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FIRST TIME BUYING IN NEW YORK? FIRST TIME RENTING IN BROOKLYN? WE CAN HELP.

New York is one of the toughest, most fast-paced cities in the world. If you can make it here, you can make it anywhere, right?

But we don’t think finding a home in the greatest city in the world should be a panic-attack-inducing ordeal. We’ve been doing this for years and we’re here to help you navigate this unique market, four-story walk-ups and all. We’ve gathered our collective experience and are always just a phone call or an email away.

WHAT SHOULD I PREPARE BEFORE BUYING?

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 DOWNPAYMENT?

You should plan to have a minimum of 10% of the purchase price available for a downpayment 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 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 Walk-through: Day 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.

CAN YOU TELL ME MORE ABOUT CO-OPS?

Cooperatives (i.e. co-ops) comprise over 80% of all apartments on the market throughout 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. Generally, 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 significantly less than those of condos too.

  • 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.
  • Screening Process
    Despite any urban legends you may have heard of overzealous boards, co-op screenings are designed to cultivate a compatible community. In a co-op, your neighbors have all been thoroughly screened by the Board of Directors, vetting their financial qualifications and character before their approval as fellow shareholders. They’ve agreed to abide by house rules and rental activity is controlled so that the building remains a primarily owner-occupied residence. As a prospective shareholder, you’ll submit a board package to the Board of Directors including a purchase application, financial details regarding your income and assets, and references and the Board will interview you in person. Although it’s rare for a Board to deny an applicant, they can do so as they see fit.

WHAT ABOUT CONDOS?

Condominiums (i.e. condos) are becoming 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 tend to be less than co-ops on a monthly basis but often do not include utilities. They include general building maintenance and supplies, payroll, management fees, and building repairs. There is no remaining underlying mortgage to be paid for the building. Real estate taxes are always paid separately by condo owners and are not tax deductible. Some new condos are tax-abated for a set duration (typically 5-25 years), which means taxes will be phased in towards the end of the abatement.
  • Screening Process
    Some condo boards screen prospective owners/renters, but the process is typically not as involved as a co-op purchase or rental. Some condos do not have a formal screening process; in those cases, you can close as soon as you secure a mortgage.

AND COND-OPS?

A cond-op is a residential cooperative in which 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; the co-op doesn’t receive any of the 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 include heat, hot water, grounds maintenance, staff salaries, real estate taxes, insurance, and any remaining underlying mortgage for the building. 
  • Screening Process
    As with a co-op, your neighbors have all been thoroughly screened by the Board of Directors in a cond-op. 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 so that the building remains a primarily owner-occupied residence. As a prospective shareholder, you’ll submit a board package to the Board of Directors including a purchase application, financial details regarding your income and assets, and references and the Board will interview you in person. Although it’s rare for a Board to deny an applicant, they can do so as they see fit.

TOWNHOUSES

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

WHY BUY?

According to the New York Times 2014 analysis, homeowners who reside in their home for up to six years can save an average of $10,460.

Married couples can earn as much as $500,000 tax-free when selling property at a gain and single homeowners can earn as much as $250,000 tax-free when selling at a gain.

Historically, Brownstone Brooklyn and New York City housing prices increased by 250% from 1974 to 2006. There have been three periods of decline in our market—from 1975-1980, 1989-1996 and 2008-2010. Fortunately, the booms that our housing market has experienced have been substantial, and, although the busts were challenging, they were relatively short-lived.