With mortgage rates at record lows, it’s a great time to buy an apartment in NYC. And if you’re a buyer who values convenience and flexibility, owning a condo in NYC is likely the best option for you. Here’s what you need to know about buying a condo in NYC.
It usually takes between 30 and 60 days to close on a condo in New York City. You should also factor in the time it will take you to find a suitable home. Most buyers will spend at least another month or two searching NYC condos for sale online and going to open houses and private showings. That means it typically takes anywhere from two to six months to buy a condo in NYC.
Here’s a rundown of what the process of buying a condo in NYC will look like.
Figure Out Your Budget and Financing
The first step will be setting a budget for your purchase. You’ll need to know how much you can afford or want to spend before starting your search.
If you plan on financing, you should start looking at lenders and obtain a mortgage preapproval. The earlier you have this, the better.
Hire An Agent
You’ll want someone to represent your interests when buying a condo in NYC, so you’ll want to hire an agent. While you may be able to start searching for and viewing apartments without an agent, you’ll definitely want to hire one before it’s time to make an offer.
If you’re wary of agents that charge excessive broker fees, you can always work with an agent who offers a buyer commission rebate. Rebate agents have lots of experience and will cut you a check for around 2% of the purchase price.
Find Your Dream Home
For most buyers, finding their dream home starts with searching NYC condos for sale online, but a real estate agent can also help you through the process by sending you listings that meet your search criteria. If you’re unfamiliar with the city or unsure of which neighborhood you want to live in, having a buyer’s agent helping from the get-go will be invaluable.
The search process will typically involve a lot of in-person tours and open houses. Even in a Covid-19 world, it’s best to set foot inside a home to make sure it’s the right fit. After all, a virtual tour won’t always give you insight into if the condo feels right or if the upstairs neighbor is noisy.
Prepare and Make and Offer
The next step in buying an apartment in NYC is preparing your offer. Before deciding how much to offer on the condo, ask your agent to perform a comparable market analysis. The CMA will compare the condo you’re interested in purchasing to similar apartments in the neighborhood.
Your offer should include any contingencies. In some cases, you may also need to submit a REBNY financial statement.
Accepted Offer and Due Diligence
After the negotiating is completed and you and the seller come to terms, you’ll get an accepted offer, and a deal sheet will be drawn up. At this point, you should have found a real estate attorney who will represent you.
Once your attorney receives the deal sheet, it will be time to perform due diligence on both the apartment itself and the condo building. This includes looking at the building’s finances or any pending litigation involving the property.
Assuming no issues arise during the due diligence process, and that your attorney is happy that the contract and its terms are in your best interest, it’s time to sign the contract and put down your earnest money deposit. This deposit is typically 10% of the purchase price and is held in escrow. The seller’s attorney will confirm receipt of the earnest money deposit, and the seller will countersign the contract and send back a full executed copy.
Closing on Your Mortgage
Assuming you’re financing the apartment, the next step to buying a condo in NYC is closing on your mortgage. If you haven’t already locked in a rate, you’ll do that, and then start working with your lender to obtain a commitment letter. A commitment letter essentially states that your loan will be funded, although it may have contingencies attached. Usually, these are related to the apartment’s appraisal (which will likely take place after you receive the commitment letter) or to you keeping your job.
This can take some time, so its best to get the process started early, ideally right after your contract is fully executed.
Title Search and Title Insurance
Once you’ve received a commitment letter, it’ll be time to work on getting a title report. When you buy a condo in NYC, title insurance is also required, and it will protect you against any unforeseen issues that may arise related to the apartment’s title.
Prepare and Submit Your Condo Board Application
Unless you’re buying a sponsor unit, you’ll likely have to submit a condo board application, which will mostly consist of financial statements and documents. The board package for a condo will be a lot less intense than what you’d need to submit if you were buying a co-op, and you don’t have to worry about the board denying you. While they technically have a right of first refusal, condo boards essentially never exercise it as it would mean they’d have to buy the apartment for the same price you agreed to pay. Getting approved by the condo board is just a formality.
Clear to Close
The next step is getting a clear to close letter from your mortgage lender, which will typically be sent to your attorney from the bank’s attorney. Once you receive this letter, you can schedule the closing. Choosing the closing date can take a bit of coordinating, as quite a few people will need to attend.
Preparing for Closing
A few days before closing, you’ll receive a closing disclosure statement, which you must receive at least 3 days before closing. This is a standard form that details your loan terms and the closing costs you’ll be paying.
You’ll also receive instructions related to the checks you’ll need to cut, all of which are required to be certified or cashiers checks. If you don’t want to deal with getting the checks yourself, you can wire the money to your attorney.
The Final Walk-Through
Before going to the closing table, you’ll want to perform a final walk-through of the condo. This typically happens the same day you close, but if your schedule doesn’t allow it, you can also perform it a day or two early. The final walk-through is when you’ll want to make sure everything in the apartment is in working order and that any required repairs have been made.
The actual closing will typically take about two hours to complete and is attended by all the parties. This means the seller, buyer, attorneys, real estate agents, and the lender will all be there.
Make sure you bring the checks and your ID and be prepared to sign a lot of paperwork.
Buying a condo is a great idea if you want the flexibility that comes with owning a condo or if you’re a foreign buyer. There are many benefits to buying a condo, including their flexible sublet policies, friendliness towards foreign buyers and investors, and their tendency to appreciate in price. Another perk is that NYC condos tend to have lower monthly common charges and maintenance fees than co-ops.