What do I need to prepare before buying a home in Brooklyn?

The best way to ensure you’re ready to buy is to secure a formal pre-approval letter from a reputable mortgage banker. Based on your recent tax returns, income and credit, they will provide a letter stating the amount a bank would be willing to loan you towards the purchase of a home. Having this ready from the get-go will avoid getting tangled up in paperwork when you need to move quickly on a new home.

How much do I need for a down payment on a Brooklyn home?

You should plan to have a minimum of 10% of the purchase price available for a down payment on a condo, and 20% or more for most co-ops and townhouses. Federal Housing Administration (FHA) loans allow as little as 3.5% down, and are available for some new construction condos.

How can I compete when there are multiple bids?

The offered amount is a huge factor, but terms and conditions can hold even more weight. The bigger your down payment, the smaller your list of contingencies and the more flexible you can be to meet a seller’s needs, all serve to strengthen your offer. If you’re not comfortable waiving a mortgage contingency, you might consider waiving an appraisal contingency under the guidance of your lender and attorney.

Appealing to a seller’s emotions and attachment to their home with a personal letter can also be an important piece of the puzzle. Offering an odd dollar amount is another way to stand out from the crowd. Be as up front as possible and show that you’re motivated and prepared to close the deal.

What can I expect as a home purchase timeline?

From offer to closing typically takes around 60-120 days. That usually breaks down as follows:

• Prepare Offer: 1 day
• Negotiate Offer & Acceptance: 2-5 days
• Due Diligence/Contract-Signing & Escrow Deposit: 7-10 business days
• Loan Application/Appraisal/Loan Approval & Commitment Letter: 2-4 weeks
• Co-op Board Package & Interview/Condo Application: 4-6 weeks
• Bank & Attorney Closing Preparations: 1-2 weeks
• Final Walkthrough: Within 24-48 hours of closing
• Transaction Closing: 2-3 hours

What can I expect my closing costs to be?

See our financing guide for a breakdown of closing costs for buyers.

What are co-ops?

Cooperatives (co-ops) comprise over 80% of all apartments on the market in Brownstone Brooklyn and Manhattan. When you purchase a co-op, you’re technically buying shares of the corporation that owns the building. Upon closing, you’ll receive a stock certificate and proprietary lease. Typically, the bigger your apartment, the more shares you own.

Collective decision-making within a co-op building tends to foster a strong sense of community among fellow shareholders and neighbors. One advantage to co-ops is that foreclosures are rare, in part due to the screening process. The building itself is first in line whenever it comes to recovering funds in the event of a shareholder’s default. Closing costs for co-ops are generally lower than those for condos.

• Co-Op Maintenance
  Don’t let maintenance fees dissuade you from purchasing a co-op—they’re tax deductible, along with a portion of the building’s real estate taxes. Maintenance fees include heat, hot water, grounds maintenance, staff salaries, real estate taxes, insurance and any remaining underlying mortgage for the building.
  
• Co-Op Screening Process
  Despite any urban legends about overzealous boards, co-op screenings are designed to cultivate a compatible community. In a co-op, your neighbors have all been thoroughly vetted by the Board of Directors, who review their financial qualifications and character before approving them as fellow shareholders. Shareholders agree to abide by house rules, and rental activity is typically restricted to ensure the building remains primarily owner-occupied.

As a prospective shareholder, you’ll need to submit a board package to the Board, which includes a purchase application, financial details about your income and assets, and references. The Board will then conduct an interview. While it’s rare for a Board to deny an applicant, they do have the discretion to do so.

What is a condo?

Condominiums (condos) have become increasingly popular as new residential buildings are being built throughout Brownstone Brooklyn and New York City. Buying a condo is similar to buying a house in that each unit comes with its own deed and tax lot. Condos tend to be priced a bit higher than comparable co-ops since you pay mortgage debt up front. In most cases, you can finance a larger portion of the purchase price than for co-ops—typically up to 90%. A condo purchase tends to be ideal for someone in need of flexibility, such as an investor.

• Common Charges/Real Estate Taxes
  Condo common charges are generally lower than co-op maintenance fees but often do not include utilities. They cover building maintenance, supplies, payroll, management fees and building repairs. There is no underlying mortgage for the building.Condo owners pay real estate taxes separately, and these taxes are not tax deductible. Some new condos may have a tax-abatement for a set period (typically 5-25 years), meaning taxes will be phased in towards the end of the abatement.
• Screening Process
  Some condo boards do screen prospective owners/renters, but the process is usually less involved than with co-ops. In some cases, condos may not have a formal screening process, allowing you to close as soon as you secure a mortgage.

What are cond-ops?

A cond-op is a residential cooperative where the ground floor (typically a commercial space) has been converted into a separate condominium. The condominium is either owned by the original sponsor of the building or an outside investor, and the co-op doesn’t receive any income generated by the condominium.

• Maintenance
  Cond-op maintenance fees are tax deductible, along with a portion of the building’s real estate taxes. Maintenance fees cover heat, hot water, grounds maintenance, staff salaries, real estate taxes, insurance and any remaining underlying mortgage for the building.
• Screening Process
  As with co-ops, prospective neighbors in a cond-op have all been thoroughly screened by the Board of Directors. Their financial qualifications and character were vetted before they were approved as fellow shareholders, and they’ve agreed to abide by house rules. Rental activity is controlled to maintain a primarily owner-occupied building.

As a prospective shareholder, you will submit a board package including a purchase application, financial details about your income and assets, and references. The Board will then interview you. While it’s uncommon for a Board to deny an applicant, they do have the discretion to do so.

Buying a Brooklyn Townhouse

When you purchase a townhouse, you own real property, complete with a title and deed. You can choose to reside in or rent out your single-family or multi-family dwelling at your discretion. The sale of your townhouse can be transferred to any party you choose. As a townhouse owner, you are responsible for paying all real estate taxes and handling any maintenance or property repairs.

Why buy a house in Brooklyn?

According to a 2014 New York Times analysis, homeowners who live in their home for up to six years can save an average of $10,460. Adjusted for inflation, that amount would be approximately $13,800 in 2024. This reflects a general inflation rate of about 3% annually in New York over the past decade, which has impacted both homeownership costs and potential savings. The estimated savings are primarily due to the benefits of equity accumulation, reduced rent payments and other financial advantages of owning a home.

Married couples can earn up to $500,000 tax-free when selling property at a gain, while single homeowners can earn up to $250,000 tax-free.

What is the Brooklyn real estate market like overall?

Historically, housing prices in Brownstone Brooklyn and New York City have seen significant growth. From 2000 to 2020, home prices increased by approximately 200%, with some areas experiencing even sharper rises.

While there have been periods of market decline—such as in the 1970s, the late 1980s, the mid-1990s and during the 2008 financial crisis—the market typically rebounds quickly. The COVID-19 pandemic also caused a temporary disruption, with the market seeing a sharp decline in early 2020 as buyers and renters hesitated due to uncertainty and health concerns.

However, by mid-2020, the market began to rebound, driven by low interest rates and a surge in demand for more space, particularly in neighborhoods like Brownstone Brooklyn. While the market cooled somewhat in 2022-2023 due to rising interest rates, the housing market in New York City showed remarkable resilience. The downturns, while challenging, were relatively short-lived, and the market has continued to experience significant growth.

To learn more about the market and see if now is a good time to buy, contact us today.