Buying in New York City
New York City is a city of extremes. Its inhabitants are notoriously strong-willed and tenacious. Its streets are often overcrowded and rarely empty. Its real estate is expensive and often more complex to purchase than in other places. If you’re a New Yorker, and even if you aren’t, you know how difficult it is to succeed here. You also understand the tenacity and perseverance required to complete a purchase here.
Buyers of property in New York City are faced with challenges that most buyers elsewhere will never encounter. Let’s focus on basics to get you started.
Know your budget
We recommend working with a lender to obtain a preapproval letter before beginning your search, especially if you’re purchasing a single family residential property. This will tell sellers you’re a serious buyer with a concrete budget and sufficient resources to close a deal. This step requires little effort up front but distinguishes your offer from other, similar offers that lack pre-approval.
Have your dollars at the ready
To be taken seriously as a residential buyer in the City, be prepared to pay a minimum of 10% as a contract deposit, and 20% for new construction. To close, be prepared to finance no more than 70-80% of your purchase with debt, which means you’ll require the rest in cash. With an average median home price in New York City of approximately $1 million, that comes to an astounding $200,000 or more in cash required to close. That figure does not include additional fees which can range from title closer tips to legal fees and “points” paid to the bank for your mortgage. Your agent can help you plan for these costs and avoid last minute surprises.
Condo vs. Co-op
Homes in NYC generally come in three forms: condo, co-op and single-family home, such as a single family townhome. Buying a unit in a condominium building gives you ownership of the entire unit and requires you to pay monthly maintenance fees to support the building. Buying a co-op means you purchase shares in a corporation, rather than the real estate itself. You also will receive a proprietary lease that grants you the exclusive right to occupy a particular unit as long as you continue to own shares in the co-op corporation and pay your share of overhead and expenses. Typically, co-ops are more affordable than condos. However, one drawback of co-ops is the somewhat extensive, often invasive and very subjective application and approval process, with no guarantees that you’ll be approved. Co-op buildings also tend to have many more rules than condos, which include restrictions on the right to sublease your unit. Condos, though more expensive, are typically located in newer buildings and approval is based on facts, such as your ability to close, and not on the subjective opinions of co-op board members. Keep in mind that there are other differences as well that make the experience of owning a co-op and condo quite different. So please do your research and make an informed decision. Your agent will help you understand these differences and what’s right for you.