million-dollar transactions with seasoned sellers and investors. Before selecting an agent, it is important to review the agent’s experience and qualifications. Buyers do not want a first-time agent handling this stressful process.
The same advice can be given for the other actors involved in purchasing a home. Buyers should ensure they have a qualified broker and a qualified legal team.
An experienced attorney will ensure that there are no impediments to purchasing the property, and will review and draft the legal documents which effectuate the sale. There is no room for error in these types of documents, so obtaining legal representation from a seasoned and successful team of attorneys is crucial.
5. Avoid Becoming Too Attached To A Particular Property
There are many stories of buyers becoming very attached to a property, only to find that they were outbid by several thousands of dollars.
In New York, many properties work on a bidding scheme, meaning that buyers submit their “best and highest” offer to the selling agent while the house is on the market, and the highest bid takes the prize.
Sometimes selling agents will inform bidders that they have lost the bid and allow them to put in a new offer, or sometimes they simply accept the highest bid.
There are other reasons for buyers to avoid becoming too attached to a particular property. An investigation of the property may reveal a faulty sewage system, an issue with the building’s ownership, or countless other problems that render the apartment a bad fit.
Contact Fisher Stone Law Today
Purchasing a home is a big step in life. Once you have found the perfect property, you need a strong legal team to provide guidance and to ensure there are no impediments to owning the home.
