The Ins and Outs in Buying RE
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
- 1)Prepare- have your essential documents prepared, and speak with your attorney and mortgage broker.
- 2)Agent- finding the right agent is important in a successful search. Gama Group has many experienced and trusted agents available to assist you.
- 3)Mortgage- get pre-approved for a mortgage through a bank or mortgage broker to better understand your budget.
- 4)Criteria: Narrow your search by creating a list of search criteria and must-haves.
- a.What kind of property are you interested in?
- b.What neighborhoods will you be looking at?
- c.What is your budget?
- 5)Educate: understanding the market and value of property in the neighborhoods you are looking at can help in your search.
- 6)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.
- 1)Co-op (Co-operatives)- these are buildings owned by corporations which you are one 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.
- 2)Condominium (Condo)- these are multi-unit buildings, which are individually owned as real property.
- 3)Condop- these are hybrid apartment buildings that include both condominium and cooperative ownership structures wherein the residential portion is treated as a single condo.
- 4)Townhouse- this type of property most often refers to a single family or two-to-four units attached row house.
- 5)Single Family Home- this type of building is intended to house one family (it is usually a detached stand-alone home).
- 6)Multi-Family Home- This building houses more than one family in several separated units and is often managed by an investor or tenant owner.
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.
- 1)Dress to impress.
- 2)Be prepared for questions.
- 3)Familiarize yourself with the details of your application.
- 4)Answer questions as simply as possible.
- 5)Never volunteer any information you are not asked for.
- 6)Do not ask questions of the board.
- 7)Do not expect an answer at the end of the meeting.
- 1)Mortgage Pre-Approval (1-2 days)- A mortgage professional will calculate your financials so you can determine your budget.
- 2)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.
- 3)Negotiations (1 hour- 6 months)- Once you found the property that you are going to make an offer on, it’s time to make negations on property details and price. Your agent will be key in helping to guide you through these negotiations.
- 4)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.
- 5)Apply for and get a mortgage (3-8 weeks).
- 6)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.
- 7)If purchasing a Co-op complete a board interview (30min- 1 hour) – See our tips for co-op interview.
- 8)Receive approval from the board (1 day- 1 week)
- 9)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.
- 10)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.
- 1)Proof of Annual Income- Generally you can borrow 2x gross annual income.
- 2)Financial Statements- These documents should be prepared by an accountant and should include assets, liabilities, salary, bonus, etc.
- 3)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 on the occasion of loss of income.
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 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 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 mortgage Over $500,000 is 1.925% of mortgage
Title Insurance, Title Search & 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 purchase price up to $500,000 1.425% of purchase price over $500,000 NYS Real Property Transfer Tax $4 per $1,000 of purchase price Sponsor’s Attorney Fee $1,500