Apartments in manhattan non spread

Apartment in Manhattan

March Edition

Robert Kravath Licensed Associate Broker Westside 100 Riverside Boulevard New York, NY 10069 Phone: 212.990.7124 RobertK@Nestseekers.com

Benefits of a Buyer’s Broker

How to Find the Right Apartment for You

How Not To Look For An Apartment...

Summary of the Apartment Purchase...

Buying an apartment in Manhattan is a complex process. However, you do not have to deal with the complexities.

Buying a home is a balancing act.

Balancing between square footage, condition, light, views, building’ ...

Buyers should focus on some things and ignore others when looking at apartments.

Accepted offer. The buyer and seller have a price agreement.

Contents

03 Basic Information 07

For Your Apartment Search

03 18

19

Welcome to “Manhattan Real Estate.”

09

Benefits of a Buyer’s Broker How to Find the Right Apartment for You Buying a home is a balancing act. Balancing between square footage, condition, light, views, building’ ...

11

12

Get the Best Apartment at ...

One of the biggest mistakes buyers make is not putting in enough offers.

13

Summary of the Apartment Purchase...

20

15

21

Which Apartment is the ...

17

How to Search for an Apartment 23

Apartment Criteria

Square Footage : Fact and Fictiona ...

29

The value of an apartment is based on many factors. But one of the most basic factors is the amount ...

The Offer Process

Apartments in Manhattan

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Rates and Purchasing Power Interest rates are at all-time lows. If you’re looking for a loan around $800,000:

Closing Costs Points: 0%-3% of loan amount (optional, but your rate can come down)

36

Co-op Building Requirements The average co-op building has requirements for prospective purchasers. After the contract is ...

37

A Pre-Approval Bank Letter is Needed If you will need a need a mortgage then you need to get a bank pre-approval letter before you view any ....

How to Read a Listing

Rent vs. Purchasing Money and Lifestyle The Apartment Search is a Hunt Right

34

Light. Southern exposure is what most people want since it provides the most light.

27

Mortgage Contingenc A mortgage contingency is a clause in the contract that allows the buyer to get out of the contract ...

35

239 East 79th Street, Upper East Side [Third Avenue & Second Avenue]

The buyer’s real estate broker submits the offer to the seller’s broker by email.

2

You will Need a Good Local Real ...

When you are looking at apartments keep in mind your exit strategy - who is going to buy your ...

If I send a buyer a list of available apartments that fit their budget and criteria and the buyer .....

33

You will need an attorney when buying real estate in Manhattan. All transactions require a seller’s ...

There are benefits to owning an apartment that may not be obvious.

16

The Co-op Board Interview

How it Affects the Purchase Price..

Some buyers are concerned about the price of an apartment. Others are concerned about the monthly ...

If you submit an application for a condo apartment and are approved there is no interview.

Accepted offer. The buyer and seller have a price agreement.

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32

The Building Application

How Not To Look For An Apartment...

Buyers should focus on some things and ignore others when looking at apartments.

Financial Considerations

The application is submitted to the building manager who reviews it for completeness and sends ...

Buying an apartment in Manhattan is a complex process.

However, you do not have to deal with the complexities.

10

BIDDING WAR / BEST AND FINAL The real estate market runs hot and cold. When it is hot and there are many buyers and not enough ...

03

How to view an apartment Be enthusiastic. At open houses and at private appointments. Let the seller’s broker know that you love the apartment, if you do. Point out things about the apartment you like.

Do not seem indifferent.

Do not criticize and point out problems.

Do not ask to see a copy of the building financials...

Information for Your Specific Needs 39

Buying an Apartment For the average Manhattan apartment there is an efficient market, which means there are enough buyers ...

40

Dogs OK If a building allows pets that does not mean it will allow dogs. You need to make sure your breed and size dog ...

Contents

03 42

Foreign Buyer

03 47

A few co-op buildings may have an issue with a foreign buyer, but not many.

43

Looking for a Great Deal A desperate seller who must sell below market value does not exist.

44

Money is Best. Right

I Must Get a Condo, Right

49

For Sale By Owner Generally these sellers paid more money for the apartment than they can now sell the apartment ...

Co-ops and Condos

54

75% of apartments are Co-ops.

25% of apartments are Condos.

52

Prewar, Postwar, Modern, New ...

53

Junior 1 Definition A Junior One Bedroom Apartment is a one room apartment that has anadditional small room.

Junior 4Convertible 2 Bedroom A Junior 4, also known as a convertible 2 bedroom, has four rooms, a bedroom, living room, kitchen, and ...

55

Cls. 6, 7, 8 Apartment A Classic 6 apartment consists of a living room, dining room, two full bedrooms, a separate kitchen, and ...

Prewar buildings in general do not have modern amenities such as swimming pools or fitness ...

Not familiar with the differences between co-op and condos? See the section on this in this presentation.

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03

Definitions

Manhattan is attractive to rich buyers from all over the U.S.A. and the world. Also, many well-off ...

45

Be A Successful Real Estate Investor Your return from rent will be poor compared to other investments.

17

Pied-A-terre–Temporary Apartment ...

Most condominium buildings allow for Pied-a-terre. But you cannot get as much space for your money ...

Apartments in Manhattan

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Testimonials Robert Kravath testimonials Licensed Associate Broker Westside 100 Riverside Boulevard New York, NY 10069 Phone: 212.990.7124 RobertK@Nestseekers.com

Thomas J. Bates, Principal, TJB Capital Management I am retired from international banking, investment banking, financial consulting and financial planning. I have owned Manhattan apartments and recently moved back into Manhattan.

I am writing this letter in recommendation of Robert Kravath as a real estate agent, consultant and expert adviser.

Robert had invaluable information and advice about the real estate market. He gave me detailed information about apartments we viewed. Even though I have an extensive background in finance, Manhattan real estate is a unique and opaque market. Having Robert as a guide and adviser was essential. I was able to get the apartment I wanted at a good price thanks to Robert.

If I were to look for another Manhattan apartment, Robert would be the first person I would contact and I highly recommend him.

Farah Liem, Designer.

I’m the new proud owner of an awesome condo in the Flatiron district! Mainly because of my awesome broker Rob Kravath!!!

He deserves an A+ for both effort and productivity! Apartment hunting in NYC is a tedious and crazy process, which can be exhausting and emotional. The market and procedures in purchasing a property in NYC is so different from anywhere else in the country. This is why it is essential to have a good, experienced broker who is familiar with the routine and in’s and out’s of the fast moving NYC real estate market...which I can attest Rob Kravath is very knowledgeable of.

Prior to meeting Rob I had the unfortunate experience of working with a few brokers who were not knowledgeable, too busy to keep me appraised of up coming new listings and not easy to work with. Too much talk and not enough action!

Rob was the opposite - totally on the ball for the 4 months I worked with him very closely in my search for a condo till the end of closing. His communication is excellent.

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No chasing emails! He responds in a prompt manner, within less then 24 hrs, if not a few hours. He listens and gets a good understanding of your budget and what you want- location, size, aesthetics, etc.

Based on your criteria he sends you current weekly listings of new properties on the market with details and open house times.

This I must say is a blessing, because I would find properties of interest on the internet and realize after doing my research that its old inventory already sold or in contract that hasn’t been removed from sites which gets really frustrating. Also, Rob’s weekly listings are time-savers because he’s done the work for you and it is based on your criteria so you can review under 20 listings which is manageable, instead of having to sift through hundreds of listings for hours online.

Rob is always available to make an appointment to view an apartment with you.

He spent time looking at many different apartments with me until we could determine what I really wanted and needed. He educates you about the market through the process. He knows how to handle the famous and stressful NYC bidding wars.

Best of all Rob won me a fabulous condo at the lowest price possible, taking a cut from his commission. Wow is right! Not many brokers will go above and beyond for you. He continued to actively support me and help me prepare the board package, and was creative enough to find other means when some of my personal criteria did not match the boards requests. This shows he knows what he’s doing, has much experience preparing board packages and knows what the boards really need in order to approve you.

Rob is detailed and works for you till the end of closing and even after. I highly recommend him to anyone including my friends and family who are interested in purchasing a property in NYC. Having Rob as your broker will relieve a lot of stress in your property hunt - guaranteed! Thank you Robert Kravath for your time and hard work.

It was a pleasure working with you. See you again in the future!

Natasha M. Diamond-Walker, Internationally known dancer and model: I had the pleasure of discovering Robert Kravath while on a hunt for apartments via “Craigslist” in July 2011. I was a woman frequently traveling abroad to Europe, working wild hours, and looking to find a 2 bedroom to purchase before September 1st but with little knowledge about actually purchasing. When I saw Robert’s detailed, clear, “no-nonsense” ads on Craigslist, I

knew I had to contact him. I emailed him immediately. In less than 24 hours Robert had gotten back to me; asking me questions that would narrow in on helping me find the perfect place. Not only within the first days did I get organized a list of my needs, I also received detailed emails from Robert on: The difference between Condo and Co-ops, choosing an apartment location, Mortgage Brokers, and a page with links to all his listings within my price range. Soon therein, he created a list of apartment viewings with dates and times around my schedule.

By July 12th, 2011, I was working with Robert to get a bid for an amazing apartment I saw, signing contracts, putting my 10% down for the place, wiring money, and in touch with a Real Estate Lawyer. Now, I am excited and thrilled to be in Escrow, awaiting closing on my first-time apartment purchase.

Robert Kravath is Efficient. He organized viewings catered to my price range, my desires, and my schedule. During the entire process, I always knew where we were going, what steps I needed to take to keep moving in the right direction, and the positive and negatives of each property we viewed. Our time spent was never wasted on idle conversations and every time we met we were a step ahead of where we were last meeting.

Robert Kravath is Experienced. In addition to being a Real Estate Broker, Robert is also a Real Estate Lawyer. He is a well of knowledge and has an eagle eye for details.

He knows many people in the field of Real Estate and is open and eager to share his own experience and network with you.

In sum, Robert is the most experienced, honest, and professional Broker I know in New York. I recommend highly his work and look forward to passing along his contact information to my friends and family in need.

He has served as both an educator and Broker of Real Estate to me. I look forward to working alongside Robert long term with future successful, quick, and painless property purchases. He is the best!”

Joe Popson, Actor: “I just had the most wonderful time working with Robert Kravath as my real estate agent.

Not only is Rob extremely knowledgeable about his job, he also goes about it in a way that makes you feel relaxed and prepared for quite possibly the biggest purchase of your lifetime.

Rob has absolutely incredible communication skills and was with me on this journey of purchasing every step of the way. He is also incredibly thoughtful of his clients and always above all, puts your best interest first. When we started this

process together and Rob was showing me properties, he sat me down after a few places and said, where do you really want to live? He asked me where do I spend the most time in NYC, and that place is midtown Manhattan in the theater district.

He takes time out of his busy schedule to find out about you and what your passions and ambitions are in this world. Then he found me the most incredible building right in the heart of midtown with a very theatrical history and artsy population. From showing me the apartment, to guiding me through the bidding steps, to the application process, acquiring an absolutely wonderful Attorney, to preparing me for the important housing board interview, closing the deal, and movein he was with me every step of the way.

Even from the couple trips that I had to make to his office the staff were approachable, kind, and caring. When you walked in you felt like the only person in the building because you knew they cared and were also putting your best interest first. I was not available on the day and time of closing for the apartment and Rob went out of his way to bring the apartment documents and sets of keys to me at an audition that I was monitoring at on the 12th floor of a building. It was very busy when he arrived and he sat patiently until I had a free minute to talk.

This is exactly the kind of guy Rob is, a down to earth, kind, caring, prompt, passionate, individual who wants nothing but the absolute best for his clients. If I ever had a question about virtually anything, Rob was always there for me. His availability and responsiveness was wonderful on top of that. I always felt confident and comfortable when I made an appointment with Rob, that he would be there and be prepared for anything that would come our way. Robert Kravath is the real deal. I will be eternally thankful to Rob for helping me make a dream of mine come true. HIGHLY RECOMMEND A+”

Valentina Musco, of Agata & Valentina Fine Foods: “My husband and I worked with Rob. We found the working relationship to be very pleasant due to his efficiency, accuracy and most importantly promptness and availability.”

Leigh Wen, Designer: “It was an amazing experience working with Robert who is extremely thoughtful for his clients. He is willing to prepare and educate with all the necessary information.

He is the best real estate agent I have ever experienced. Definitely when I am ready to purchase in the near future I would ask for his help again. I strongly recommend him.”

Basic Information

for Your Apartment Search

Welcome to

"Manhattan Real Estate."

• This presentation will give you a good grounding for your home search.

• This presentation will address co-ops and condos including pre-war and modern apartments.

• This presentation is not about real estate in America and not even all of New York City.

Apartments in Manhattan

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This presentation is only about Manhattan real estate.

Only about real estate in the areas of Manhattan not crossed out.

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Apartments in Manhattan

M

anhattan real estate is unique. The parts of Manhattan not crossed out are unlike any other real estate

market.

This market is historically strong and resilient. Co-op boards in these areas have always had more stringent requirements for purchasers than banks. These co-op boards protected Manhattan. No sub-prime mortgages were allowed. There have been very few mortgage defaults or even late payments.

Prime Manhattan real estate was down about 20% from the highs during the worst of the downturn. Prices have been fairly steady for a while and have started to firm up.

People from all over the world want to live in New York City or have a 2nd home here.

Investors see New York City real estate as aexcellent investment.

For information about Manhattan neighborhoods try Wikipedia:

The quality of life in Manhattan has been increasing for years and is still getting better.

Families that would have moved to a suburb in the past are now staying.

All of this combines to make Manhattan a unique and expensive place to live.

Articles about Manhattan neighborhoods: http://topics.nytimes.com/topics/classifieds/ realestate/ columns/living in/index.html Apartments in Manhattan

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Apartments in Manhattan

Benefits of a Buyer’s Broker Buying an apartment in Manhattan is a complex process. However, you do not have to deal with the complexities. I will handle all aspects of putting the deal together.

There is no cost for my services. The seller pays the Listing Broker and that fee is split.

Benefits of a buyer’s broker: Focusing on the listings that are worth looking at.

An unbiased analysis of a property’s strengths and weaknesses.

A price analysis for apartments of interest.

I know how to put an offer letter together that makes a seller want my buyer.

Expert negotiation for the best price on your terms.

Expert building application preparation.

Referrals to the best mortgage brokers, attorneys, contractors, etc.

A buyer’s broker can bring a 5% savings or more.

The seller’s broker works for the seller to get the most money possible. They are not allowed to let you know about hidden problems with the apartment.

If a seller’s agent represents both the seller and the buyer in a transaction this is a conflict of interest. The law is that the seller’s agent has to get the buyer to acknowledge and waive this conflict. The legal form for this is here: http:// www.dos.state.ny.us/forms/ licensing/1736-a.pdf

I am one of the top buyer brokers in Manhattan and an expert negotiator.

You can view my client reviews, details of my experience and background and credentials at www.NYCBuyerBroker. com.

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How to Find the Right Apartment for You Buying a home is a balancing act. Balancing between square footage, condition, light, views, building’ amenities, neighborhood, etc. Your goal is to find an apartment that has relatively more of what you want in your budget. If you do not know what is more important to you, you will after seeing a few apartments.

Focus on one area. If you are not familiar with a neighborhood you may be interested in start out driving around and then walking around. Going to open houses is a good way to explore new neighborhoods. The best apartments listed at the right price can sell in a week. If you are spending time looking in more than one area you will miss it.

Focus on the search. It takes time and commitment to find the apartment for you. It takes looking at a number of similar apartments in the same area to get to know what is available.

The right apartment can come on the market tomorrow.

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Focus on the budget. Know what you can afford, both purchase price and monthly expenses. Interest rates are low, giving your more buying power.

Do not spend time looking at apartments you cannot afford.

Do not spend time looking at “bargains” that you will not be happy with.

Focus on what is available - mostly co-ops. Co-op apartments make up over 75% of the market. Condos the rest.

Focus on when you want to move into your new apartment.

The average time from contact signing to closing in a co-op is 4 months. For condo it is 3 months. If you will be moving in more than 6 months then any apartments you look at now will probably be sold by the time you are ready to buy. In that case the best thing to do is to go to open houses in the different areas you are considering living in so you can narrow down where you want to live.

If you will need a mortgage you must have a bank pre-

approval letter before looking at apartments. This is not a pre-qualification letter. For a pre-approval letter you will need to fill out an application and the bank will review your credit. It usually takes a day to get the letter. There are many reasons why you need a preaproval letter before looking at apartments.

“

Buying a home is a balancing act.

Balancing between square footage, condition, light, views, building’ amenities, neighborhood, etc.

How Not To Look For An Apartment and Why - The Met Buyers should focus on some things and ignore others when looking at apartments. For some buyers this can be difficult to do. Bw ut it is essential Do:

T

his may seem counterintuitive and some buyers, especially people who work with numbers, find following these guidelines difficult to do and get hung up on one or more items in the Do Not list. These buyers are at a disadvantage and if they do find an apartment they will probably not get the best apartment for them at the lowest price possible.

Once there is a price agreement, an accepted offer, the buyer's attorney will review the building's financials, board minutes and other issues. Until then the buyer should assume the financials are solid, that there will not be any unusual maintenance increases, that the seller's broker's representations are accurate, etc.

Only after the attorney does his due diligence and the contract is signed is there any legal agreement.

There is a reason why things are done this way. The board minutes show what the board is discussing and if there is any possibility for an unusual maintenance increase or other issue of concern. The

board minutes are not public.

The buyer's attorney has to read them in the manager's office.

Only the attorney does this.

Likewise, any representations of the seller's broker will be checked into by the buyer's attorney. The buyer's attorney is usually the only one with the access to the information needed.

Some buyers do not want to get their attorney involved because they are concerned about paying an attorney fee and then the deal does not happen. Most attorneys do not charge a fee if there is no closing. Plus the attorney fee is one of the smallest expenses in purchasing an apartment.

1

Look for apartments that meet your needs for space, light, cost,etc.

2 3

Look for buildings that meet your needs for amenities, etc.

.Look for neighborhoods that meet your needs for convenience, shopping, culture, etc.

Do Not Ask About or be Concerned about:

1 2 3

The building’s financials.

Future maintenance increases.

If the view will be blocked if the seller’s broker says it will not beby new construction, etc.

4

Anything that does not directly relate to the points above under “Do”.

cannot control. Everything will be looked into and checked out and confirmed before you sign a contract. Your role as the buyer is to look at apartments and find those that you want to live in.

Leave the details to the experts, your mortgage broker, attorney and buyer's broker.

Sellers want to get to an accepted offer with buyers who are enthusiastic about the apartment. If a buyer is asking a lot of questions the seller's broker will assume they are not a real buyer. While one buyer dithers with irrelevancies the buyer who is focused will swoop in and get the apartment.

Be a smart, focused buyer. Do not worry about things that you

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Get the Best Apartment at the Lowest Price O

ne of the biggest mistakes buyers make is not putting in enough offers. An offer has no legal or moral significance. Even if the offer is accepted by the seller it has no legal significance. You have no legal obligation until your attorney has reviewed the contract, the building financials and other documents, you sign the contract andthe buyer signs the contract.

What some buyers do is look and look until they find the perfect apartment for them, or at least the best they can find. Then they put in an offer. But if the apartment is attractive to you then it will also be attractive to other buyers. It will probably sell quickly, at or above the market price. The chances that you will be the one to get the apartment are slim.

The way to get the best home at the lowest price possible is to: Focus on one neighborhood. Look at all the apartments in the neighborhood for sale that meet your criteria. See apartments when they come onto the market.

When you find an apartment of interest have your buyer broker do a price analysis. The price analysis is based on recent closed sales but more importantly contract signed prices that only brokers have access to. The average time from contract signing to closing is about 4 months. So the closed prices available on the Internet show where the market was a while ago. This is useful but not good enough. Manhattan real estate is a constantly changing market.

Once you know what the apartment is worth you put in an offer based on its actual market value, not what the asking price is.

A good buyer's broker does not just submit an offer with just a price. An offer is made up of 2 elements.

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The amount of the offer and the financial strength of the buyer. The stronger a buyer you appear the better deal you can get. If a seller has 2 offers from 2 buyers the seller will go with the stonger buyer even if the offer amount is a bit less.

Keep looking at apartments. The seller's broker will continue to show the apartment until there is a signed contract. About 1 in 3 offers get to the point of a signed contract. You offer more money the more you want the apartment. The seller will accept less money the more motivated they are. Keep enough deals going at the same time and eventually there will be a price agreement.

Putting in an offer has the added benefit of showing to the seller's broker that you are a real buyer.

Before this you are just one more person who has seen the apartment. After a solid offer is submitted they will be more willing to open up with useful information, such as the seller's situation and some details about other offers they received.

Summary of the Apartment Purchase Process 1. Accepted offer. The buyer and seller have a price agreement.

2. The seller’s attorney sends the draft contract to the buyer’s attorney.

3. The buyer’s attorney reviews the contract, board minutes, building financials and other documents.

4. Buyer signs the contract. Buyer puts down 10%.

5. Seller signs the contract. Only now is there an enforceable agreement.

6. If buyer is getting a mortgage an appraisal is done.

7. The board application is submitted.

8. If needed a board interview takes place.

9. Board approval is granted (hopefully.)

10. Closing is scheduled.

11. Walkthrough of the apartment to make sure no damage was done when the seller moved out and to check that appliances are in working order.

12. Closing takes place.

13. Buyer moves in.

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Which Apartment is the Best Investment?

A

n apartment is a major investment as well as a home. Many buyers think that the best investment is an apartment that is relatively less expensive per square foot. In general this is the opposite of a good investment.

When you are looking at apartments keep in mind your exit strategy - who is going to buy your apartment when you sell it in the future.

Buyers from Asia and Russia are flush with cash and they buy real estate in new full-service Manhattan buildings in the best neighborhoods.

The most expensive apartments get more expensive fast and are the best investments.

Buyers who are professionals and make a good living want an attractive apartment in good condition with light and views in a building with a doorman in a good neighborhood. These apartments increase in value fast also.

The rest of the apartments have something that the Asians and Russians or professionals do not want. Such as not a good view or the building does not have a doorman, etc. If this is the only kind of apartment you can afford you are still buying Manhattan real estate, which is a good investment. It is just not as good an investment as the apartments that the Asians and Russians or professionals want.

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Rent vs. Purchasing

Money and Lifestyle There are benefits to owning an apartment that may not be obvious.

The government has incentives for people to own their home.

Owners get tax deductions and other benefits. Also, the monthly maintenance for a co-op apartment is partially tax deductible so you may get back a large amount of money at the end of the year.

The lifestyle is generally better

in a co-op or condo building.

Renters are 50% more likely than homeowners to be victims of burglars. (Click New York Times, for article.) These burglaries are probably a result of relatively poor security and the fact that renters are much more likely to be burglarized by their neighbors than owners are. I have lived in a large coop building for 15 years. There have been no burglaries in the building the entire time. Co-op

boards can be a pain to deal with but once you are approved and living in the apartment you become part of an exclusive and protected club. The same difficulty you had in getting into the building will keep out the type of people who are likely to burglarize your home, or to be a bad or annoying neighbor. A co-op building is a small community of people who know and look out for each other.

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The Apartment Search is a Hunt Right If I send a buyer a list of available apartments that fit their budget and criteria and the buyer does not see anything of interest in the list either:

1

The buyer changes their criteria and/or the budget. Then we start again. Repeat until the buyer finds at least a few apartments in the list to view. This buyer is on their way to a new home.

2

or

The buyer sticks to their criteria and budget. I have had a least one buyer say to me that it is called an apartment “hunt� for a reason. This buyer is on their way to frustration and no new home.

In Manhattan if there are not several apartments available that meet your criteria and budget it is time for a reevaluation. The apartment for you in your budget will not pop up and you will be able to purchase it. There are several reasons for this. The main one is a lack of enough attractive apartments to satisfy demand.

Do not expect this to change.

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The Offer Process The buyer’s real estate broker submits the offer to the seller’s broker by email.

It can help to be the first buyer to submit a solid offer. Sometimes a seller will give more consideration to the buyer with the first offer.

Most of the time the seller will continue to show the apartment but some sellers will stop showing if they are confident the buyer will go through with the transaction. This is the best position for the

buyer. The buyer does not want another party to offer more money.

An offer has two major parts - the offer price and the buyer’s financial qualifications. If the apartment is in a co-op building the seller will be concerned about the buyer’s ability to be approved by the board. If the buyer needs a mortgage the seller of a co-op or a condo will be concerned about the buyer’s ability to get a mortgage.

A proper offer includes: 1. The offer price with terms such as mortgage contingency.

2. Closing date.

3. A brief biographical description. Many sellers want to pass on their home to people who will respect it and they can relate to. A note about why the buyer likes the apartment can help.

4. The employment background, how long employed and income. Include all income from any other sources.

5. The assets. Liquid assets - this is cash in banks, stocks, bonds, anything that can be easily converted into cash. Include separately your nonliquid assets such as real estate and retirement accounts.

6. Condo buyers who want to keep some aspects of their financials private can provide enough information to show they can afford the apartment but keep some information private.

7. There is a standard financial disclosure form that is submitted with an offer. Let me know if you would like to see a copy.

8. Attorney contact information.

9. Pre-approval letter if you will need a mortgage.

• A well prepared offer can make the difference between getting an apartment and not.

• Even if the seller accepts the offer this has no moral or legal obligation for the buyer. The buyer has no obligation until the contract is signed by the buyer and the seller.

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BIDDING WAR / BEST AND FINAL T

he real estate market runs hot and cold. When it is hot and there are many buyers and not enough apartments for sale the buyer needs to ready. The bold and aggressive buyer will get the apartment.

Even if the real estate market overall is hot does not mean that you will be in a bidding war. Each segment is its own market. The 2 bedroom Upper West Side market is different than the 2 bedroom Upper East Side market and is different than the 1 bedroom Upper West Side market. Ask your buyer-broker for the status of the market you are in. You need to know the type of market because if you are in a hot market than your approach will be different.

Also, apartments with a major flaw may not attract enough buyers to have a bidding war.

If you are in a hot market than the attractive apartments will sell fast. In a week or less. You need to be ready to put in an offer immediately. Your buyerbroker should have your Financial Statement and pre-approval letter

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(if you are getting a mortgage) before you look at apartments.

When you see the apartment you need to assume you will be putting in an offer based on that one showing. So take your time and look over the apartment carefully. Note the apartment’s light, view, condition, size, layout, etc. Note the building’s amenities.

Note the neighborhood’s pluses and minuses in terms of shopping, restaurants, transportation, etc.

Make sure the showsheet has photos or take your own.

During the showing do not say anything negative about the apartment. Do not ask questions about the owner or the owner’s motivations for selling or the owner’s negotiability. Do not ask about the building’s financials or the safety of the neighborhood or the type of people in the building.

It is OK to ask basic questions about the building amenities. But do not pester the seller’s broker.

If the seller’s broker finds you odd or off-putting any offer you submit will be rejected as the seller’s broker will fear you will be rejected by the board (assuming

it is a co-op.) The seller’s broker and the owner of an apartment in great demand want to make a deal with a buyer who is in love with the apartment and appears enthusiastic. If they think a buyer may drop out between the time of the accepted offer and contract signing the offer will not be accepted.

After the showing let your buyer-broker know that you are interested in the apartment.

Your buyer-boker will do a price analysis and give you a suggestion for an offer. Do not be surprised if the suggested offer is at or above the asking price. Offers at or above the asking price are common.

If there are many offers the seller may go to “Best and Final.” There will be a deadline for all offers to be submitted. The seller will then select 1 offer. There will be no more negotiation. So each buyer will put in their best price. A seller may accept a lower offer from an all-cash buyer. So the buyer who needs a mortgage may need to pay extra.

The Building Application

Every building requires a purchaser to submit an application. Both co-op and condo buildings.

The application is typically submitted within 10 business days of contract signing.

The application is submitted to the building manager who reviews it for completeness and sends it to the board.

The board is made up of residents of the building that have been elected by the residents. The board members make decisions about the building regarding things like improvements, renovations, maintenance increases and reviewing buyer and renter applications.

A co-op board will review an application and if they think the buyer is financially qualified they will schedule an interview with the buyer. If they reject the buyer based on the application or the interview the seller of the apartment has to start over and try and find a new buyer. The rejected buyer gets their contract deposit back.

Reference letters from friends and co-workers that state that you would make a good neighbor.

Reference letter from your landlord if applicable.

If the building is a condo and rejects a buyer the condo board must buy the apartment from the seller. It is very unlikely the condo board will do this unless the selling price is less than the market value.

Employment verification letter.

Co-op buildings may reject a buyer if they believe the price is too low. Since the seller is selling the apartment usually the seller has no power with the board. At the bottom of the market in 2009 many applications were rejected where the price was below the boards’ bottom line.

Application fee and other fees.

The typical application requires:

Tax returns for past 2 years.

Financial statement and supporting bank statements.

Paperwork regarding your mortgage if you are getting a mortgage.

Putting an application together is one of the most difficult things a real estate broker does.

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The Co-op Board Interview I

f you submit an application for a condo apartment and are approved there is no interview.

If you submit an application for a co-op apartment and the board finds that your financials are satisfactory you will be asked to meet with the board for an interview. The board members may have questions about your financials but mostly the board wants to make sure that you would be a good neighbor.

While this can be a nerve racking process for you the interview usually takes place in a board member’s apartment where snacks and drinks are served.

To the board members this is routine.

Interview tips: Be on time.

Dress appropriately for the building and neighborhood. Conservative is best.

This is not an opportunity to find out information about the building. Do not elaborate or ask questions. An innocent question might offend a board member.

Do not go into details about renovations you want to do.

Do not ask questions about the sublet policy or pet policy unless the board brings it up.

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It is not a job interview, you do not have to try and sell yourself.

Let the board ask the questions, set the tone and conduct the interview.

Boards like candidates willing to volunteer to serve on the board or building committees.

Boards look for candidates that will “fit in” and follow the rules.

Don’t ask for or expect a decision on the spot. Usually they will notify you within a few days.

You will Need a Good Local Real Estate Attorney You will need an attorney when buying real estate in Manhattan. All transactions require a seller’s attorney and a buyer’s attorney.

Your attorney gets involved after a price agreement.

Also known as an accepted offer.

The attorney reviews the contract, board minutes, building financials and other documents.

The attorney also handles many details of the the transaction that the real estate brokers do not.

Your attorney needs to be a local attorney who focuses on real estate transactions. Not a litigator.

None of these attorneys are expensive. This is not a place to save money. The attorney cost is one of the least expensive items in the transaction. But the wrong attorney can really make a mess of things.

Let me know if you need a referral to a good attorney.

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How to Search for

an Apartment

E

ach apartment has its own plusses and minuses. Buying an apartment in Manhattan involves balancing different criteria. It is important to choose the criteria that is most important to you and be flexible with other criteria. The

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more issues an apartment has that the average buyer will not want to deal with but you can then the better a deal you can get.

These are some pros and cons that you should consider.

Apartment Criteria Apartment Criteria: Light. Southern exposure is what most people want since it provides the most light. Western exposure is good since it provides light in the afternoon and evening when people are in their apartment the most. If a listing mentions the exposure this does not mean it has light, just that it faces in that direction.

View. If a listing does not state there is a view there probably is none. The better a view the more it will add to the value and cost of an apartment. The most desired views are of Central Park. A close second is river views. Third is open city or park views (not Central Park). Then partial city view where the view is partially blocked. Last is a view of an enclosed courtyard or a wall.

High ceilings. Many buyers discount the importance of high ceilings but they can add a lot to a sense of space.

Sponsor apartment. If the apartment is owned by the sponsor you do not have to be approved by the co-op board.

Wood floors. Most pre-war apartments have wood floors, which is attractive to many buyers.

Some condos have only carpeting.

When viewing an apartment ask what is under the carpet if it is wall-to-wall.

Pre or post war. or modern. See the section of this presentation about

this important topic.

Monthly expenses. See the section of this presentation about monthly expenses and how it relates to the purchase price.

Maintenance deductibility. In co-op buildings the monthly maintenance is tax deductible. The amount is different for each room This is not an easy number to calculate and you need a mortage expert on your team to assist with this.

Terrace. Many buyers want a terrace but terraces are not frequently used.

Noise. Most buyers want a quiet apartment. Most buyers want a view. But these two criteria can be in conflict as most apartments with a view are facing a street and most quiet apartments are facing the rear of the building. Windows such as CityQuiet are more expensive but actually do keep noise out.

Closet space. Some apartments have great closet space. Others not so much. If this is important to you check the floorplan for closet space before viewing the apartment.

Layout. Check the floorplan before viewing an apartment to make sure the layout works for your needs.

There are split bedroom layouts where the bedrooms are separated from each other. There are layouts where the bedrooms are next to each other and the entertaining area of the apartment is separated from them. You can also tell from Apartments in Manhattan

23

the floorplan what the size of the kitchen is. If you are a cook this will be important because many apartment kitchens will be too small for your needs.

Large Windows. Modern buildings have more and larger windows than older buildings.

The current trend in new buildings is for floor to ceiling windows.

Wood Burning Fireplace. In listings this is a ‘WBFP”. If a fireplace is important to you make sure a fireplace you see is not decorative and the chimney is not bricked up. You will find a WBFP in pre-war apartments.

Pre-War details. Besides larger rooms and high ceilings buyers who like pre-war apartments love the details inside the apartments and on the outside of the building.

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Apartments in Manhattan

Condition. Apartments come in a range of conditions, from estate to mint. An estate apartment needs a gut rehab.

A mint apartment is ready to move into without doing any work. Apartments are sold as-is.

Unless otherwise agreed the seller will not do any work. If an apartment has had a highend renovation with expensive appliances that will increase the value of the apartment, up to a certain point. It is possible for a seller to spend too much money on renovations and not be able to recoup all of the expenses.

Eat-in-Kitchen. “EIK”. A kitchen with a small area where there is room for a small table and chairs.

Breakfast bar. Space next to the kitchen with surface space and room for chairs.

Dishwasher. Most larger

apartments have a dishwasher.

Many studio apartments do not.

Wood floors. Most pre-war apartments have wood floors, which is attractive to many buyers. Some condos have only carpeting. When viewing an apartment ask what is under the carpet if it is wall-to-wall.

Washer/Dryer. Many apartments, especially prewar apartments, do not have a Washer/Dryer in the apartment.

Older buildings do not have pipes that are able to handle the discharge. Almost all buildings have a laundry room.

Many Manhattanites have their laundry done by a service that picks up the dirty laundry and returns the laundry clean and folded. Some buildings charge more than others for their laundry machines as a way to generate money for the building.

Building Policies: Co-op or condo. See the sections of this presentation that describe co-op and condos.

Financing allowed. All condos allow 90% financing. Every co-op building has its own downpayment requirements.

The average co-op building allows 75% financing and requires at least a 25% downpayment. Some co-ops allow more financing and some allow less. The less financing a building allows and the more downpayment it requires the fewer buyers there are who can meet the financing requirements and there is less demand, so prices are lower. For condos and the co-ops with relaxed financing requirements there are more buyers who can meet the financing requirements and there is more demand, so prices are higher. So you should buy the apartment where you can qualify

for the building financial requirements but are not overqualified in order to get the best possible deal.

Maintenance deductibility. In co-op buildings the monthly maintenance is tax deductible.

The amount is different for each building. This is not an easy number to calculate and you need a mortgage expert on your team to assist with this.

Doorman. Most buyers want a building with a doorman.

Many buildings have parttime doormen where there is a doorman on duty during the week in the afternoon and evening. If you need a doorman to be on duty 24/7 make sure the listing states full-time doorman. Generally the more doormen and other staff the building has the higher the maintenance will be.

Live-in Super. Some buildings without a doorman have a super that lives in the

building. They can keep an eye on things and accept deliveries.

Pets. Most buildings allow some pets, such as cats. There are some buildings that do not allow any pets. Some buildings allow pets except dogs. See the section of this presentation about dogs.

Sublets. All condos allow sublets. Most co-ops allow sublets after you live in the building for 2 years. Almost all buildings, condos and co-ops, require that leases be 12 months at a time. No short-term subletting allowed.

Live/Work. Some buildings allow a few apartments to be used for live/work. This is usually for a professional such as a therapist who sees clients in their home. Some buildings do not allow live/work in any apartment.

Pied a terre. See the section of this presentation on Pied a terre.

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Building Amenities: • Elevator. Most buyers want to have an elevator. If you can live in an apartment a few flights walk up you can get a better deal than a buyer who wants or needs an elevator,.

• Roofdeck / Garden. There are some great roofdecks in the city.

They offer a quiet place to relax or to have a private party.

Many of the gardens that buildings have are just a small dark area between buildings so if a garden is important to you be sure to view it when viewing the apartment.

• Bike room. Some buildings have a bike room. Usually limited to 1 bike per apartment.

• Storage room. Many buildings have a storage area. This can have a storage cage for each apartment. If you need such a storage space make sure that there is an available space. Many times there is a wait-list.

• Garage. Some buildings have a garage in the basement. If the garage is private and only residents are allowed to use it you can expect that it will have a long wait-list, sometimes longer than 10 years.

• Gym. Many buildings have a gym, a room with work-out equipment. Some buildings have a luxurious health club.

• Pool. A few newer buildings have a pool. Unless you must have a pool do not make this a requirement or you could end up paying a lot more for the apartment.

• Children’s room / Nursery. Some buildings have a dedicated room for children, stocked with toys.

• Building size. Building sizes range from about 6 apartments to over 400 apartments. Different size buildings will have a different sense of community. The larger the building generally the lower the maintenance.

Neighborhood: • Neighborhood. This has a huge affect on the value of the apartment. People want to live in areas that are close to transportation, shopping, restaurants, ethnic. There are areas of the city that are somewhat isolated, such as Beekman Place.

People who want to be away from the hustle of the city live there. See the section of this presentation on researching neighborhoods.

• Main Street or Side Street. A nice tree-lined side street can have a much different feeling than a busy avenue. But expect to pay more for an apartment on the side street.

• School District. See the section of this presentation on schools.

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How to Read a Listing

239 East 79th Street,

Upper East Side [Third Avenue & Second Avenue]

Price $1,100,000 Maintenance [monthly] Financing Allowed

$1,910 70%

Apartment Details Two Bedroom Apartment Size Square Feet (Approximate) Rooms Bedrooms Baths

1200 4.5 2 2

Building Details Ownership Service Level Age / Built Building Type Building Size

Co-op Full Time Doorman Post-war / 1957 Mid-rise 18 Floors / 208 Apts

Apartment Features Dining Alcove, Entry Foyer, Open View, Northern Exposure. Corner Apartment.

Washer/Dryer

Building Details

Monthly maintenance. For a co-op there is one monthly charge that includes maintenance and real estate taxes.

The amount of down payment required. Here the building allows 70% financing. So you will have to put down at least 30%. Even if the bank will give you a mortagage with 20% dow you will need to put down 20%. Also, the average co-op allows 75% financing. A building that allows less than 75% financing in general will have a tougher co-op board.

Square footage. Never believe the amount of square footage in a listing. Always look at the floor plan to see what the real amount of square footage is and if the layout will work for your needs.

Dogs allowed? Pied a terre allowed? Sublet rules? This information will be here. But it is not always reliable or it is missing. Ask your real estate broker for this information.

Dogs allowed? Pied a terre allowed? Sublet rules? This information will be here. But it is not always reliable or it is missing. Ask your real estate broker for this information.

Garage; Courtyard: Garden; Laundry Room.

Broker Summary This large corner two-bedroom home includes a formal dining area that could be a third bedroom or home office. North and west facing from the 12th floor, this home boasts open views and abundant sunshine. Some of the desirable features include a full size washer and dryer within, a gracious entrance foyer, thru-the-wall air-conditioning, custom closets and crown

molding. While the floors are presently carpeted, there are wood floors beneath. The bathrooms are in excellent condition and the updated kitchen has new stainless steel appliances and granite counters. The cooperative is in pristine condition with impressive and unmatched financials.

There is a garage in the building. the extra wide hallways and lobby are recently renovated and it is pet friendly Apartments in Manhattan

27

239 East 79th Street Upper East Side [Third Avenue & Second Avenue]

Price $1,100,000 Maintenance [monthly] Financing Allowed

$1,910 70%

Apartment Details Two Bedroom Apartment Size Square Feet (Approximate) Rooms Bedrooms Baths

1200 4.5 2 2

Building Details Ownership Service Level Age / Built Building Type Building Size

Co-op Full Time Doorman Post-war / 1957 Mid-rise 18 Floors / 208 Apts

Apartment Features Dining Alcove. Entry Foyer, Open View, Northern Exposure. Corner Apartment.

Washer/Dryer

Light and views are very important to most buyers. Look at the photos to see if you can see what the views are.

The description is written by the seller’s broker. The seller’s broker will accentuate or exaggerate any positives of the apartment and is not allowed to inform you of any negatives. If the description does not mention the amount of light there is probably limited light. If the description does not mention the views there probably are no views.

Just because a description mentions something like “Southern exposures” does not mean it has a view, it could just have windows that face South but also face a brick wall.

Building Details Garage; Courtyard: Garden; Laundry Room.

Broker Summary This large corner two-bedroom home includes a formal dining area that could be a third bedroom or home office. North and west facing from the 12th floor, this home boasts open views and abundant sunshine.

Some of the desirable features include a full size washer and dryer within, a gracious entrance foyer, thru-the-wall air-conditioning, custom closets and crown molding. While the floors are presently carpeted, there are wood floors beneath. The bathrooms are in excellent condition and the updated kitchen has new stainless steel appliances and granite counters. The cooperative is in pristine condition with impressive and unmatched financials. There is a garage in the building, the extra wide hallways and lobby are recently renovated and it is pet friendly.

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Apartments in Manhattan

If you see a listing with information such as 4/2/1: • 4 is the number of rooms.

Bathrooms are not counted in the total room count.

• 2 is the number of bedrooms.

• 1 is the number of baths.

If you see something like 3.5/1/1 the 3.5 means there are 3 and a half rooms.

So there is probably a kitchen, living room, bedroom and a dining area that is counted as half a room.

Square Footage

Fact and Fiction How to Know What the Size of an Apartment Really Is.

The value of an apartment is based on many factors. But one of the most basic factors is the amount of square footage.

Knowing the size of an apartment is vital. But this vital information is not always obvious.

Seller’s brokers exaggerate the amount of square footage. Part

of the problem is that there are several ways to calculate square footage. Plus, a portion of common areas may be included.

I have stopped even looking at the claimed square footage in a listing since it is so unreliable. I look at the floorplan and figure out the square footage from that.

If the square footage is not in a listing I assume the apartment is smaller than average.

If there is no square footage listed and there is no floorplan I assume the apartment is much smaller than average.

If there is no floorplan I look for floorplans in listings for the same line in the building.

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How to view an apartment Be enthusiastic. At open houses and at private appointments. Let the seller’s broker know that you love the apartment, if you do. Point out things about the apartment you like.

Do not seem indifferent.

Do not criticize and point out problems.

Do not ask to see a copy of the building financials or ask about the building’s financials. Do not ask about maintenance increases.

Ask to see the laundry room. Even if you are not really interested in the laundry room it is a good

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idea to see the basement. How the basement is kept up gives you a good idea of how well the building is maintained.

It is OK to see the apartment again with friends and family.

There are too many buyers and not enough apartments for sale to act hard to get When the seller considers offers from different buyers they will be reluctant to accept an offer from a buyer who does not appear to love the apartment.

Financial Considerations

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Monthly Costs How it Affects the Purchase Price..

S

ome buyers are concerned about the price of an apartment. Others are concerned about the monthly maintenance, or common charges if a condo. You should be thinking about both.

If you are getting a mortgage you will have 2 bills every month from owning an apartment, the mortgage and the maintenance.

When comparing two otherwise similar apartments the higher the maintenance the less money you will have for the mortgage payment. The lower the maintenance the more money you will have for the mortgage payment. In general this has already been factored into the seller’s asking price. Apartments with relatively high maintenance will have a relatively lower asking price and those with relatively low maintenance will have a relatively higher asking price. They tend to balance each other out so that the total monthly costs are similar for comparable apartments.

The rule of thumb is that for every $100 increase in maintenance the price of the apartment should decrease by about $18,000. And vice versa.

This is comparing similar apartments in similar buildings in similar areas. The rule does not work if there are significant differences in one or more aspects.

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Mortgage Contingenc A mortgage contingency is a clause in the contract that allows the buyer to get out of the contract if they cannot get a mortgage.

Up until about 2009 no contract had a mortgage contingency.

Sellers would not accept it and did not have to.

With the mortgage crisis sellers became more flexible. Buyer’s attorneys would not accept a contract without a mortgage contingency because there was a great deal of uncertainty in the mortgage market.

Now some seller’s will accept a mortgage contingency and some will not. In a situation

where there are multiple offers the seller’s broker will advise the seller not to accept an offer with a mortgage contingency, even if the offer is higher.

This is because it is too easy for the buyer to find a bank to deny them a mortgage and exercise the contingency. In the meantime the apartment is not being shown and the seller is still paying the mortgage and maintenance.

If there is no mortgage contingency and you cannot get a mortgage and cannot close you lose your 10% of the purchase price that you put down when you signed the contract.

If you will need a mortgage you may face a situation where your real estate broker suggests that your offer not include a mortgage contingency. This is not as risky a situation as you may think. Before you sign a contract your attorney will make sure that you will be able to get a mortgage.

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Rates and Purchasing Power

Mortgage rates have a large effect on purchasing power: Interest rates are at all-time lows.

If you’re looking for a loan around $800,000: ach 1/2 point increase in your interest rate gives you $50,000 less in purchasing power.

E E E

1

ach point increase in your interest rate gives you $100,000 less in purchasing power.

ach 2 point increase in your interest rate gives you $200,000 less in purchasing power.

Waiting for a bargain may be a wait that never ends because your loss of purchasing power can easily outweigh any money you save from finding a good deal. Talk to your mortgage broker or bank representative about how rising interest rates will affect you.

Let me know if you need a referral to a mortgage expert.

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Closing Costs Closing Costs For a Co-op: • Own Attorney: Consult your Attorney • Points: 0%-3% of loan amount (optional, but your rate can come down) • Application Fee: $400 • Bank Attorney: $900 • Appraisal Fee: $400+ • Origination Fee: $600+ • Judgment & Lien Search: $300 • UCC-1 Filing Fee: $75+ • Move in Deposit: $500+ (sometimes refundable) • Short Term Interest: up to 1 month (depending on closing date) • Maintenance Adjustment: up to 1 month (depending on closing date) • Mansion/Luxury Tax: 1% of purchase price if $1,000,000 or more.

Closing Costs For Condos and Townhouses:

• Mortgage Title Insurance: $250-$500 per $100,000 • Move in Deposit: $500-1-(sometimes refundable) • Short Term Interest: up to 1 month (depending on closing date) • Common Charges Adjustment: up to 1 month (depending on closing date) • Real Estate Tax Adjustment: 1-3 months (depending on closing date) • Mansion/Luxury Tax: 1% of purchase price if $1,000,000 or more.

• At closing, the seller is required to pay the New York State (.4%) and New York City (1% on sales of less than $500,000, and 1.425% when greater than $500,000, in most cases) Real Property Transfer Taxes. In newly constructed and gut renovated buildings, developers typically want the buyer to pay these taxes, plus their attorney’s fee. This is subject to negotiation, and can add to the buyer’s closing costs.

• Own Attorney: Consult your own Attorney • Points: 0%-3% of loan amount (optional, but your rate can come down) • Application Fee: $400 • Bank Attorney: $900 • Appraisal Fee: $400+ • Origination Fee: $600+ • Misc Fees: $300 • Managing Agent Fee: $500+ • Tax Escrows: 2-6 months • Mortgage Tax: 1.8% of loan amount for loans under $500,000. 1.93% of loan amount for loans exceeding $500,000.

• Fee Title Insurance: $450-$650 per $100,00 Apartments in Manhattan

35

Co-op Building Requirements

T

he average co-op building has requirements for prospective purchasers. After the contract is signed you will need to submit a financial disclosure form along with bank, brokerage, etc. statements. Plus you will need to submit a credit disclosure form.

Each building has different requirements. Some buildings will accept you if you just can afford the apartment. Some buildings require that the purchaser have a large income and millions of dollars in liquid assets. Most buildings fall between these extremes.

The more downpayment the building requires the more restrictive are the building requirements, in general. So a building that requires at least a 40% downpayment will be much more restrictive than a building that requires at least a 25% downpayment.

Some buildings allow gifting of money for the downpayment or purchase, parents purchasing for children, etc. If a building does not allow for your situation talk to me about this. Sometimes a buyer does not know how to handle a board. The seller’s broker will not want to do anything that could upset the board. But this is NYC, if the edge is not pushed you will never get what you want.

The average co-op board is looking for: 20 - 25% down payment.

The equivalent of 18 months to 2 years of mortgage

and maintenance payments in liquid assets in addition to the down payment. You do not have to pay this money, you need to prove you have it. Many buildings consider cash and stocks to be liquid assets but not retirement accounts.

Sufficient income. Some buildings are clear about how much income they want to see proof of. Some buildings are deliberately vague about this.

A 25 - 28% debt to income ratio. Try to not have any credit card debt.

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Apartments in Manhattan

1 or more personal letters of reference.

1 or more professional letters of reference.

Landlord letter of reference (if applicable).

If you cannot meet one or more of these criteria that does not mean you cannot purchase in a coop building. It means you need to only view apartments in buildings for which you likely will qualify for. This is true for every buyer as there will always be a building that will not allow you to purchase.

A Pre-Approval Bank Letter is Needed

Before Viewing Any Apartments If you will need a need a mortgage then you need to get a bank pre-approval letter before you view any apartments. I am not referring to a pre-qualification letter that is obtained over the phone with no credit check.

A pre-approval letter is based on

your income, assets and credit score. If there are no issues you can get the pre-approval letter in about 1 business day.

A few years ago you would not need to get the pre-approval letter in advance. This has changed and you need to have the letter now because: The banks have greatly tightened up on their lending requirements from a few years ago. The banks have started to loosen these requirements lately but they are still nowhere near as relaxed as before.

Even if you have great credit you still need to get the preapproval letter now. Buyers can get tripped up by issues they did not expect because the rules have changed. For example a buyer who owns several properties may have a problem. Small business owners may have a problem. These problems are usually able to be overcome but this can take time.

If there is an issue with your credit that is a surprise it may take time to clean up.

Apartments that are priced at their market value can sell in a week. You will not have time to get a pre-approval letter if you

run into any problems getting the letter.

If you want to view an apartment by a private appointment you need to be qualified. One aspect of being qualified is to have a preapproval letter.

A good mortgage broker will help you to know what you can afford, purchase price and monthly costs. Especially with the tax deductibility of co-ops this can be a complicated issue.

This is vital information to know before looking at apartments.

A good buyer broker will be in contact with the mortgage broker. Some buyers may not want to divulge all of their finances to a real estate broker.

But knowing what the buyer can afford and how eligible they are to pass a co-op board is vital information for the buyer broker. The buyer broker and the mortgage broker can

resolve these questions without the mortgage broker going into details about the buyer’s finances.

Getting a pre-approval is free and does not obligate you in any way. If you need a referral to a great mortgage broker let me know.

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Information for Your Specific Needs 38

Apartments in Manhattan

Buying an Apartment That Needs Work Combination Apartment Buying an apartment that needs renovation or combining 2 apartments - benefits & drawbacks: For the average Manhattan apartment there is an efficient market, which means there are enough buyers to bring up the price to the fair market value.

But for some apartments that need work there are not enough buyers looking at them. Most Manhattan buyers are not willing to do work, especially if the apartment is not unique in some way. So the market for these apartments may not be efficient.

So some apartments may be able to be purchased at less than fair market value. This depends on the desperation of the seller to sell, the attractiveness of the apartment to buyers — such as light, view, quality of the photos in the listing, etc., plus it depends on the overall market conditions at that moment, etc. There is no way to know in advance which apartment will be a good deal and which will not. The only way to find out is to view as many apartments as possible and put in many offers.

Do not expect to get a great deal.

There are no apartments selling for a great amount below market value. The goal is a good deal.

Even if a seller wanted to sell at a

huge discount the building’s board will not approve such a sale.

Sometimes two apartments are for sale next to each other that can be combined into one larger apartment.

Combining apartments can be fairly simple as far as construction but make sure the layout works properly for your needs. Some combinations produce awkward layouts that waste space and are inconvenient.

Also, a combination can have higher maintenance costs than an equivalent apartment that did not start as a combination. But it can be a way to get a lot of space for less money.

The building will require a written alteration agreement before renovations start and will make sure that your contractor is licensed and has insurance. Local contractors know how to deal with this. This paperwork should not be a reason to not purchase an apartment you like. You can do some basic work yourself. What type of renovations requires you to submit an alteration agreement and use a contractor depends on the building as each has their own rules about this.

Besides possibly saving money a reason to buy an apartment that needs work is so you can do the renovations to your taste and needs and not pay for the seller’s renovation you do not like.

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Dogs OK Some buildings allow dogs. Some do not. Each building has its own rules about this.

If a building allows pets that does not mean it will allow dogs. You need to make sure your breed and size dog is allowed.

Buildings that do allow dogs may have additional requirements or limitations such as: Weight limit.

Height limit.

Only 1 dog allowed.

Some breeds not allowed.

Board approval for your dog may be required.

There are a few buildings that do not allow any type of pet.

If you have a pet, make sure you know the rules of the building before looking at an apartment.

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Finding a Home in a Great School District Living in a good school district is worth $400,000 to a family with two children, the cost of sending two children to private school in Manhattan for six years.

Admission to Manhattan Middle and High schools is based on test scores, not living in a school district. The competition for a seat getting even more competitive as a baby boom moves its way through the school system. Parents often get tutors for the tests. The difference between a child going to a good school nearby or a poor school further away can be life changing. Or if the parents choose to send the child to a private school instead of a poor school this can be extremely expensive.

Elementary school admission is supposed to be based on living in the school district zone - But the better schools are overcrowded and

are now in a lottery system. So living in the zone is no guarantee of getting in.

Brokers are discouraged from discussing the school district an apartment is in and from discussing which are the good school districts.

Both can be considered a violation of the Fair Housing Act. Go to www.Blog0fNY.com. On the left side are links to web sites that have reviews and other information. Some of these sites deal specifically with NYC schools.

I can provide you with a referral to great public and private school consultants. They can help in many ways to get your child into the school you want or with advice and information. Also, I can provide a referral to a great tutor.

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Foreign Buyer If you are a buyer and not a United States citizen you can buyalmost every apartment a citizen could. You can buy a co-op or a condo apartment.

A few co-op buildings may have an issue with a foreign buyer, but not many.

I have worked with many foreign buyers and almost all of them want an apartment in a new building that has many amenities. Since new buildings are all condos this is the type of apartment most often bought by foreign buyers.

A foreigner can buy a condo in their own name or through a corporation.

A foreigner can sublet a condo.

If a foreign buyer wants a mortgage this can be difficult but not impossible. Most banks will want to

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see proof of assets in the United States. There are banks that will consider assets held overseas. Let me know if you want a referral to a mortgage expert who handles these types of mortgages.

value is the actual value an apartment has based on the market.

Looking for a Great Deal If I do a listing search for a buyer and there are no listings that meet their criteria I know they will have to change their criteria or increase the budget. But many buyers do not know this and some against my advice may continue to search until they get frustrated and give up. If there are no apartments for sale now that meet the buyer’s criteria and budget it is unlikely that a new apartment will pop up for sale that does. And if it does it will probably sell in a bidding war for a higher price.

A desperate seller who must sell below market value does not exist. There are too many buyers. Manhattan has an “efficient” real estate market. “Efficient” is a term of art in economics which basically means you cannot beat the market where there are enough buyers and sellers and information is available to all.

The asking price is the amount of money the seller is asking for the apartment. The market

All apartments have a market value the apartment will sell for and not less. An apartment with no light and no view and needs work will sell at its market value. The market value is set by the many buyers and sellers in the market for a particular type of property in a particular neighborhood. The market value can be discovered by recent sale prices and more importantly recent contract signed prices that show what the market is now. Contract signed prices are not public information but a good buyer broker can get this vital data.

Even if you are lucky enough to find an apartment you like at a price below market value you possibly may not get the apartment. The building’s board is made up of residents of the building. They do not want to lower the property values of the apartments in the building by having a low cost apartment sale show up on the Internet where future buyers for other apartments in the building will see it and use it to negotiate lower prices. A low cost sale can also affect the value that banks put on the other apartments in the building when making mortgages. The board will not allow such a sale. This applies to both co-ops and condos.

While the seller in this situation is desperate to sell, the board will not care about the seller.

The seller is leaving the building and has no power with the board.

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Money is Best. Right

Cash buyers: Buyers who will purchase an apartment with all cash and do not need a mortgage usually expect to get a very good deal but are often overly optimistic about how much of a discount they can get.

Manhattan is attractive to rich buyers from all over the U.S.A. and the world. Also, many well-off professionals work or live in Manhattan and they have a lot of liquid assets to buy an apartment.

There are many buyers who can and do buy apartments for all cash. Cash buyers should expect that some of the other buyers who are looking at the same apartment as they are will pay all cash.

In most cases an all cash buyer can get 3-5% off market value. This is less of a discount than many all cash buyers expect. The asking price is the amount of money the seller is asking for the apartment. The market value is the actual value an apartment has based on the market. The market value is set by the many buyers and sellers

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in the market for a particular type of property in a particular neighborhood. The market value can be discovered by recent sale prices and more importantly recent contract signed prices that show what the market is now. Contract signed prices are not public information but a good buyer broker can get this vital data.

If an apartment is attractive and priced at the market value then a cash buyer may not be able to get any discount off of the market value. In this case the seller who has multiple offers will choose the buyer who is offering all cash over a buyer who will need a mortgage. So there is still an advantage to being an all cash buyer. If there are multiple cash buyers the seller will choose the one with the best financials, which does not always mean the most liquid assets.

See the section of this presentation on co-op requirements.

Sellers like buyers with all cash. They can close faster and are more likely to be approved by a co-op board. Also, a mortgage can slow down a closing by a month or more.

I Must Get a Condo, Right

T

hink you have to purchase a condo and not a co-op?

Not familiar with the differences between co-op and condos? See the section on this in this presentation.

Many buyers only consider a condo because they believe they could not be approved by a co-op building or a co-op has rules that are too restrictive.

By only looking at condos they put themselves at a big disadvantage. Condos are much more expensive. Plus there are many more co-op apartments available for sale than condos.

There is a good chance you can purchase a co-op apartment and it will fit your needs. Some reasons why a buyer may think they need a condo when they do not: 1) They want to be able to sublet the apartment in a few years if they have to move out for a year or two 2) They want to be able to get a mortgage on the apartment.

3) They are a foreigner.

4) They are worried they cannot be approved by a coop board.

5) They do not want shares in a co-op, they want a condo deed. (A meaningless difference.)

6) A condo is a better investment. (Not true.)

None of these are reasons to buy a condo. The only reason to buy a condo is because you have to. Until you have spoken with a mortgage broker and a real estate buyer broker you do not know what your situation really is and if you have to buy a condo. Many buyers who thought they must buy a condo end up as a happy co-op owner.

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For Sale By Owner

S

ome apartments for sale are not represented by a real estate broker. The owner is selling the apartment themselves.

Generally these sellers paid more money for the apartment than they can now sell the apartment for. In an attempt to save money they do not hire a broker.

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Most of these apartments do not sell and the owner ends up hiring a seller’s broker who puts the apartment back on the market at a lower price. The main reason these apartments do not sell is that the owner puts the apartment on the market at more than it is worth.

If you view one of these apartments know the value or you could be wasting your time.

Be A Successful Real Estate Investor You are an investor if you plan on buying an apartment that:

You probably will not have a positive cash flow.

Your return from rent will be poor compared to other investments.

You will never live in, or You will rent out before you live in it, or You will live in and then rent out for more than two years.

Manhattan offers great rewards for investors but you need to be prepared: Only view apartments that an investor can buy, a condo or condop. Not a co-op.

If you will need a mortgage then expect that the rent you get may not cover your monthly expenses.

Wait a few years. When the apartment’s value increases sell it or take out a mortgage to get some cash out. Buy another apartment. Repeat until you have a good portfolio of apartments.

You will not be able to rent out the apartment by the day, the week or the month. Most condo buildings require that you have a lease with a one year term period.

Another option is to buy an apartment where there is a tenant in residence who cannot be evicted as long as they pay their rent. You have to wait until they voluntarily leave or pass away. This is a way to get an apartment at a deep discount compared to what it would cost without such a tenant.

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Definitions

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Co-ops and Condos Explanations of Cooperative (Co-op) and Condominium (Condo) Apartments.

75% of apartments are Co-ops.

25% of apartments are Condos.

Almost all pre-war buildings are co-ops.

Almost all new buildings are condos.

C

o-op and condo buildings have a board made up of residents of the building who have been elected by the residents of the building. The board makes decisions regarding approving new residents, budget, maintenance, maintaining and improving the building, etc. Each building has its own board.

Co-op: A co-operative building is owned by a corporation.

When you purchase an apartment in a co-op building you are purchasing shares of the corporation that entitle you, as a shareholder, to a “proprietary lease� which gives you the right to occupy the apartment.

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The board can approve or reject an applicant based on their financials or their board interview.

5

Each Co-op building has their own financial requirements and criteria.

6

Some buildings allow a mortgage guarantor, co-purchase, gift money, pied-a-terre, parents buying for a child, etc.

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The bigger your apartment, the more shares of the corporation you own.

Standard Co-op apartments:

1

You are required to put down about 20% for the down payment at the closing, more or less depending on the building.

2 3

You need to give the board financial disclosure.

A board interview is required.

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Leasing: Each building has their own rules regarding for how long you can lease your apartment to a renter. The average rule is you can sublet for 2 out of 5 years after living there for 2 years. The boards do not want residents to use the apartment solely as an investment but they allow limiting renting so a resident is not forced to sell if they have to move temporarily.

Co-ops are not ideal for those who are self-employed and cannot show much income on their income taxes. The co-op board will only consider income shown on tax returns.

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Resale condo apartments: Previously owned apartment.

The sellers are individual owners.

There is a monthly “common charge� that does not include your real estate taxes. Real estate taxes are a separate bill and are not tax deductible.

Common charges tend to be lower than co-op maintenance because there is no underlying mortgage for a condominium building.

You can finance up to 90% of the purchase price (assuming you can get a mortgage for 90%.)

You need to submit an application with some financial disclosure.

Standard Co-op apartments: (Continued) One monthly bill for maintenance includes real estate taxes and may include electricity, heat, etc. A portion of the maintenance is tax deductible. Each building is different in regard to tax deductibility of maintenance.

BUT: Do not get discouraged if all of this sounds onerous. With a good buyer broker broker on your side who will handle the complexities buying an apartment can be fun.

Sponsor Co-op apartments: Apartments that are held as an investment by the sponsor, the original developer who built the building or converted the building to a co-op.

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No board approval is required.

No financial requirements.

No downpayment requirement.

Sponsor units cost more because people who might not pass a board or don’t want to go through a board approval process can buy them. But cost less than a condo.

You still have to follow the building rules about sublets, pets, etc.

Not many sponsor units are available.

Condominium: You hold the deed to your apartment unit plus a percentage of the entire project in common with all other owners.

Renting the apartment: At will.

Usually for a one year lease term.

Condominiums are the best choice for flexibility.

Because there is more scarcity and more demand a condominium is more expensive than a cooperative apartment.

New Development Condo apartments: These apartments are new construction or preconstruction.

Buying into new construction has its perks: being able to pick out the apartment that best suits your need, a particular floor, or an apartment built to your specifications if you get in early enough.

Some of the disadvantages of new development are: uncertainty of the closing date, not being able to know exactly what the apartment will look like, and a possible higher closing cost than resale condo apartments.

Condop: A Co-op building with Condo rules.

Special hybrid of a Co-op and a Condo.

You but shares of corporation, as you would if you were buying into a standard Co-op.

Most new apartments are condos.

Investors need to buy a condo or condop.

If you do not have to buy a condo you should buy a co-op. In general a co-op apartment is about 30% less expensive than a condo, assuming the apartments are equal in terms of view, light, condition, monthly charges, neighborhood, building, etc.

Besides the lower cost there are many other benefits of a co-op: Many co-ops allow subleasing

them to buildings they can get into. Also, the seller’s broker will make sure that a buyer who puts in an offer can pass the board. Seller’s brokers often get fired by the seller after a board rejection.

Some buyers are concerned about privacy and do not want to disclose their financial details to a co-op board. I deal with buyers with tens of millions of dollars all the time.

Everyone involved in the co-op board application process are professionals that have seen many applications. All of the

Major difference is that the rules of the building will be Condominium rules.

These rules would be unlimited sublet policy, no financial requirements, no interview, investor friendly and more flexibility.

Very few condop apartments are available.

Applications for Co-ops and Condos.

Both require an application.

Co-op boards can reject a potential buyer. The seller then has to start over and find a new buyer.

Condo boards have the right of first refusal. If they do not want the potential buyer to purchase the apartment the board has to purchase the apartment from the seller.

Which is best for you?

Most pre-war apartments are co-ops.

after a period of time. Tax benefits. Once you are in the building you have a co-op board protecting you from a loud or obnoxious neighbor. The most important reason is that most of the apartments for sale are coops so the apartment that will fit your needs and that you can afford will likely be a co-op.

Some buyers worry about getting rejected by the board so do not consider co-ops. But their buyer broker will guide

sensitive materials in my office get shredded after a closing.

Also when purchasing a condo an application and financial disclosure is required anyway.

A good article that suggests the differences between condos and co-ops are not as large as they used to be is here: http:// www.nytimes.com/2012/10/07/ realestateigetting-startedchoosing-between-a co-opand-a-condo.html?pagewanted 28cr=0&pagewanted print Apartments in Manhattan

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Prewar, Postwar, Modern, New and Walk-up Buildings Prewar Building:

T

hese are apartments in buildings that were built before World War II.

The apartments.are in limited supply.

Also there are many buyers who prefer prewar apartments for their large rooms, high ceilings (9 feet and higher) and architectural details. Some have fireplaces. Some have moldings and decorative trim that is much sought after. So these apartments can be more expensive.

Almost all prewar apartment buildings are cooperatives.

details, have windows larger than prewar buildings but do not have the floor to ceiling windows of modern buildings. Some are downright ugly while others are attractive.

Most of these buildings have a doorman, elevator and laundry room.

Modern Building (Mid-1970s through late 1980s) This was a time when developers built buildings fast and cheap. Many apartment owners in these buildings have had problems such as leaks, appliances prone to breaking and poor construction.

The buildings have a lot of glass and steel.

Prewar buildings in general do not have modern amenities such as swimming pools or fitness centers or children’s playrooms. Many do have doormen, elevator and a laundry room.

The buildings have architectural details and were built very solidly with high quality craftsmanship, thick plaster walls and floors.

New Building (1990s to present)

Post-War Building (1940s through mid-1970s)

Walk-up Building:

These buildings were built solidly. Many of the apartments have high 8 foot ceilings. Walls are sheetrock. Many of these buildings have amenities such as gym room and rooftop deck.

The buildings do not have prewar architectural

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Apartments have high ceilings, floor-to-ceiling windows, washer/dryer, open chef’s kitchens with high-end appliances and marble tile bathrooms.

The buildings offer many amenities such as doorman, concierge, health club, pool, lounges, media room, etc.

Built in the early 20th century. A five to six story building. No elevator. No doorman.

Some have a laundry room in the basement. Security is usually a locked double-door with audio or video intercom.

Junior 1 Definition Example of a Junior 1 Bedroom Apartment.

A Junior One Bedroom Apartment is a one room apartment that has anadditional small room.

Usually the small room does not have a window and cannot be legally called a bedroom but is often used as a sleeping area or home office.

There is no standard size for a Junior One so you need to check the floorplan to see if it will fit the bed size you want. There may be a door or a curtain to divide the spaces.

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Junior 4Convertible 2 Bedroom

A

Junior 4, also known as a convertible 2 bedroom, has four rooms, a bedroom, living room, kitchen, and dining room or dining area. The bathroom is not counted.

The dining area can be converted into a small bedroom or home office. Two temporary walls and a door is installed.The extra room has its own window. A Junior 4 is a good option for a buyer who needs an extra room but cannot afford a 2 bedroom apartment.

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Cls. 6, 7, 8 Apartment

A

Classic 6 apartment consists of a living room, dining room, two full bedrooms, a separate kitchen, and a third smaller bedroom referred to as a “maid’s room.”

The maid’s room usually has a small bath.

There are also at least two other full baths.

The layout provides privacy, with the entertaining areas away from the bedrooms.

Classic 6 apartments are found almost exclusively in pre-war buildings.

The maid’s room is good for teenagers since it is separate from the other bedrooms. Or it is good for a home office.

A Classic 7 or Classic 8 Apartment is the same as a Classic 6, with the addition of one or two more bedrooms.

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Pied-à-terre – Temporary Apartment 2nd Home Pied a Terre - Definition • If you are looking for an apartment to live in when in NYC but will not be your primary residence then you are looking for a Pied-a-terre (French for “foot on the ground”.)

• Most condominium buildings allow for Pied-a-terre. But you cannot get as much space for your money when you buy a condo. Plus there are many more co-op apartments available.

• Some co-op buildings allow Pied-aterres. Many do not. Co-op boards prefer owners who live in the apartment as their primary residence.

• Do not be tempted to try and fool a co-op board into thinking you will be using the apartment as your primary residence. The board as a matter of routine will be checking your financial history and if they see evidence that you have another home they will start asking questions. If you are turned down by the board and the seller thinks you acted in bad faith by trying to trick the board you could possibly lose your 10% deposit.

• Before looking at an apartment make sure that the building allows Pied-aterres. Even some condo buildings do not allow for this so check first.

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Real Estate Broker. Attorney.

Real Estate Investor.

Licensed Associate Broker

Direct: 212-990-7124 Twitter: twitter.com/rob212 Consistent “Top Producer�

Attorney Since 1992 Nest Seekers Real Estate 100 Riverside Blvd., New York, NY 10069 (at 65th Street) RobertK@NestSeekers.com www.facebook.com/pages/Manhattan-Realty/305775195465

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