Buyer's Guide to Success

Visualize your future home and I will help you find it.
 

ASSEMBLING YOUR TEAM 
 

Real Estate Broker 

· Provides a market/neighborhood analysis and a comparison of on-market, in contract and sold properties. 

· Negotiate the purchase and terms of the deal. 

· Prepare a strong purchase application to help the board approval process run smoothly. 

· Knowledgeable on due diligence and litigation processes. 

· Offer guidance on co-op board interview (if needed). 

· Contact walk-thru of the apartment prior to closing. 

Mortgage Bankers 

· Assess borrowing capacity. 

· Evaluate financial strength of collateral for co-op, condo or townhouse. 

· Develop financing options based on buyer's objectives. 

· Provide Pre-Approval for targeted transactions(s). 

· Coordinate legal/financial diligence and contract terms with Realtor and Attorney on strategy. 

Real Estate Attorney 

· Perform thorough due diligence review of all documents related to the apartment and condominium or co-op. 

· Documents include offering plan, amendments, bylaws, rules and regulations, board minutes, financial statements of the co-op or condominium for the last two years, the propriety lease (for co-ops), assessment history, construction and repair, underlying mortgage and any lawsuits. 

· After the real estate broker comes to the terms of the deal, the seller's attorney will prepare the contract and send it to buyer/buyer's attorney for review. 

· Attorney reviews terms and conditions in the contract with purchaser. Most attorneys will negotiate with the seller's attorney to include an additional rider or language to protect buyer's interest further. 

· Once the contract is agreeable on both sides, the buyer will sign the contract first and send it back to the seller's attorney along with 10% down payment. 

· Order a title report (condo) or judgment and lien search (co-op). This is to identify any liens or encumbrance files against the seller or property prior to closing. 

· Coordinates closing with seller's attorney, lender's attorney and building's managing agent. 

· Prepares closing statement that includes a list of the bank and personal checks required. 

· After the closing, the attorney will provide closing statements and copies of all documents signed at closing. 
        

MORTGAGE & PRE-APPROVAL PROCESS 
 

Attain Pre-Approval (Same day – 2 days) 

· Pre-approval is a preliminary indication of borrowing capacity based on application information and a hard credit pull. 

· Pre-approval is subject to verification of complete documentation regarding credit, income, assets and the subject property collateral. 

· Employed: 2 years Tax Returns, Business Returns, K1's. 

Mortgage Commitment Letter (2-4 weeks) 

· Formalizes Pre-Approval based on official underwriting (process beigns once contract of sale is fully executed). 

Commitment to Lend Subject to 

· Appraisal of property 

· Title 

· Project approval 

· Purchase/personal financial approval 

Critical Compenent For 

· Co-op/Condo Board Submission. 

· Managing Non-Contingent Contract Risk. 

Commitment Letter Requirements 

Full documentation regarding credit, income, assets, and the subject property collateral that is reviewed and approval by the Bank's underwriting department. Commitment Letter is typically binding subject to the conditions stipulated there in and the expiration date. 

DOCUMENT PREPARATION 

These documents will be presented to the seller or seller's agent in an offer and will prove to the seller the buyer is ready, serious and qualified to pruchase the apartment. This is very advantageous in negotiation and ultimately in closing the deal quickly. 

Mortgage Pre-Approval Form 

This is a letter you will get from your bank/mortgage broker. If financing, this is important for the seller to know you have been approved for a certain amount and have already begun the process of obtaining a mortgage. 

REBNY Form 

This is an industry standard Real Estate Baord of New York form that will summarize all of your financial information. This will be critical for the seller as to confirm you have the funds to purchase the apartment and can pass board approval. Please note that the entire form does not need to be completed at this point in the process but should include: cash in banks, stocks and bonds, income and liability and anything else in your financial profile that stand outs. 

COOP Forms 

Specific Coops may require additional forms to be filled out in advance

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COOPERATIVES VS. CONDOMINIUM 
 

COOPERATIVE 

Ownership 

Purchasing shares of stock & a propriety lease. 

Application Process 

Requires board review of application and interview of purchaser. 

Approval 

Can accept or reject purchaser without giving reason. 

Fees 

Maintenance Fee - includes utilities, building insurance, property tax and staff salaries. 
Downpayment & Finances After Purchase 

Variable & building specific - sometimes financing not permitted.
 

CONDOMINIUM 

Ownership 

Own the real estate comprising your apartment. 

Application Process 

Requires board review application. 

Approval 

Have right of first refusal: The condo board can review purchaser but cannot reject without exercising right of first refusal to purchase the apartment. 

Fees 

Common Charges: Building operating cost, management fees Real Estate Taxes: Taxes levied on apartment. 

Downpayment & Finances After Purchase 

Most require 10% down payment and proof of funds to purchase.

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TERMS & FEES TO KNOW 
 

Assessments: An amount of money that a condominium/cooperative trust needs owners to pay in order to finance a project or outstanding debt that was not part of the 

annual budget. These projects are for the common good of the building whether it be hallways, lobbies, roofs, mechanical systems, water or even the building façade work. 

Common Charges: A condo fee that includes building operating costs and management fees. 

Flip Tax: A fee paid by a seller or buyer when purchasing in a co-op. It is not a government tax. It is a transfer fee to profit the building on the sale on an apartment. Flip tax can be negotiated or a co-op will have a strict rule on whether buyer or seller pays. 

Maintenance Fee: A co-op fee that includes utilities, building insurance, property tax and staff salaries. A percentage can be tax deductible but varies by building. 

Mortgage Contingency: A provision in a purchase contract saying that if the prospective buyer cannot get a mortgage within a fixed period of time with the specified terms, the buyer can call off the whole deal and get back his deposit. 

Property Tax Abatements: The government grants a reduction or exemption from taxes for a specific period in order to stimulate real estate or industrial development. The most common is 421a - this exemption lasts for 10 years, giving owners a 100 percent exemption from any increases in their real estate taxes for two years, then phasing out the exemption by 20 percent every two years over the remaining eight years. In Upper Manhattan and the outer boroughs, the exemption can last for 15 or 25 years. 

Proprietary Lease: A lease given by a cooperative corporation that provides the share owner with the right to live in a particular unit or apartment. 

Real Estate Taxes: For a condo, this is a separate NYC tax bill. 

Subletting: Leasing to a subtenant. Ex: If you own a co-op you’re subletting to a renter because you have a proprietary lease with the co-op.

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TIMELINE TO CLOSING 
 

1 - 2 DAYS - Pre Approval 

·1 - 3 MONTHS - Offer 

1 WEEK - Negotiation 

1 - 5 DAYS - Offer Acceptance 

2 WEEKS - Contract 

1 MONTH - Financing 

7 - 45 DAYS - Board Approval 

1 - 2 WEEKS - Clearance to Close 
1 - 3 HOURS - Closing