The Purchasing Process:
Steps from A-Z on Buying a Co-op in NYC
Buying a home is a big investment. When making such a huge decision, it's important to choose a broker who really knows the market and can offer you a wealth of information paired with strong negotiating and problem-solving skills. When you have all these tools at your disposal, you'll be able to use your time and assets effectively!
1. Getting Pre-Approved For a Mortgage
Before you start looking online at all of the beautiful properties NYC has to offer, you should first think of how you will be purchasing your new property. If you're paying cash then you can skip this step, but if you plan on financing your purchase then your first step should be to shop around for a mortgage. Once you find a good rate, make sure you have a pre-approval letter to provide to your real estate agent.
2. Visiting Properties
Once you've been pre-approved and have found a reputable real estate agent, your next step will be to begin your search. Although you should have an agent who will search on your behalf, feel free to also keep an eye out for properties that interest you that you can also send to your agent. Your agent will schedule open house tours and privately scheduled showings for you to view apartments.
3. Making an Offer
Once you find a property that you are ready to purchase, your real estate agent will submit an offer with a presentation of your qualifications on your behalf either orally or in writing.
***Make sure you ask about the flip tax as this is something a negotiating point***
The seller may accept or counter your offer as part of a price negotiation. In the case of multiple bids, your agent will work with you to submit the highest and best offer that you are comfortable with.
4. Hiring an Attorney
Once the price and terms of the offer are agreed upon, you will need to hire a capable attorney that has experience in New York City residential real estate transactions. The attorney will need to be involved from the early stages of the purchasing process to prepare and review a contract of sale. Your attorney will exercise due diligence by asking for certain key documents from the seller or their managing agent. These typically include:
The proprietary lease
The building's by-laws
Statement of the building's financial condition
5. Singing the Contract
Following your attorney's review and approval, you will sign the contract of sale. At the signing, it is common to present a deposit of 10% of the sale price. The contract and deposit are forwarded to the seller's attorney, who will then obtain the seller's signature. Your deposit is usually held in the seller's attorney's escrow account until the closing date. Normally any interest earned follows the principal.
6. Board Requirements & Application Forms
The seller's real estate agent will provide you and your agent with the building's board requirements and application forms which may include the following:
Signed financial statements
Personal and financial letters of reference
Social and professional reference letters
Contract of sale
Bank financing documents (unless you are paying cash)
7. Putting Together the Board Package
Your agent will assist you in compiling the board package and will send it to the seller's agent. They will review it prior to submission to the building's managing agent who will present it to the building's Board of Directors. Upon review, the board may or may not ask for addition information or may turn you down. Unlike co-ops, condo boards generally do not interview buyers.
8. Interview Process
Once you are approved by the board, the co-op board will then schedule an interview with you. Make sure you meet with your real estate agent to go over the process so you feel well-prepared.
***It's important to note that the time frame between the submission of a board package and scheduling of the interview varies from building to building and from season to season.***
9. Final Walk-Through
Immediately before the closing, your agent will schedule a final walk-through inspection of the property for you. Hopefully your agent has a checklist for the walk-through but if not, click to have a checklist of your own so you can make sure you do a thorough walk-through.
Once you are approved by the board, the final step is the closing. Usually this occurs in the office of the building's managing agent. The exact date should be flexible to accommodate everyone (you, the seller, the attorneys, the banks and the managing agent). It's best to allow for a potential delay of 30 days from the closing date specified in the contract.
***The entire process is more involved than that of a condo, and 60 to 90 plus days from contract to closing is not unusual.***