Buying real estate in New York City can be, OK, it IS a major hassle. You have a whole bunch of different brokerages, most of which you’ve NEVER heard of if you don’t live in the area, compounded by school zones, co-op boards, tax abatements and assessments that folks living in single family residences have probably never even heard of.
Even if you do live here, and have all your life, going from being a renter to homeowner is arguably the best, craziest thing you will ever do with your financial future.
Now, I’m not going to argue the benefits of home-ownership vs renting in this article for a number of reasons, chief among them because I think most people would see this as pretty clear without any explanation. This is to help define some terms and situations that will help you make good choices going forward.
First of all, get yourself some help. Buyers generally don’t pay a thing when dealing with a broker as they are most often paid through a commission split with the seller’s broker. It’s somewhat akin to the adage of “… those that represent themselves have fools for a client.” people, especially home buyers have a tendency to get wrapped up emotionally in the purchase of their new home, professional brokers can spot it a mile away and we negotiate accordingly. When you have a dispassionate voice of reason as your advocate you will ALWAYS make better decisions. In short, have your fun with Zillow and Streeteasy, but when you are done see a professional.
Next, it’s always a good idea to have an idea about what you are talking about and what you can afford. If you’re a multimillionaire cash buyer that’s GREAT, but unfortunately most of us don’t find ourselves in that situation. This means you should know some things about your financial situation. The best thing is to see a mortgage lender which can be someone from the institution where you hold your accounts, or any number of specialists reputable brokers will be able to put you in touch with. They will pull your credit, look at your assets, liabilities and income; and give you a max budget to go shopping with. This process is called being “Pre-Approved” which is not to be confused with being “Pre-Qualified”. Most if not all brokers in NYC won’t take any offer seriously without an accompanying pre-approval letter from a lender unless you are a vetted, cash buyer.
Another good thing to know is the difference between condos and co-ops. The differences are diminishing more and more these days as condo boards are becoming as restrictive as co-op boards in many cases but several important differences remain. Primary among them is the fact that condos are real property, this means that you hold the title, and you pay your tax bills directly. In co-ops, you hold a proprietary lease in a private corporation and a number of shares in that corporation. You still pay taxes, to be sure, but they are billed to the corporation and then rolled into your monthly maintenance payment. There are many nuances here, so I’m not going to cover all of them, but they are important to know about as Manhattan is comprised of roughly 75% co-ops and 25% condos according to this article in the New York Times.
Have a dog? GREAT, I LOVE dogs! Many buildings in NYC, however do not. Make sure whenever you go see listings that you have verified pet ownership status of the buildings. This means your broker should contact the managing agent via email so they have it in writing. Seeing someone with a dog in the lobby means NOTHING as buildings have a tendency to adopt new rules all the time and, while current owners can be grandfathered in under the old house rules, Fido could be out of luck if you don’t do your homework.
