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F.A.Q. – A guide to making educated decisions.

Sellers

Guide

PREPPING FOR THE SALE

1. PREPARE YOUR HOME FOR SALE:

Improve your property’s value by making both cosmetic and mechanical repairs before it hits the market.

2. GATHER BUILDING DOCUMENTS:

If selling a coop or condo, obtain a board package, offering plan, the building’s financial statements from the last two years,     and a copy of the house rules from the managing agent.

3. FLIP TAX:

Find out if your building has a flip tax or working capital deposit and determine whether the buyer or seller is responsible for paying it.

4. FIND AN ATTORNEY:

Select an experienced attorney who specializes in real estate transactions and has experience in your area and type of property.

5. MARKET YOUR PROPERTY:

We will craft a marketing plan specific to your home and market conditions to attract qualified buyers.

6. RECEIVE AN OFFER:

Receive a written offer along with buyers qualifications, which include proof of funds or pre-approval letter from mortgage banker or lender.  Accept or counter the offer as part of price negotiation.  In the case of multiple offers, work with your agent to obtain the best price and terms from the most qualified buyer.

7. ENTER INTO AN AGREEMENT:

Agree upon the price, terms and closing date.  Your attorney will draft a contract based on the terms outlined in the deal sheet and send int to buyer’s attorney for approval.  Expect from one to several rounds of comments.

8. GATHER BUILDING DOCUMENTS:

The buyer’s attorney will request for certain documents from you or your management company, such as building financials, by-laws, proprietary lease or offering plan and amendments.  The buyer will sign the contract of sale and typically present a deposit of 10% of the sale price, which will be held in your attorney’s escrow account until closing date.

9. BOARD APPROVAL:

If there is a coop board, your real estate agent will present the buyer with the building’s transfer requirements and application papers and submit to the building’s managing agent.  The coop board has the right to turn down a buyer, ask for additional information, or interview the buyer.  If selling a condo, the board cannot reject the buyer as they can in a coop.

10. CLOSING:

If the board approves the buyer, the final step is to close.  Usually, the buyer requests a final inspection before the closing, where all fixtures and appliances should be in good working condition.  Before signing a contract, make sure all closing costs are explained by your attorney.

CONDO CLOSING COSTS

CONDO

Broker: Typically 6%

Own Attorney: Consult your attorney

Processing Fee: $450+

NYC Transfer Tax:

Residential:

Up to $500,000 = 1%

$500,000+ = 1.425%

Commercial:

Up to $500,000 = 1.425%

$500,000+ = 2.625%

Admin. Fee:

Non-Deed Transfers (i.e., Co-ops) = $50

Residential Deed Transfers= $75

Commercial Deed Transfers = $165

NY State Transfer Tax: $4 per $1,000 of price

NYS Equalization Fee: $75

Pick-up/Payoff Fee: $250-$500

UCC-3 Filing Fee: $100

Miscellaneous Condominium Charges: Vary by building

Note: For condominiums in new developments, the Purchaser will pay costs normally paid by the Seller. These include Seller attorney fees as well as NY and NYC Transfer Taxes.

CO-OP CLOSING COSTS

CO-OP

Broker: Typically 6%

Own Attorney: Consult your attorney

Co-op Attorney: $450+

Flip Tax: Typically 1% to 3% of price (if applicable)

Stock Transfer Tax: $0.05 per share

Move-out Deposit/Fee: Varies by building

NYC Transfer Tax:

Residential:

Up to $500,000 = 1%

$500,000+ = 1.425%

Commercial:

Up to $500,000 = 1.425%

$500,000+ = 2.625%

Admin. Fee:

Non-Deed Transfers (i.e., Co-ops) = $50

Residential Deed Transfers= $75

Commercial Deed Transfers = $165

NY State Transfer Tax: $4 per $1,000 of price

NYS Equalization Fee: $75.00

Pick-up / Payoff Fee: $250-$500

UCC-3 Filing Fee: $100

Miscellaneous Coop Charges: Vary by building

TOWNHOUSES + SINGLE FAMILY

TOWNHOUSES + SINGLE FAMILY HOMES

Broker: Typically 6%

Own Attorney: Consult your attorney

NYC Transfer Tax:

Residential:

Up to $500,000 = 1%

$500,000+ = 1.425%

Commercial:

Up to $500,000 = 1.425%

$500,000+ = 2.625%

Admin. Fee:

Non-Deed Transfers (i.e., Co-ops) = $50

Residential Deed Transfers= $75

Commercial Deed Transfers = $165

NY State Transfer Tax: $4 per $1,000 of price

NYS Equalization Fee: $75

Miscellaneous Title Fees: $200-$500

Pick-up / Payoff Fee to Title Closer: $100-$300

Buyers

Guide

TYPES OF REAL ESTATE PROPERTY

Understanding which property type is appropriate and right for you can be a challenging choice to make. The rules tend to differ in New York than other parts of the country. This is why we put this guide together, to make your decision process easier.

New York comprises mainly of cooperative and condominium apartments, with a smaller selection of private homes, which are called townhouses or brownstones. Outside of Manhattan, in the boroughs, you also find single and multi family homes, sometimes detached or semi-detached.


Cooperatives are not a new concept, although they seem to be a type of ownership that is more common in New York City than elsewhere in the United States. In New York City, approximately 75% of our apartments available for purchase are in cooperative buildings, while 25% are in condominiums. This means two very simple things to potential buyers in New York City:

1. There is more inventory to choose from if the buyer includes co-ops into the mix of properties.

2. Prices are, in general, more attractive for cooperatives.

Cooperatives are owned by an apartment corporation. Individual tenants do not actually “own” their apartments as they would in the case of “real” property. Owners, (shareholders) of co-op apartments, actually own “shares” in the corporation which entitles them to a long-term “proprietary lease.” The corporation pays the total amount of the building’s mortgage (importantly, a cooperative may have an underlying mortgage on the entire building, whereas a condominium building must be owned outright), real estate taxes, employee salaries, and other expenses for the upkeep of the building. The tenant-owner, in turn, pays a portion of these expenses as determined by the number of shares the tenant owns in the corporation. Share amounts are dictated by apartment size and floor level.


A condominium apartment in Manhattan is real property. The buyer gets a deed just as if he were buying a house. Since this is real property, there is a separate tax lot for each apartment. Hence, this means the buyer pays his own real estate taxes for the property. An owner will also pay common charges on a monthly basis. Common charges are similar to maintenance in a cooperative. However, they will not include real estate taxes since these are paid separately, nor will they include the building’s mortgage and interest given that a condominium, by law, cannot have an underlying mortgage. Condominiums are attractive for a variety of reasons

1. Financing the purchase of a condominium apartment is governed by the financial markets not a board of directors and thereby much more flexible than in a cooperative. Generally, a buyer can finance up to 90% of the purchase price.

2.  An approval process is usually required, and most condo boards are requiring application packages with financial disclosure. Generally, however, the requirements are not as rigorous as the co-op boards. A board meeting may or may not be required. The length of time for approval varies from building to building, but it is usually not as long as a co-op approval process.

3.  There is greater flexibility in sub-leasing your apartment. This makes condominiums the better choice for investment property.

4.  They are the ideal choice for non-U.S. citizens or for those with their assets held outside of the United States given that co-ops are unlikely to approve a buyer whose funds are not in the U.S.

Given that there are fewer condominiums than cooperatives and that they are “easier” to purchase, they are generally more expensive than co-ops. Additionally, monthly combined common charges and real estate taxes in a condo are typically less than a co-op’s monthly maintenance charges, again resulting in higher purchase prices.

THE BUYING PROCESS

SEARCH FOR YOUR HOME

We will get to understand you and your unique needs for a home.  Common criteria include location, amenities, size, pet-friendly, views, and proximity to transportation.  Make a list of things that matter to you!

GET PRE-APPROVED FOR A MORTGAGE

If you are buying in cash, skip this step.  If you are planning to finance your purchase, consult with a mortgage broker or banker.  Based on your income and credit, the broker will be able to advise how much the bank will lend you, a crucial piece in determining your purchasing power.  We are happy to connect you with a mortgage broker.

NEGOTIATE WITH SELLER

Once you find the perfect property, we help you place an offer, a non-binding agreement to pay your offered price.  If below asking, the seller may counter your bid.  We will advise you on pricing throughout, and negotiate with the seller so you get the price you want at the terms you want, with both parties coming to an agreement.

REVIEW PAPERWORK WITH ATTORNEY

Work with an attorney that specializes in New York condo, co-op and house sales as they will be reviewing a copious amount of paperwork with you to make sure your interests are protected.  You will be reviewing the contract of sale, building financials, and board minutes.  In rare cases where minutes are not allowed to be disclosed, your attorney would request their questionnaire to be answered by buildings managing agent.

SIGN THE CONTRACT

You will be required to put a 10% down payment to indicate good faith effort to the seller that you’re interested in purchasing their property.

COMPLETE BOARD APPLICATION

The board package is a set of specific documentation that includes legal forms that must be filled (window-guard rider, lead-based paint rider, etc) as well as personal financial documents and references. The extent of the board package requirements vary by building, and we will help guide you in its successful completion. In a co-op building, the board package is often more detailed and the financial requirements more stringent. An in-person interview is also a standard requirement in co-op buildings. In condominiums, you will still submit a board package, but there is no interview requirement and board turndown happens rare.

CLOSING SCHEDULED

Once board approves your application, both buyers and sellers attorneys will schedule a closing date. If financing, this is also when your banker or mortgage broker locks in your rate and gets you ready for a closing.

FINAL WALK THROUGH

This usually takes place on the date or 2-3 days prior to closing on the home. What we’re looking for here is to make sure that no surprise changes have taken place since you last saw the property. This is also the time to check electrical, appliances, etc…

PURCHASE PROCESS

1. SAVE:

Buyer’s should plan to put down at least 20%, as well as account for other charges and closing costs.  Consult with your real estate agent or attorney for a breakdown of closing costs.

2. CLEAN UP YOUR CREDIT:

Buyers often need to secure loans through banks, which use credit scores to evaluate the potential risk of lending to individuals.  Knowing your credit score well in advance will give you time to boost your number without incurring the risk of losing your property to other buyers.

3. GET LOAN PRE-APPROVAL:

Contact a mortgage professional to receive a written estimate of the amount you can likely borrow based on initial review of your credit and financial information.  The application often requires submitting pay stubs, bank statements, tax returns and other financial documents.

4. CONTACT A REAL ESTATE AGENT:

Consider working with us to guide you through the buyer process and suggest properties and neighborhoods that may be of interest.  We will also bid and negotiate on your behalf.

5. ANALYZE DATA:

We will craft a marketing plan specific to your home and market conditions to attract qualified buyers.

6. BEGIN LOOKING AT PROPERTIES:

After understanding your budget, what you are looking for and where, start looking at listings.

7. RIGHT TEAM MEMBERS:

A real estate attorney is required for all property transactions in Brooklyn and NYC.  Look for a lawyer who specializes in both the area and type of property you are considering.  If you are are buying a coop, it’s crucial to work with a mortgage broker and/or lender who deals with the specific property type and region.

8. MAKE AN OFFER:

An offer can be made based on numbers and comparables, or it can be made on emotions, needs and desires.  Make sure you understand your motivation.  It’s also prudent to determine a set maximum price when you would like to walk away.  In Brooklyn and NYC, offers are placed in writing through your agent to the seller’s agent.  Don’t be reluctant to make an offer, since nothing is final until the contract is signed by both parties.  Your agent will draw up a formal offer sheet with your info, attorneys info, any contingencies or other information.  The seller may either counter your offer, resulting in a negotiation, or accept your offer.

9. ACCEPTED OFFER AND DEAL SHEET:

Once price and terms are agreed on, the seller’s agent and attorney will prepare a deal sheet for your attorney to begin examining the financial condition of the building in which you wish to purchase.

10. HOME INSPECTION:

If you are purchasing a house, once a verbal agreement is reached, hire a home inspector.  It is especially important to protect yourself from buying a property that is significantly flawed or overvalued.  Your home inspector should be licensed and preferably also a structurual engineer.  The inspector will help you determine the age, condition and whether anything structural or mechanical will need replacement or updates.

11.  GO INTO CONTRACT:

Once your lawyer concludes that the financial condition of the building is satisfactory, the by-laws are acceptable to you and contract of sale is acceptable as well, the buyer will sign the contract and put 10% of the purchase price in escrow.  The contract will then go to sellers attorney who will give it to seller to sign.  Once contract arrives to buyers attorney’s office, it is then considered fully executed and the seller can no longer entertain other offers.

12.  FINALIZE FINANCING:

If you are financing, expect your mortgage broker or lender to ask for numerous financial documents, which you should have prepared.  The lender will send an appraiser to check the property, and they or your attorney will order a title search to make sure the property is clear of all liens.

13.  BOARD APPROVAL:

By now, you will have received the board requirements and application materials from your real estate agent. The application can be similar for a coop and condo, however, the actual process is quite different.  You will typically need to complete an application, financial statement with all requisite support, two or three years of tax returns, bank statements, letters of personal, business or financial reference, a contract of sale, a bank document indicating that your loan is in place.  In the case of a coop, if your application meets the initial approval, you will be invited to an interview either by the board.  The coop board has the right to turn down a buyer, ask for additional information, or interview the buyer.  After board approval, you are ready to begin planning for a closing.

14.  CLOSING:

Before closing, the agent and the buyer will do a final walkthrough to make sure the property is in the same condition as the time that the contract was signed.  The buyer’s attorney will schedule the closing, where both parties sign papers detailing the mortgage agreement and transfer of ownership.

CONDO CLOSING COSTS

CONDO

For the Purchaser

Buyer’s Attorney: Consult your attorney

Bank Fees: $350-$750

Application Fee: $350

Processing Fee: $330

Appraisal Fee: $300-$1,500 (depending on sales price)

Credit Report Fee: $10.10 single/$15.20 joint

Bank Attorney: $650-$750

Tax Escrows: 2 to 6 months

Recording Fees: $250-$750

Fee Title Insurance: Amounts vary, please consult your attorney

Mortgage Title Insurance: Amounts vary, please consult your attorney

Municipal Search: $350-$500

Mansion Tax: 1% of entire purchase where price is $1,000,000 or more.

NYC Mortgage Tax (paid by borrower):

a. Mortgage less than $500,000 = 1.80%

b. Mortgage $500,000+ on 1-3 family residential dwelling = 1.925%

c. Mortgage on all other property over $500,000.00 = 2.80%

CO-OP CLOSING COSTS

CO-OP

MORTGAGE CLOSING COSTS

Buyer’s Attorney: Consult your attorney

Bank Fees: $350-$750

Application Fee: $350

Processing Fee: $330

Appraisal Fee: $300-$1,500 (depending on sales price)

Credit Report Fee: $10.10 single/$15.20 joint

Bank Attorney: $650-$750

Lien Search: $250-$350

UCC-1 Filing: $100

Mansion Tax: 1% of entire purchase price where price is $1,000,000 or more.

ADDITIONAL REAL ESTATE EXPENSES

Miscellaneous Co-op Charges: Vary by building

Recognition Agreement Fee: $200+

Maintenance Adjustment: Pro-rated for the month of closing

Short Term Interest: Equal to interest for balance of month in which you close

TOWNHOUSES + SINGLE FAMILY

TOWNHOUSES + SINGLE FAMILY

MORTGAGE CLOSING COSTS

Buyer’s Attorney: Consult your attorney

Bank Fees: $750

Application Fee: $350

Processing Fee: $330

Appraisal Fee: $300-$1,500 (depending on sales price)

Credit Report Fee: $10.10 single/$15.20 joint

Bank Attorney: $650-$750

Tax Escrows: 2 to 6 months

Recording Fees: $250-$750

Fee Title Insurance: Amounts vary, please consult your attorney

Mortgage Title Insurance: Amounts vary, please consult your attorney

Municipal Search: $350-$500

Mortgage Tax – NYC (paid by borrower):

1-3 Family Home or Condo:

If mortgage is less than $500,000: 1.80%. If mortgage is $500,00 or more: 1.925% of loan amount

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Alen Moshkovich ©, [2017].

All data is deemed reliable but is not guaranteed accurate by Alen Moshkovich, RLS or Douglas Elliman. See Terms of Service for additional restrictions. All information regarding a property for sale, rental, taxes or financing is from sources deemed reliable. No representation is made as to the accuracy thereof, and such information is subject to errors, omission, change of price, rental, commission, prior sale, lease or financing, or withdrawal without notice. All square footage and dimensions are approximate. Exact dimensions can be obtained by retaining the services of a professional architect or engineer. The number of bedrooms listed above is not a legal conclusion. Each person should consult with his/her own attorney, architect or zoning expert to make a determination as to the number of rooms in the unit that may be legally used as a bedroom.