Walk me through buying a condo in NYC like I'm three
August 6, 2012 6:13 AM   Subscribe

Buying a condo in NYC (Brooklyn specifically) and really need some guidance on resources and how things work here.

As a follow up to this question - we have moved to Brooklyn and are now settled in an amazing brand new apartment in Williamsburg. We love the neighborhood and are considering buying a condo here in the next year.

My google and metafilter searching has not yielded exactly the info I'm looking for in terms of process for shopping for a condo here in NYC specifically - (just a lot of realtor ads) what are the steps we should take?

For context, I have been through the house shopping process in California, and these were the steps I took:

1. spoke to a mortgage broker to figure out my price range and get a pre-approval
2. Perused Redfin daily to find listings
3. looked at a bazillion houses with a realtor
4. Made an offer on a few houses and condos (lost most of them)
5. Worked with my realtor to negotiate prices and terms with the seller for an accepted offer
6. Entered escrow for the condo - provided an earnest deposit (I think it was 1% of purchase price?)
7. Received a thousand pages of condo history and bylaws for review
8. Did a home inspection
[Decided not to go through with the purchase because of issues with the home inspection and condo board - but I think the next steps would have been to receive the mortgage and do a closing where I paid the remainder of the down payment and took the keys]

My specific questions about NYC are:

- Where do most people start in terms of financing? mortgage broker? go directly to a bank?
- what is the relationship with the realtor and the buyer? do buyers in NYC pay a fee to the realtors directly? (In CA it would be the seller who paid the commission for both the buying and selling realtor)
- what is the typical downpayment for a condo in NYC? We'd like to put down 20%, but I'm curious what is acceptable.
- What is typically included in condo fees/common charges? (taxes? maintenance?)
- what is the role of the real estate lawyer? This seems standard here but I'm unfamiliar with it from CA.
- what fees are unique to NYC that I may not expect? (I've seen there is an extra tax if the sale price is over $1M for example)

Finally, are there any online resources you would recommend? (I'm using streeteasy for the Brooklyn MLS info)

Thank you - happy to answer any follow up questions.
posted by Sockowocky to Work & Money (13 answers total) 14 users marked this as a favorite
One more question:

- how long is the process from offer to move in? (CA could be as little as 30 days, I get the feeling it's longer here)
posted by Sockowocky at 6:23 AM on August 6, 2012

I can answer a couple of these questions:

1) Typical downpayment is dependent, in part, on the condo board's requirements. In other words, though your mortgage lender may be willing, for example, to lend you 90% of the purchase price, the condo board may require that you only borrow 75% (or have to put 25% down) etc. Some condos and co-ops require an all-cash payment. So, the best answer here is to check with your condo board's requirements. If those requirements require a larger downpayment than your lender's minimum, go with the larger downpayment.

2) The real estate lawyer is supposed to be your advocate in the whole process. Remember, your realtor may also be working for the seller, and has an incentive to push the deal through in order to get a commission. The lawyer, in theory, is supposed to have no stake in whether the transaction goes through. His role is to ensure that all the paperwork is done correctly and that your rights and interests are protected. Of course, you're paying him a fee either way, so he does have some financial stake in this transaction.
posted by dfriedman at 6:26 AM on August 6, 2012

I can answer some of these questions.

--Financing-you do the same thing as you'd do anywhere else. If you like working with a broker, do that. If you like working with a bank or credit union, do that. Ask among your property owning friends if they have any referrals or recommendations. I've used a broker with great success, but I had a friend in the title office business and she has about a million people on her LinkedIn.

--Relationship with realtor should be exactly the same. The seller pays the realtor fees.

--Downpayment. That's between you and the bank. It has nothing to do with the property negotiation. You will be in a stonger position if your financing is secure before you make any offers. Offers fall through in New York more than other places because of financing (probably because it's so freaking expensive and so many people are patching their financing together with spit and bailing wire.)

--You'll have an advantage of not having a contingency in the contract of having to sell your place first (since you're renting.) That's HUGE! Make the most of it.

--Condo/Co-Op. This can get tricky. The boards are an enormous part of the process. Approvals are not perfunctory and many places want you to have assets that match the purchase price of the condo. (More reason to buy in the burroughs and in newer, builder-owned buildings. )

Get referrals and recommendations for a realtor from your friends.
posted by Ruthless Bunny at 6:40 AM on August 6, 2012


Realtor.com is THE MLS. Also, their tools are excellent for narrowing down your choices to exactly what you want.
posted by Ruthless Bunny at 6:42 AM on August 6, 2012

posted by JPD at 6:47 AM on August 6, 2012

No, the downpayment is not dependent on the bank, for the reasons I enumerate above. The downpayment is dependent upon the board's requirements. Their requirements are very likely more stringent than the lender.
posted by dfriedman at 6:50 AM on August 6, 2012 [1 favorite]

-Condo fees do not include taxes, just maintenance. Many condo buildings in Brooklyn, especially newer buildings, currently are in tax abatement programs, with varying lengths and time remaining. The listings for these properties will advertise taxes of $33 a month for $800,000 apartments. Which is true, for now, but the abatements slowly disappear over their lives. Because the taxes are cheaper, the apartments end up being more expensive than they would be otherwise, and you'll need to factor the present-day value (and eventual increase in taxes) into your calculus.

You can find out what the taxes would be without the abatement by going here, typing in the address and apartment, going to the last quarterly statement, and on the last page there will be a row that says something like "yearly tax without abatement." Divide by 12 and that would be your monthly taxes.

-Streeteasy has excellent tools for sorting apartments, allows you to save searches and notifies you when new places come up that meet your criteria. If you pay $10 a month you get more features, including sale price history (goes back about 10 years).

-dfriedman is right that the condo board could set a minimum down payment of 20% or higher, while a bank might lend to you with just 10% down. But that's more typical of co-op boards, most condo boards are laxer and will be fine with 10%.
posted by benbenson at 7:01 AM on August 6, 2012 [1 favorite]

Depending on the realtor you work with, they may be able to suggest a mortgage broker (in my case, Douglas Elliman has a partnership with Wells Fargo which has a broker). I found working with a broker much easier than working with the bank directly. For perspective, communicating directly with the bank (on an earlier attempted purchase) took 4 months to give me a pre-approval. With a broker, 15 minutes.

As far as I know it is the seller who pays the realtor's fees, not the buyer. You have to pay fees requested by the bank and the condo's board.

20% should be an acceptable down payment. Some places go with as low as 10% but as others have said above, the condo board could have more stringent requirements. Boards are much pickier than the bank.

The real estate lawyer is your advocate and is able to answer any questions you may have/interact with the seller's and bank's lawyers/make sure the whole purchase process runs smoothly and on time.

I do not know of any unique fees for NY in general but have no idea about properties at the $1mil level.
posted by mlle valentine at 8:11 AM on August 6, 2012

Here's a good list of the costs.

The only thing you may not be used to is the "mansion tax." Probably won't be an issue in Williamsburg.

Seconding what everyone else said about condo board approval. It shouldn't be as hard as a Co-op, but there will usually be an application fee and they may have their own financing requirements.
posted by snickerdoodle at 10:14 AM on August 6, 2012

Thanks for the tips! That link to Corcoran is what concerned me - they say that there will be a "Broker Commission" at 6% for the buyer. That seems non-standard based on my non-NYC experience, is that correct?

(sadly, it seems pretty easy to invoke the "mansion tax" for a reasonably sized condo in this area)
posted by Sockowocky at 6:51 PM on August 6, 2012

That Corcoran site is wrong, or at least confusing. Seller pays the 6% broker fee out of the sale price.
posted by benbenson at 8:05 PM on August 6, 2012

Yes, the seller certainly pays the broker fee.
posted by mlle valentine at 6:43 AM on August 7, 2012

6% is the standard fee that the seller pays the realtor. It's typically split evenly between the buyer's and the seller's brokers.

In New York, the lawyers handle the contract, all the negotiations that go into the contract and the actual transaction. Once you and the seller have agreed on terms (typically price, down payment %, included furnishings and closing date), the real estate agents are pretty much done with the deal.
posted by NotPayingAttention at 1:30 PM on August 10, 2012

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