Clients Guide to Real Estate
Below you will find a comprehensive Clients Guide to Real Estate. Being a first time home buyer, seller or renter can be a daunting and an intimidating endeavor. These tools are available to help guide you in your journey as a supplement to working directly with a broker. Whether you're a buyer, seller or renter, there is information in this guide that can provide a solid foundation and understanding no matter what side of the process you are on.
BUYER'S GUIDE
Buying a home can be a life changing decision - often times the biggest financial commitment an individual can make. That's why it is vital to have an investment strategy in place before jumping into the New York City real estate market. You'll need a buyer’s agent, a mortgage broker, and a real estate attorney. Follow our step-by-step process for a smooth, enjoyable, and successful purchase here in NYC.
Step 1: Determine your budget
We always recommend our buyers to have a conversation with an experienced mortgage broker to help them determine what they can afford. Mortgage brokers can quickly tell you based off your level of income and assets what your budget can be. At this point, the mortgage broker will draft a “Pre-approval" letter indicating how much the bank is willing to lend you. This letter is also used when submitting an offer to prove to the seller that you are pre-approved by a bank and able to legitimately buy. Buyers who are not prepared with this step can often times lose out on properties because of delays in getting this letter which is why it is crucial to have this complete early on. This is also a great time to decide who will represent you legally in the transaction. You should always use an experienced Real Estate Transaction Attorney who does consistent business in the area and neighborhood you are purchasing in.
Step 2: Understanding what you want vs. what you need
Once you know what you can spend, you will then need to find out what your money can and can’t buy you. Having realistic expectations is very important when searching for your next home, and working with a buyer’s agent can help you manage those expectations by educating you on the current inventory. Is location more important than the size and quality of the finishes? Do you need a doorman and other building amenities? Do you have pets? Will you need to sublet the apartment in the future? Transportation access? These are basic questions that you should be asking yourself as a buyer and future owner, and prioritizing what is most important. Whether your budget is big or small, you will always have to compromise somewhere in the process.
Step 3: Viewing apartments
Often times, the more apartments you see, the more you learn about the above step. So the more you see, the closer you will get to finding that perfect apartment. Working with a real estate agent who knows the market and is able to show you the best options efficiently will ultimately save you time and lead to that “this is it!” moment. Most buyers see between 10 and 30 apartments before making a decision, and 9 out of 10 transactions in the city are closed with a buyer’s agent.
Step 4: Submitting an offer and negotiating terms
In a market where most apartments are going for just about 3% below asking price and often times for full asking price, there are other major factors that play an important roll in the negotiating process: price, financing amount, contingencies, transfer taxes, flip fees, inclusions, exclusions, closing date, etc. Because the inventory is so tight, most sellers will have the upper hand in most of these factors - especially when there are multiple bidders. But understanding what your leverage is and why you are more qualified to purchase an apartment over another buyer can be the difference between securing your next home, or getting beat out. This is where your agent will advise you on what you need to do in order to get an accepted offer.
Step 5: Going into contract
Congratulations, you have an accepted offer! Not so fast. You don’t technically or legally ‘have’ anything yet. You still need to put down 10% for escrow and your trusted Real Estate Attorney needs to conduct his due diligence on the transaction. That may include looking at the building financials, the offering plan, and deal specifics. Usually this take about 5 days. Once everything is cleared by your attorney, you are ready to sign the contract and put down your deposit.
Step 6: Purchase Application
At this point, you will be handed a condo or co-op purchase application. This serves as your application to live in the building and be approved by it’s board members. As you may have heard, the condominium application approval process is much easier and quicker than the cooperative approval process by which you have to literally be interviewed in person by it’s board members. But don’t worry, your agent will walk you through each step and make sure that your board package is organized and impressive so that there are no issues getting approved.
Step 7: Closing
While you wait for approval from the condo or co-op, your mortgage broker will be getting your loan cleared by the bank. Once you are approved and cleared, the agents, attorneys, bank and property managing agent will schedule a closing by which you will take possession and title of your new home. You will always be granted a “walk-through” before the closing to check that the apartment is in the same condition as when you first decided to purchase it. The keys will be handed over to you at the closing and you are now the owner of your new dream home!
SELLER'S GUIDE
Selling your home can be an emotional decision. That is why your agent can take the emotion out of it, and focus on the business part of it. Our job is to price the apartment just right so that you maximize your investment and close at an efficient pace. Having an exit strategy when selling your property is vital and executing it successfully the first time around is just as important. There are many moving parts to a sale in New York City that most owners overlook which is why 9 times out of 10 properties are sold by a real estate professional.Please find a complete guide to successfully selling your home in the city below.
Step 1: Choose your broker
Selecting a broker that you can trust to get you the highest price for your property, while executing a transaction smoothly is vital. You will work very closely with this person throughout an emotional process, so it is important that your agent is level headed, knowlegdeable, and confident.
Step 2: Price your home
Your broker will be able to provide you with all information regarding recent comps in the neighborhood and in your building, current competing listings in the area, and market trends. It is important to understand that in a market where nearly everything sells, only the market itself will determine what your property will actually sell for: that means above or below the asking price. That said, you should always discuss with your broker how quickly you need/want to sell, therefore determining initial price point.
Step 3: Advertising the listing
All photographs, floor plan and facts about the listing need to be put together by your broker before launching the listing to the public. Once the content is gathered, the listing will be sent out to as many potential buyers as possible through ways of major media outlets, real estate sites, and the local and international brokerage community.
Step 4: Showings and open houses
Show. Show. Show. As much as possible. The more you can allow access to an immaculate apartment, the better chance you have of selling it quicker and at a higher price. If you are demanding a premium price, then it should look and feel like a premium property.
Step 5: Negotiating and accepting an offer
The negotiating techniques and communication skills of your broker will affect the selling price. Also, understanding a potential buyer's financial situation is just as important as their offer number. In the situation of a co-op sale, your broker will also be determine what a prospective buyers chances are in receiving board approval.
Step 6: Executing the contract of sale
Once an offer has been accepted, the attorneys will work diligently to iron out all details of the transaction. A deposit usually in the amount of 10% of the purchase price will be put down in the seller's attorney's escrow account.
Step 7: Condo or Co-op approval
This is where your agent will work hard with the buyer or buyer's agent to make sure they are approved by the building condo or co-op board. This can take anywhere between 2 weeks to 2 months depending on the board - generally co-ops take longer because of the extensive financial documents and references required, as well as the in-person interview that will take place.
Step 8: Closing
Once the buyer is approved by the board and cleared by the bank, the attorneys and managing agent of the building will coordinate a date and time for closing.
RENTER'S GUIDE
Renting an apartment in New York City is no easy task. The demand is high, the market is fast paced, and there is a lot of financial paperwork that landlords and management companies require in order to lock down a unit. The Internet is loaded with "bait and switch" ads, dishonest brokers and lots of false hope. Selecting an honest agent who knows the neighborhoods, is up front about fees, manages your expectations graciously, can make or break your moving experience in this crowded city. Understanding what you need to prepare and also what you should expect to spend up front is the first step in securing your next home.
Rental Requirements
Income: 40 - 45 x's the monthly rent (ie: a $3,000 apartment would require you to make an annual salary of $120,000 to $135,000
- "Guarantors" aka "co-signers" will need to make 80 - 85 x's the monthly rent in annual salary
Credit: 700 + credit score is ideal, anything less landlords and management companies will require additional security deposit
Proof of Income
- 2 most recent tax returns
- 3 most recent pay stubs
- Offer or employment letter
Assets
- 3 most recent bank statements