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.
In the Rock, Paper, Scissors game of Real Estate, location always wins.
A fabulous apartment in a subpar location is always a challenge when it comes to your investment upside.
What makes a residential location bad?
The main offenders are noise, proximity (lack of) to the subway, parks, and schools, lack of residential amenities (think Fidi in 2006), too many tourists, and traffic to name just a few.
What makes the location great? This is more complicated, and not always as obvious as merely purchasing on Central Park West and doubling your money in 10 years.
A great buyers agent will be able to provide insight into this analysis for you. Often a good location is one where there is a real opportunity for improvement and future demand or upside.
Drawing buyers into up and coming locations with the promise of changing neighborhoods has been the model of many savvy real estate developers for at least the past decade.
An average apartment on a great block will always have a buyer for it. More than the view, condition and charm, the location of a property can determine how much your upside potential is.
So when you go about your search for your next home consider how and why the location will change over the next 5 to 10 years- as this is where the magic happens.
When we started our Truth and Principles series, our goal was to share what we have learned from selling hundreds of Manhattan and Brooklyn apartments, buildings, and homes over the course of decades. The point was to provide the insider tips usually only passed between friends and family to the masses.
Being a student at heart, I always like to crowdsource and learn from my peers. When I asked one of the top residential managing directors in the business (marketing) for some great advice to share with buyers they replied,
“people always regret what they didn’t buy, not what they bought.”
Having seen this pan out first hand from the Investment Banker that didn’t buy in the first round at 15 CPW, to the husband and wife who couldn’t agree that Tribeca was going to evolve the way it has (in 2004). There are certain buildings I walk past like the one on Warren Street that could have been taken down for around $5M, and the buyer didn’t see the upside, today it is worth upwards of $16M. There hasn’t been a day that when I walk past that building, I don’t feel their pain.
As a broker, building a level of trust with a buyer is never easy. Why would it be when you are asking them to spend millions of dollars and get paid based on that. But once this level of trust has developed, then the magic happens.
A seasoned agent should know more than you about the market, and I mean, why else would you work with an agent to purchase real estate. Take advantage of their experience and knowledge and, most importantly, their guidance. And remember NYC real estate is best played as a slow burn, not get rich quick. It is one of the more stable places to park your money, and in the case of a beautiful apartment, call your home. So go ahead, grab your broker and start shopping and by all means, don’t regret not buying something you loved.
Thinking about purchasing the apartment next door to you? Don’t…
Combining apartments does two things: First, it creates higher than normal maintenance or common charges. With two units you are now paying for overlapping building services and expenses. From the doorman, building staff, repairs, and even that roof deck you never use. When you combine apartments it’s not 1+1 = 2 when it comes to the carrying charges, it is more like 1+1 = 3.
Know what is harder than selling an apartment facing a brick wall? Selling an apartment with excessive monthly charges.
Disproportionate monthlies have an inverse effect on the price of the apartment.
Second, I have never seen a layout on a combination apartment that really made sense or had a great flow. Most of the time, you get an awkward shape floorplan and too many bedrooms and weird pockets of dead space. Like everything in life there are some exceptions…if you have the chance to buy another 6 or 8 windows facing Central Park, run…don’t walk.
But as a rule of thumb think twice before buying that apartment next door and certainly have a seasoned broker on your side to offer advice along the way.
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