There is no better value out there right now for buyers. Like everything else in life, there is a spectrum ranging from great to nightmare and each co-op is taken on a case-by-case basis. I can tell you that in the 100+ co-op deals we have done, at least once or twice a year, we find ourselves asking, “Why would you ever want to buy a co-op?” out loud while sticking pins in our managing agent voodoo dolls. Truth.
Unlike a condominium, co-ops can turn a buyer down for any reason at all and they do not have to disclose why. There are times when they do find some reason to do just that. No one applies to live in a co-op without having assessed their likelihood of being approved by the Board. Sometimes, it goes beyond the financials and it comes down to a overreaching Board. We recently had a co-op sale where the acting Board President had his own apartment on the market at the same time as our sale. After submitting a textbook applicant to the Board, we found out the Board President didn’t appreciate our sale trading at a discount which, in theory, lowered the value of his own sale. So the Board started questioning the approval of our sale and delaying the Board interview. We had to stage an intervention by our seller and another shareholder. Two martinis later, it was sorted out and the application moved forward to approval. All true. These things happen. The best analogy is that a co-op is like a fancy country club that you are applying to be a member of, and while having financial strength and being a good neighbor should really be the only focus of the Board, they sometimes overreach when determining who will become their partner in the corporation.
It is for this reason why when the market crashed in 2009, most co-ops were very stable. It is this high barrier of entry which makes them a very stable form of home ownership until, of course, it is time to sell and the Board doesn’t like the fact that the buyer is a Mormon with two wives.
Having a seasoned broker behind you who has been through hundreds of co-op Boards is mandatory if you are buying and selling a co-op.
Am I better off working with a Buyer’s agent when shopping at a New Development?
The onsite sales team works for the sponsor, and their job is to get the Sponsor the highest price and to sell that particular building only. The fiduciary duty of an onsite agent is not to the buyer but to the Seller (the Sponsor). • Onsite agents are extremely knowledgeable and want to make the deal happen but to some extent, they are limited in how frank they can be. You will never hear an onsite agent say something negative about their own project (there is a subway vibration in unit 2 but not unit 4), or suggest purchasing anything but their own project. This is a limitation. • Having a buyer’s broker on your side that is experienced in new development purchases will be able to see beyond what is being offered to you at one particular project and lead you to the other projects in the neighborhood that are not yet on your radar. Often times New Development projects are marketed softly to insiders and VIP brokers before the listings even hit StreetEasy. • Having a buyers agent that does a lot of deals will allow you to know that a developer just discounted a similar apartment last month by 8% and is the difference between you believing that getting 5% off is the best they can do or getting another $100,000 discount. • A seasoned agent will also be able to assist in negotiating the best possible deal for you. We are in a buyer’s market after all and there is no reason why you shouldn’t have your cake and eat it too, or better yet get 12 months of free common charges. • Having a top agent by your side who has sold numerous resales will pay off when deciding between the duplex on the second floor, and the three bedroom with great light. Knowing which property will be more marketable down the road when you do go to sell, is often a question that many buyers don’t consider when purchasing on their own.
By arming yourself with an expert, who will work with the onsite sales team and at the same time be able to give it to you straight is the smartest way to finding that perfect new home and a great investment. Happy shopping.
The compensation for listing agents is determined well in advance and is agreed to contractually. And so, while the listing agent would love to be able to collect the fee on both sides of the deal and go to Tulum for the month of April , the reality is that it is up to the seller to make the decision to accept your offer.
Here, we come back once again to the concept that the listing agent has a fiduciary duty to the seller to get them the highest price. Dangle double the commission in front of them and some agents will tell you whatever you need to hear to get to the finish line. That kind of temptation is difficult for some agents to do the right thing.
The only time having no buyer’s agent mayu benefit you is when you end up in a bidding war and you are competing against other offers that do have buyer’s brokers.
In this situation, if the offers are close, we have seen listing agents reduce their fee to make “their deal” happen. Rare at best and probably morally wrong, but I am still firmly in the camp that believes having a seasoned buyer’s agent that can advise you on how much to bid and how to win the bidding war is much more valuable than maybe getting a 1% bump.
Purchasing a home is exciting, but there’s a lot to consider. Take time to define your search parameters like price range, location preference, type of ownership (co-op, condo, etc.), size of property and building amenities, if applicable. Prioritize your needs (i.e., space, light, views, schools, etc.) but try to be flexible. In evaluating your budget, know what you can spend on a down payment as well as monthly expenditures like maintenance or common charges, real estate taxes, monthly mortgage, utilities, parking, etc. Find the right real estate agent to help you navigate through the process, speak with a mortgage lender to obtain written pre-approval for a loan, and choose an attorney experienced in NYC real estate.
Yes! Getting your financing in place before you look for a home will save time and help ensure a smoother transaction. Meet with a mortgage broker to ask questions about the loan process and arrive at a comfortable price range. There are two levels of endorsement during this process: pre-qualification and pre-approval. Pre-qualification means you are potentially qualified for a stated loan amount, assuming full and accurate disclosure, while pre-approval is more appealing to a seller. To get pre-approved, you must provide your mortgage broker with information for a detailed background and financial check (including tax returns, credit check and income history). You’ll then get a letter from the lender stating the amount of your loan. This commitment is usually valid for about 60 days.
Co-ops are owned by a corporation. When you buy a co-op, you’re buying shares that entitle you as a shareholder to a “proprietary lease” in a particular apartment. Shareholders pay a monthly maintenance fee to cover building expenses, including real estate taxes. Approval is granted by a board of directors, and all prospective buyers must submit a “board package”. The board will also require an interview.
A condominium is real property, and a purchaser is given a deed. Besides owning the apartment, you also own a small percentage of the building’s common elements like the halls, stairwells, etc. Each individual apartment gets a separate tax bill from the city. There is also a monthly common charge for building expenses. Financing and subletting terms can be more flexible in a condo than a co-op.
Once you’ve started your search and are working with your agent to preview different properties, it’s important to be aware of the timeline of events that generally take place when you’ve found that perfect home. In most cases, once you decide to make an offer, it can take an average of 60 – 120 days to complete the closing process.
Prepare the Offer: 1 day
Negotiate the Offer & Acceptance: 2-5 days
Loan Application & Appraisal, Loan Approval and Commitment Letter, Sign
Contract/Escrow Deposit: 2-4 weeks
Co-op Board Package & Interview/Condo Application: 4-6 weeks
Bank & Attorney Prep Closing: 1-2 weeks
Final Walk Through: Day of Closing
Transaction Closing: 3 hours