Luxury Apartments LIC

OUR PARTNERS

BUYER’S GUIDE

Congratulations! The decision to own a property is probably one of the most important ones you will ever make!

Luxury Apartments LIC is a Long Island City-based boutique company helping customers with their real estate needs.

Living in NYC can be stressful but buying a home shouldn't be. Our agents can help you every step of the way. We have a wide range of partners we work with to further assist our clients. This guide will provide you with valuable information and will navigate you through the process of buying a property. Get the complete pdf version of the guide here.

STEP-BY-STEP GUIDE

Step 1: Financing and Budget

We suggest that buyers get pre-qualified or pre-approved prior to looking at any property.

Pre-qualification is often seen as the first step in the mortgage process, followed by pre-approval. With pre-qualification, you’ll supply an overview of your financial history to the lender, including income, assets, debts, and credit score. The lender will review this information to give you an estimate of what amount you would qualify for. Mortgage pre-qualification doesn’t always require documentation of your financial history; it can often be self-reported. Mortgage pre-approval is very similar, but it usually requires documentation and verification of your income, assets, and debts. A credit check will probably be required as well and that will result in a hard inquiry on your credit report.

Budget: Location, size, amenities, building type, school locations and nearness to public transportation are crucial in determining what a property will cost.

Step 2: REBNY Financial Statement

This form, along with the Pre-Approval letter, is needed when an offer for the purchase of an apartment is submitted. We would like to get you completely ready to put an offer as soon as you identify your dream home. It is best to have the REBNY Financial Statement Form filled out prior to looking at any properties.

Step 3: Attorney

Please interview and find a Real Estate Attorney that you like. We recommend that you choose an attorney who specializes in the area/neighborhood of your desired property. You may need an attorney rather quickly after submitting an offer for an apartment as things may move fast.

Step 4: Location

Choosing the right neighborhood/area is very important as you most likely will spend a considerable amount of time living there. Many people choose a home based on how close it is to their job, school, friends, and family.

Step 5: Type of Property

The next step is to determine what type of property you would like to purchase. Your budget will probably help you determine what type of building would be the best fit. For a condominium, co-op or a cond-op description and details/differences please check below*

Step 6: Timing

What is your time frame?

Condominium transactions usually take less time to close and co-op transactions normally take a little longer.

If you are renting, it is good to talk to your landlord a little bit in advance and give them fair notice.

Step 7: Preview

Prepare a list of apartments/properties with your agent. Visit as many as you can so that you make an educated decision.

Step 8: Offer

Your Luxury Apartments LIC agent will help you formulate and submit the Formal Purchase Offer for the property you like.

Step 9: Negotiate

Negotiate the terms. Your Luxury Apartments LIC agent will help you with this step and will negotiate the terms with the Seller and/or the Seller’s agent(s).

Step 10: Due Diligence

Your Luxury Apartments LIC agent will request the building's Offering Plan, the 2 most recent years financials and board package requirements for you and your attorney and/or CPA to review. Seller’s and buyer’s attorneys will then further negotiate and finalize the contract.

Step 11: Sign the Contract

Buyer and seller sign the contract and buyer submits a deposit check (typically 10% of the purchase price).

Step 12: Loan and Insurance

Buyer now needs to apply for mortgage, title insurance, and appraisal.

Step 13: Board Package

Prepare and submit the board package. For Co-ops: schedule a board interview.

Step 14: Schedule Closing Date

Step 15: Final Walk-Through

Your next step is a final walk-through of the property, arranged by your real estate agent. The goal is to ensure the property’s condition hasn’t changed since your last visit, that any agreed-upon repairs have been made and that the terms of your contract are met. A walk-through may be informal or more formal.

Step 16: Close and CELEBRATE!

CONDO vs. CO-OP vs. COND-OP

The residential market in New York City primarily consists of co-ops (70%) and condos (30%), and very rarely cond-ops. Each property type has its distinct advantages and disadvantages. There are some key differences between owning a condo and owning a co-op.

Condominium Purchase: Condo owners buy the apartment and also own a percentage of the common building areas, i.e. entrance areas, hallways, recreational areas, etc. The condominium is considered real property and therefore the owners have the right to use the property any way they see fit. Owners pay property taxes which can either be escrowed into a part of a monthly mortgage payment or are paid annually as an expense. Monthly maintenance fees are generally paid to the building's condominium association.

Co-op Purchase: In contrast to condos, co-ops are not considered real property. When you buy into a co-op, you become a shareholder in a corporation that owns the property. As a shareholder, you are entitled to exclusive use of a housing unit in the property. Buying a co-op is tricky, but Luxury Apartments LIC team of qualified agents can help. When purchasing a co-operative apartment, the purchaser is really buying shares in a cooperation. The shares correspond to the unit in which you live. Co-op fees include a monthly mortgage payment and maintenance fees for the building. Maintenance fees are sometimes high but both mortgage payments and maintenance fees generally result in higher tax deductibles.

Cond-op Purchase: While condos and co-ops make up the vast majority of New York City’s multi-family market, it’s possible you encounter something a little different during your home search: a cond-op. A cond-op is a co-op that was formed inside of a condo building. At the bottom of the building is often a single condo unit that houses commercial and retail space, which is run under condo rules. Above, all the residential space is one giant condo unit in which a co-op is formed so that the apartments can be divided via shares among owners. The residents operate primarily under co-op rules, but the co-op must abide by the condo rules and hence both rules are in effect. For the most part, cond-ops function more like co-ops when it comes to the application and approval process. Cond-op owners own shares in the building — just like co-op owners — and also pay maintenance fees that include taxes. According to the NYC Buildings Department, as of early 2014, cond-ops comprised less than 5 percent of the city’s common-interest real estate entities.

ADVANTAGES & DISADVANTAGES OF EACH PROPERTY TYPE

ADVANTAGES:

CO-OPS	CONDOS	CONDOPS
1. Lower prices than condos	1. Flexible financing, sometimes up to 90%	1. Less strict application process than co-ops
2. Lower closings costs than in condos	2. Most often no board interview	2. Easier to sublet than co-op
3. Some part of monthly maintenance is tax deductible	3. Small chance of rejection	3. Lower prices than condos
4. Integrity of the buildings is maintained. Everyone needs to go through board interview and approval	4. Easier re-sale and subletting	4. Similarly to co-ops, some part to the monthly maintenance is tax deductible
5. High level of comfort and security	5. Investors are permitted	5. Lower closings costs than in condos
	6. Absolute ownership

DISADVANTAGES:

CO-OPS	CONDOS	CONDOPS
1. Strict review of financing and board interview	1. Much more expensive than condos	1. Higher prices than in co-ops but lower than condos
2. Minimum amount of down payment which is set by the board, usually 20-25 percent of the purchase price	2. Higher closing cost than in co-ops	2. Higher interest rate than in condos
3. Difficult to sublet	3. Supposedly, since it is easier to buy a condo, this makes the buildings less exclusive	3. Normally higher maintenance fee
4. When selling, board approves the new buyer

CLOSING COSTS ESTIMATES

CONDOS:

FOR THE PURCHASER	ESTIMATED COST	MY APPRX. COST
Purchaser’s Attorney	Varies. $1,500 - $2,500+	$
Building Application	$500+	$
Move-in Deposit	$500 - $1,000+ (usually refundable if no damage)	$
Title Insurance, Title Search & Recording Fees	0.6% of purchase price and up	$
Title Closer Customary Fee	$200	$
Mansion Tax	1% of total purchase price when price is $1M or more	$
Common Charges, Property Taxes & Insurance Premium	Adjustments pro-rated as of closing	$
Points - Origination Costs	0 to 3% of loan value	$
Application, Credit Check, etc.	$750+	$
Appraisal	$425+	$
Bank Attorney	$650 - $1,000+	$
Mortgage Recording Tax	1.8% for all mortgages less than $500,000 & 1.925% for all mortgages of $500,000 or more, minus $30 for townhouses	$
Real Estate Tax Escrow	0 to 6 months, depending on lender requirements	$

FOR NEW DEVELOPMENT:

NYC Real Property Transfer Tax	1 – 1.425% of purchase price	$
NYS Transfer Tax (Transfer taxes are calculated and added to purchase price (for tax purposes) and then recalculated based on the bulked up price.)	0.4% of purchase price	$
Sponsor Attorney	$1,500+	$
Working Capital Fund Contribution	One-time fee equal to 1 or 2 months on common charges, depending on condo	$

CO-OPS:

FOR THE PURCHASER	ESTIMATED COST	MY APPRX. COST
Purchaser’s Attorney	Varies. $1,500 - $2500+	$
Managing Agent Fee	$500+	$
Move-in Deposit	$500 - $1,000+ (usually refundable if no damage)	$
Mansion Tax	1% of purchase price when price is $1M or more	$
Lien Search	$350	$
Maintenance Adjustment	Pro-rated for month of closing	$
Points - Origination Costs	0 to 3% of loan value	$
Application, Credit Check, etc.	$500+	$
Appraisal	$425+	$
Bank Attorney	$650 - $1,000+	$
UCC-1 Filing	$75+	$

TYPICAL QUESTIONS ANSWERED

What do I need to facilitate the buying process so I do not miss out on a great deal?

The New York City real estate market is extremely competitive. The most desirable and affordable properties can go into contract in a matter of days. The most important factor in getting a deal is to be ready to submit an offer right away (on the spot). For that you need:

-Letter of pre-approval

-REBNY Financial Statement

-Short introduction letter

Luxury Apartments LIC can assist you with the specific requirements.

What does being pre-qualified mean?

Pre-qualified, also called pre-approved, is when a perspective buyer tells a lender their income level, debt and credit information, so the lender can provide an estimated loan amount. Being a pre-qualified buyer will reassure a seller that any offers made are bona fide and that a buyer can actually make the purchase. In fact, most offers submitted by Luxury Apartments LIC are often accompanied by a buyer's pre-qualification letter.

Ask your Luxury Apartments LIC agent to provide you with (a trusted partner's) information about financing, estimated monthly mortgage payments, and any other necessary qualifications. Pre-approval letters make for strong offers because the lender has already pulled a credit report, checked debt/to/income ratio and done an analysis of your finances. Also, it is preferable to be pre-approved so that there will be no surprises when the credit report is received.

Why select a real estate attorney?

The real estate market in NYC is a very dynamic and quite unique. Having a real estate attorney who specializes in the NYC market is very important. First, they know the intricacies of the laws and regulations. Second, they can respond quickly to any issues that arise and can therefore expedite the closing. Ask your Luxury Apartments LIC agent to assist you in selecting a qualified real estate attorney.

What is a closing?

A closing is where a buyer gives the seller money in exchange for ownership and title to a particular property. This bargained for exchange, or consideration, results in a transfer of property ownership. The seller also needs to sign different documents including a deed. The place of closing is normally at the bank attorney's office. The parties present will be: seller, bank attorney, brokers, seller's attorney, buyer's attorney and title closer.

What are the steps in the application process?

For mortgage applications and for co-op or condo boards, buyers need to gather relevant financial documentation. Required documentation includes 2 months of most recent bank statements, brokerage statements and any other assets. In addition to current income verification, boards and banks require a minimum of 2 years of federal income tax returns. Self-employed buyers need to provide at least 3 years of federal tax returns and a letter from an accountant verifying income.

When do I need to move?

Find a target date for moving. If looking to finance, expect to take about 3 months from purchase to close. Buyers, begin your search 4-6 months before prior to an estimate moving date.

Where do I want to live?

New York City is a city of diverse neighborhoods, all with their own unique appeal. Before beginning your search, decide what is important. For example, proximity to public transportation or proximity to your job. Do you prefer a quiet residential neighborhood or a bustling hub of activity and nightlife? Try to be open to different areas as sometimes neighborhoods other than your first choice are more affordable and offer many of the same features. Visit our detailed neighborhood guide for information on all our neighborhoods.

What is the best way to win over sellers?

If you really want to buy a particular property that has generated a lot of interest, sell the seller on the fact that you are a qualified buyer. It doesn't matter whether you plan to buy a studio or a building; chances are that there is a limited number of properties available in your price range. In a competitive market such as NYC, attractive properties can be in contract before they even appear in the classified ads.

Brokers tend to notify serious buyers first. Make sure that you are ready to buy; have all your paperwork in order including financial documentation and pre-qualification for a mortgage. Communicate your needs, budget, timetable, and neighborhood preferences.

Make yourself available to view properties. Workdays are preferable as you avoid weekend shoppers and congested open houses. Also, keep in mind that a lot of the best buildings tend to show properties between 10AM to 3PM, M-F.

How do I make the deal happen?

After finding the property you want, immediately make a verbal offer. Consult your Luxury apartments LIC agent for the best ways to extend an offer to a seller. There are a lot of different reasons, other than money, that influence a seller in choosing the right buyer. If the verbal offer is accepted, have your broker get confirmation of the offer and acceptance in writing. Once the written offer is accepted and signed, your Luxury apartments LIC agent prepares a transaction summary. This is sent to the seller's and to the buyer's attorneys for review. Using the signed offer and acceptance, the seller's attorney then prepares a contract of sale. After the buyer's attorney reviews the contract, negotiates the terms and evaluates the property's financial statements, the buyer then signs the contract and presents the down-payment check. Generally, down-payments range from 10% - 20% of the contract of the sale. This money is often held in the selling attorney's escrow account to be sent to the seller's attorney. The seller then executes the contract.

Note*: Verbal offers are not legally binding. In fact, in the New York City area an offer is legally binding when both the buyer and the seller sign a contract of sale. Sometimes sellers are tempted by higher offers. To avoid problems, be prepared and have your attorney move quickly through reviewing financials and completing the contract.

How much money should I put down?

The amount needed to purchase property varies with the type, size and location of a property. Luxury apartments LIC recommends being prepared to pay about 10-20% of total price. Some properties may accept a smaller percentage for qualification. You will also need to set aside additional monies for closing costs.