- Your ResidentialNYC.com broker is uniquely equipped to translate your lifestyle desires to the various New York City neighborhoods and locate the best selection of properties to suit your needs.
- The first step in this process will be to complete a comprehensive search of your preferred marketplace and the REBNY Listing System (RLS) to ensure availability.
- Your broker will then show you the properties as well as educate you as to their unique qualities including neighborhood amenities, and ownership financial requirements.
- Once you have selected a property, your broker will negotiate the most favorable price, terms and conditions for your purchase and secure an acceptable offer.
- Your broker can also assist you in selecting appropriate legal representation and even locate a financing source, if necessary.
- Your broker will guide you through the application process and assist you in assembling the board package, if required.
- As a last step, he/she will coordinate all of the necessary elements and people to finalize your closing and purchase.
Condominium boards often require a down payment of at least 10%. The condominium owner pays monthly "common charges" which are his or her share of the general upkeep of the building...i.e. employee salaries, fuel, insurance, management fees, etc.
The owner pays the real estate taxes allocated to the apartment. No board interview is required of a purchaser and there are often no limitations on the amount of money you can borrow to finance the apartment. You can sell your apartment to whomever you please, at any time, with only the condominium board's Right of First Refusal.
The closing costs for purchasing a condominium are higher than for a co-operative.
When you purchase a co-op, you are actually purchasing shares in the apartment corporation. The corporation usually has a mortgage on the entire building. However each purchaser may have a separate loan for the purchase of his or her apartment.
The apartment corporation establishes the amount of financing allowable on apartments purchased in the building. The range is literally from all cash (i.e. no financing allowed), to 90% financing.
In a co-op, the purchaser pays monthly maintenance charges based on his or her share of the underlying mortgage and real estate taxes of entire building as well as expenses for general upkeep, salaries, fuel, etc. Monthly maintenance charges for co-ops are generally higher than for condominiums. The portion of the maintenance charge comprised of mortgage interest is tax deductible.
A major difference between co-op and condominium ownership is that in a co-op your ownership is subject to approval by a Board of Directors. This Board is elected from among the shareholders. The Board's job is to conduct the business of the Apartment Corporation and oversee the management of the building, usually with the assistance of a Managing Agent. The Board may impose limits on the amount of money you need to finance your apartment, as well as restrictions on sub-letting, etc. You cannot sell a co-op without the board's approval of the prospective buyer.
For a condominium closing, the purchaser must first obtain a loan commitment unless they are paying cash. Then the seller must receive a Waiver of the Right of First Refusal from the Condominium Association's board. For a co-op closing, the purchaser must obtain a loan commitment, and finally, approval of the sale by the co-op's Board of Directors after a personal interview. Your Residential NYC broker will be able to give you an estimate of closing time based on his/her experience dealing with the managing agent and board of the building you have chosen.
For a condominium, the lawyer should review the offering plan, all the amendments, the by-laws, the house rules, the financial statements and the title report. For a co-op, the lawyer should review the offering plan and all the amendments, the by-laws and the house rules, the financial statements and the proprietary lease. In addition, the attorney should review the corporate minutes of the cooperative at the managing agent's office. Reviewing the minutes will provide insight into any current or future problems in the building and reveal if there are major expenses to be incurred by the co-op corporation and its shareholders.
After the contract is finalized, the lawyer should meet with you to explain your rights and obligations under the terms of the contract. You will sign three or four copies of the contract and will provide a personal check payable to the order of the seller's attorney (usually equal to 10% of the purchased price), representing the down payment. The contracts and the down payment check are then delivered to the seller's attorney.
The sellers' attorney will hold your down payment in his trust or escrow account until closing. Thereafter, the seller counter-signs the contract, the seller's attorney signs the contract acknowledging receipt of the down payment and two fully executed copies are returned to your attorney. Your attorney will deliver one original contract to you and a copy to your lender or mortgage broker. After receiving the signed contract promptly submit your final mortgage application if you have not already done so.
A lender's decision to make a loan is usually based upon the following factors: your credit rating, income, assets and liabilities, amount of the loan and the appraised value of the apartment. To verify this information, the lender will require you to complete a loan application setting forth your assets and liabilities, will confirm your employment and income, will request a credit report form a credit reporting agency and will have the apartment appraised.
When obtaining a loan on a condo or co-op apartment, the mortgage broker or lender will need to make sure the building is in good financial condition. Therefore, when applying for a loan, it is a good idea to obtain the building's financial statements for the last two years.
It normally takes three to six weeks to obtain a written loan commitment. A "commitment" is the lender's written agreement to lend you money to buy the apartment. Once the loan commitment has been issued, your attorney should review it. If everything is in order, sign the commitment and return it to the lender or mortgage broker as directed.
Each co-op board establishes the financial requirements for prospective purchasers in their building. In addition, co-op boards set financial limitations on the amount of money a prospective purchaser may borrow in order to conclude the transaction. (For example, many co-ops allow a purchaser to finance only 50%-75% of the purchase price.)
Then you will sign and receive all documents to convey the co-op apartment to you, including stock certificates, the proprietary lease and consent. Checks, representing the balance of the purchase price and adjustments, are exchanged for the keys.
At the closing, you will first sign all documents necessary to put a first mortgage on the apartment. These documents include a Mortgage and a Promissory Note. Then you will sign and receive all documents to convey the condo apartment to you, including a deed, title report and unit power of attorney. Checks representing the balance of the purchase price and adjustments are exchanged for the keys and you pay all appropriate taxes and title charges.
- Luxury doorman buildings
- Usually refers to new construction or apartment buildings that were built within the past twenty or so years. These buildings tend to be condominiums, typically stand twenty to forty or more stories tall and provide concierge services. Many have health clubs and/or swimming pools.
- Pre-war buildings
- By definition, a building built before World War II. These buildings are usually ten to twenty stories tall and are sought after for their larger rooms, fireplaces, hardwood floors and higher ceilings. They may or may not provide a doorman.
- Post-war buildings
- These buildings were built between the late 1940s and the late 1970s. They are generally hi-rise and most have doormen.
- Elevator buildings
- This term usually describes a 6 to 20 stories tall non-doorman building which may be pre-war or post-war. Elevator buildings usually have an intercom or video security system.
- Walk-up buildings
- This is the least expensive type of housing in New York City and the quality can vary widely. Usually these are 4 to 5 story buildings with no doorman and no elevator. They were originally constructed as multi-family dwellings and do not exude the charm or elegance of brownstones or townhomes.
- Brownstone or Townhouse
- 4-6 story buildings built in the 1800s to early 1900s. These can be single family houses or may have been converted over the years into multiple apartments. They are prized for their charm and elegance. In almost all cases these buildings do not have a doorman.
- Loft apartments
- Former commercial or industrial buildings that have been converted into apartments. These buildings almost never provide a doorman and usually consist of vast spaces with high ceilings.
- Studio
- One or two rooms with combined living and sleeping areas.
- Alcove studio
- A one or two room apartment with a separate alcove which can be used as a sleeping or dining area. Alcoves usually adjoin the living room space of the apartment, are generally less than 100 square feet and can sometimes be walled off to create an additional bedroom.
- Junior
- An apartment with an alcove off of the living room has been converted into a bedroom or dining room. For example, a Junior 4 would be a three room apartment, (living room, kitchen and bedroom), which has four rooms by using the alcove space to create an additional room.
- Convertible
- This is typically an apartment with an alcove adjacent to the living room that can be used to create another room by using this "flexible" space to "convert" the apartment from, for example, a one bedroom to a two bedroom.
- Classic
- The word "classic" is usually followed by a number indicating the number of rooms in an apartment. It is usually associated with pre-war apartments that meet criteria for numbers of rooms and design. However, a "classic" can exist in a post-war building assuming it follows the same guidelines. As an example, a "classic six " is comprised of a living room, dining room, kitchen, two bedrooms and a maid's room. A "classic seven" is comprised of a living room, dining room, kitchen, three bedrooms and a maid's room.
- Loft area
- This is an additional space created in apartments with very high ceilings. The loft area is constructed above the living area, accessed via a staircase or ladder and used for extra storage, sleeping or living space (e.g. an office.)
- Duplex
- In Manhattan this refers to an apartment with two floors or on two levels and not to two apartment units.
- All of the interest paid toward a home mortgage is fully tax deductible. For example: If the total mortgage payment is $3,000 per month (where in the early stages of your mortgage most of the payment is interest), let's assume the interest is $36,000 per year ($3,000 x 12). If you are in the 28% tax bracket, a $36,000 deduction means a federal tax saving of over $10,000. Meanwhile, the property continues to appreciate in value as your home grows in value.
- All the money you pay in real estate tax is fully deductible.
- When your apartment is your principal residence and you decide to sell, you may exclude up to $250,000 of your total gain ($500,000 if you are married and file a joint return). This exclusion is allowed each time a taxpayer sells or exchanges a principal residence, although the exclusion generally may not be claimed more frequently than once every two years.
As you can see, the deduction from taxable income, and the deferral of capital gains when you sell are important considerations when you weigh the benefits of owning against renting in Manhattan.
|
Closing Cost Estimates* Condominium Apartments & Townhouses | |
|---|---|
| FOR THE SELLER | |
| Broker Commission | Set by broker |
| Seller's Attorney | $1,250 and up |
| Managing Agent Processing Fee | $450.00 - $750.00 |
| Move-out Deposit | $500.00 - $1,000 |
| New York City Transfer Tax | 1% of price for purchase of $500,000.00 or less |
| 1.425% of price for purchase over $500,000.00 (Paid by Seller, except sale by Sponsor) | |
| New York State Transfer Tax | 0.4% of price (paid by Seller, except sale by Sponsor) |
| Miscellaneous Title & Recording Fees | $100.00 |
| Mortgage Satisfaction Fee | $150.00 - $300.00 |
| FOR THE PURCHASER | |
| Purchaser's Attorney | $1,250 and up |
| Bank Fees: | |
| Points | 0 to 3% of loan amount |
| Application, credit check, etc. | $500.00 |
| Bank Attorney | $450.00 - $750.00.00 |
| Short Term Interest | Up to one month |
| Tax Escrows | 2 to 6 months |
| Recording Fees | $150.00 |
| Mortgage Tax | 2% ** of amount of mortgage on loans under $500,000.00 |
| 2.125%** of amount of mortgage loans of $500,000.00 and over | |
| Title Insurance Rates vary by NY law as insurance increases | |
| Violation Search | $250.00 |
| Managing Agent Fee | $250.00 |
| Common Charge Adjustment | Up to one month |
| Real Estate Tax Adjustment | 1 to 5 months |
| Mansion Tax | 1% of price where price is $1,000,000.00 or more |
| Title Closer Fee | $100.00 - $150.00 |
|
Closing Cost Estimates* Cooperative Apartments | |
| FOR THE SELLER | |
| Broker Commission | Set by broker |
| Seller's Attorney | $1,250 and up |
| Co-op Attorney/Managing Agent | $400.00 - $800.00 |
| Flip Tax | Varies by building, if any |
| Stock Transfer Tax | $0.05 per share |
| Move-out Deposit | $500.00 - $1,000.00 |
| New York City Transfer Tax | 1% of price for purchase of $500,000.00 or less |
| 1.425% of price for purchase over $500,000.00 (Paid by Seller, except sale by Sponsor) | |
| Transfer Tax Filing Fee | $25.00 recording fee |
| New York State Transfer Tax | 0.4% of price (paid by Seller, except sale by Sponsor) |
| Payoff Bank Attorney | $300.00 |
| UCC-3 Filing Fee | $25.00 |
| FOR THE PURCHASER | |
| Purchaser's Attorney | $1,250 and up |
| Bank Fees: | |
| Points | 0 to 3% of loan amount |
| Application, credit check, etc. | Approximately $500.00 |
| Bank Attorney | Approximately $450.00 - $800.00 |
| UCC-I Filing | $75.00 |
| Short Term Interest | Up to one month |
| Move-in Deposit | $500.00 - $1,000.00 |
| Recognition Agreement Fee | $250.00 |
| Lien Search | $250.00 |
| Maintenance Adjustment | Up to one Month |
| Mansion Tax | 1% of price where price is $1,000,000.00 or more |
*These are only estimates. Actual costs may vary.
