Looking to Buy?
Buyer’s Guide
Moving has long been considered a stressful process and we work to change that every day. Rediscover the fun and excitement of real estate with us. Your Elegran advisor is a trustworthy guide to streamline the experience, from the decision to move all the way to the closing table and beyond. This guide will help you make a plan and achieve your goals.
C O N T E N T S
1. Choosing a Neighborhood
2. Buyer’s Agents
3. Condo vs. Co-Op
4. FAQ
5. Buyer’s Path to Purchase
6. Glossary
Choosing a Neighborhood
L
E T ’ S G
E T S T A R T E D
Fr o m H a m i l t o n H e i g h t s t o F i d i , G o w a n u s t o A s t o r i a a n d e v e r y t h i n g i n b e t w e e n , s e l e c t i n g t h e r i g h t
n e i g h b o r h o o d c a n b e o v e r w h e l m i n g , s o w e r e c o m m e n d n a r r o w i n g y o u r s e a r c h t o y o u r t h r e e t o p
a r e a s b e f o r e h i t t i n g t h e s t r e e t s . W h i l e y o u m a y l o v e S o h o f o r s h o p p i n g o r t h e U p p e r E a s t S i d e f o r
r e s t a u r a n t s , t h e r e a r e a v a r i e t y o f f a c t o r s t o c o n s i d e r.
I N V E N TO R Y & P R I C I N G
A r e y o u l o o k i n g f o r a h i g h r i s e o r a
b r o w n s t o n e ? D o y o u w a n t a n a r e a
t h a t ’s e v o l v i n g o r o n e t h a t ’s m o r e
e s t a b l i s h e d ?
G E T T I N G A R O U N D
H o w m u c h t i m e a r e y o u w i l l i n g t o
s p e n d c o m m u t i n g ? D o y o u w a n t a
v a r i e t y o f s u b w a y o p t i o n s o r p r e f e r t o
w a l k ? A n d d o y o u w a n t a n e a s y c i t y
g e t a w a y b y c a r ?
G R E E N S PA C E
W h a t d o y o u d o o u t s i d e ? H o w d o
y o u e xe r c i s e ? D o y o u p i c n i c o r
s t r o l l ? P i c k : C e n t r a l Pa r k o r
H u d s o n R i v e r P a r k
T H E V I B E
D o y o u f e e d o f f o f b u s y s t r e e t s ? H o w
d o y o u f e e l a b o u t c o b b l e s t o n e ? P i c k :
m u s e u m s o r g a l l e r y h o p p i n g ? E a r l y
m o r n i n g c o f f e e o r l a t e n i g h t d i n n e r s ?
Tr e n d y o r c l a s s i c ?
Buyer’s Agents
A b u y e r ’s a g e n t h a s o n e j o b : p r o t e c t t h e b u y e r ’s i n t e r e s t s d u r i n g t h e p u r c h a s i n g p r o c e s s . T h e
a g e n t n e g o t i a t e s w i t h t h e l i s t i n g a g e n t o n p r i c e a n d c o n t i n g e n c i e s , a n d a s s i s t s t h e b u y e r w i t h
n a v i g a t i n g t h e m o r t g a g e , b o a r d a p p r o v a l a n d c l o s i n g p r o c e s s e s T h e l i s t i n g a g e n t s o l e l y
r e p r e s e n t s t h e i n t e r e s t s o f t h e s e l l e r T h e i r j o b i s t o n e g o t i a t e t h e h i g h e s t p o s s i b l e p r i c e f o r
t h e a p a r t m e n t T h e B u y e r ’s a g e n t g o a l , i n c o n t r a s t , i s t o f i n d y o u t h e r i g h t h o m e f o r t h e b e s t
p o s s i b l e p r i c e w i t h m i n i m a l i n c o n v e n i e n c e t o y o u r l i f e W H AT I S A B U Y E R ’ S A G E N T ?
W H Y D O I N E E D A B U Y E R ’ S A G E N T ?
A s a b u y e r, u s i n g a n a g e n t p r o t e c t s y o u r i n t e r e s t s i n w h a t i s a n e x p e n s i v e a n d o f t e n v e r y c o m p l e x
p u r c h a s e w h i c h i s o f t e n c o m p l i c a t e d b y t h e b o a r d a p p r o v a l p r o c e s s B u y e r s t h a t r e l y o n t h e s e l l e r ’s
a g e n t t o h a n d l e b o t h s i d e s o f a d e a l d o n o t h a v e a p r o f e s s i o n a l , d e d i c a t e d a n d u n c o n f l i c t e d
a d v o c a t e d u r i n g n e g o t i a t i o n s a n d m a y n o t h e a r a b o u t p r o b l e m s w i t h t h e a p a r t m e n t o r t h e b u i l d i n g
u n t i l i t ’s t o o l a t e L e g a l l y, a b u y e r ’s a g e n t h a s a s i n g u l a r f i d u c i a r y d u t y t o y o u , t h e b u y e r D u r i n g a
t r a n s a c t i o n , a b u y e r ’s a g e n t a l s o w o r k s t o r e m o v e p r e s s u r e , a b s o r b s t r e s s , a n d r e m o v e e m o t i o n
f r o m t h e p r o c e s s T h i s l e a d s t o c l e a r e r i n f o r m a t i o n , g r e a t e r k n o w l e d g e , a n d m o r e t h o u g h t f u l
d e c i s i o n s , a l l o f w h i c h b e n e f i t t h e b u y e r.
H O W I S A B U Y E R ’ S B R O K E R C O M P E N S AT E D ?
I n m a n y r e a l e s t a t e t r a n s a c t i o n s , t h e s e l l e r o r o w n e r o f t h e p r o p e r t y o f f e r s a c o m m i s s i o n
[ c o m p e n s a t i o n ] t o t h e b u y e r ’s b r o k e r. I f t h e b u y e r ’s b r o k e r a c c e p t s t h i s o f f e r, t h e y w i l l b e d i r e c t l y
c o m p e n s a t e d b y t h e s e l l e r o r p r o p e r t y o w n e r. H o w e v e r, i n c a s e s w h e r e t h e s e l l e r d o e s n o t o f f e r
c o m p e n s a t i o n t o t h e b u y e r ’s b r o ke r, t h e b u y e r m a y b e r e s p o n s i b l e f o r c o m p e n s a t i n g t h e i r
b u y e r ’s b r o ke r I n s u c h i n s t a n c e s , t h e b u y e r a n d t h e i r a g e n t w i l l a g r e e o n t e r m s o f c o m p e n s a t i o n , o f t e n o u t l i n e d i n a B u y e r R e p r e s e n t a t i o n A g r e e m e n t T h e b u y e r t h e n p a y s t h e i r a g e n t d i r e c t l y f o r
t h e i r s e r v i c e s
W H AT I S A B U Y E R R E P R E S E N TAT I O N A G R E E M E N T ?
A B u y e r R e p r e s e n t a t i o n A g r e e m e n t f o r r e a l e s t a t e i s a n a g r e e m e n t b e t w e e n a h o m e b u y e r
a n d a r e a l e s t a t e b r o k e r I t o u t l i n e s t h e b r o k e r ’s s e r v i c e s , c o m p e n s a t i o n , t h e d u r a t i o n o f t h e i r
r e l a t i o n s h i p, a n d t h e b u y e r ’s o b l i g a t i o n s I t ’s i m p o r t a n t f o r c l a r i t y a n d l e g a l p r o t e c t i o n d u r i n g
t h e h o m e b u y i n g p r o c e s s
Condos vs. Co-ops
T R Y I N G T O D E C I D E W H I C H I S B E S T F O R Y O U ?
Here’s a head-to-head on the differences.
WHAT DO YOU OWN?
Co-op
Shares of the corporation that owns the building, with a proprietary lease for occupation of the specific unit.
Condo
Real property. The physical “four walls” of the apartment and everything within, allowing for greater ease of renovations
WHAT’S THE APPROVAL PROCESS?
Co-op
It varies by each building, but typically a board package with full financial disclosure and references and an interview are required. Co-op boards have the ability to reject any applicant.
Condo
The process is simpler as boards generally don’t have the right to refuse new owners without purchasing the unit themselves, although an application package is still required to be submitted by the purchaser(s).
HOW LONG DOES IT TAKE?
Co-op
Typically close 2–3 months from contract signing.
Condo
Typically 1–2 months from contract signing.
HOW MUCH CAN I FINANCE?
Co-op
Typically 70–80% of your purchase price, but some buildings require a larger down payment.
Condo
Typically 80-90% of your purchase price.
CAN I SUBLET MY APARTMENT?
Co-op
Generally no, but sometimes within time limits and with additional fees.
Condo
Generally yes, but additional fees, time limits and financial disclosures may apply.
ANY BARRIERS TO MY OWN SALE OF THE APARTMENT?
Co-op
Just the same approval process you went through, and some boards also impose transfer fees called “flip taxes.”
Condo
The buildings can exercise a right of first refusal, which is uncommon. Some new development condos have also imposed a flip tax for units sold before a certain time period.
WHAT ABOUT MONTHLY CHARGES AND TAXES?
Co-op
Generally based on how many shares are attributed to a unit; include heat, hot water, staffing, real estate taxes and debt service for mortgages.
Condo
Based loosely on the square footage of the unit; include building maintenance, common area upkeep and staffing; real estate taxes are billed individually.
W H A T W O U L D Y O U L I K E T O K N O W ?
WHY BUY VERSUS RENT?
New York City real estate is often considered to be a solid financial investment in a relatively stable market. Many purchasers like that they are paying their monthly fees toward a goal of ownership versus monthly rent payments, or like the freedom to make the home their own with renovations and decorating.
WHAT GOES INTO A BUDGET?
First consider if you’re financing and the necessary down payment funds, closing costs, moving fees, and contingencies for unforeseen renovations and decorating costs.
HOW LONG DOES IT TYPICALLY TAKE TO BUY A HOME?
Buyers shop for the right home for any length of time, from a week to a year. Once you pull the trigger and reach a signed contract, the time to closing is generally 60 to 90 days for a condo and 90 to 120 days for a co-op. See “10 steps to purchase” for details.
WHAT GOES INTO A BOARD PACKAGE?
A: Co-ops typically require two years of income tax returns and W2 forms, business and personal reference letters, the last three employer pay stubs and a letter confirming employment, and statements for all accounts. If you’re financing, you’ll also provide a loan application, commitment letter, and recognition agreements. Condo boards require an application and many require similar materials to co-op boards, but very rarely refuse a purchaser based on this package.
I’M AN INTERNATIONAL BUYER — HOW IS FINANCING DIFFERENT?
In regards to both condos and co-ops, many lenders require international purchasers to make a larger down payment. Not all US lenders will provide financing to non-residents.
The Buyer’s Path to Purchase
M U S T E R YO U R
R E S O U R C E S
Finances, credit score and lending options define your budget.
I D E N T I F Y M U S T- H AV E S
A S S E M B L E YO U R T E A M
Interview and partner with your preferred agent, attorney and mortgage lenders.
To narrow things down, make lists. E X P L O R E T H
Understand what you like and don’t like.
Submit your loan application, have the property appraised, and sign the commitment letter.
S
and close the deal.
Glossary
Adjustable Rate Mortgage (ARM)
The initial interest rate is fixed for a period of time (typically between three to 10 years). After this initial period of time, the interest rate resets periodically, at yearly or even monthly intervals.
Appraisal
Your lender will typically have the home valued by an appraiser to confirm that the price follows fair market value. This includes a physical inspection as well as comparison to similar properties.
Capital Gains
A tax on the growth in value of your investments (in this case, the home) at the time of sale. The percentage rate depends on your tax bracket; shortterm capital gains apply to assets held less than one year.
Closing Costs
Various fees related to financing that are incurred at the time of closing, including title and insurance fees, attorney fees, current and future property tax and mortgage insurance payments that are held in escrow.
Common Charges
The costs of operating a building, which are communally shared by residents. These include management fees, staff salaries fees, lobby, exterior and amenity operating expenses.
Conversion
As it relates to real estate, this refers to a building whose purpose has changed from its original construction; potential conversions: 1) from manufacturing or commercial to residential, 2) within residential: from rental to for-sale.
Entity Ownership
Ownership that is not in your own name, meaning the actual title is associated with a limited liability company, limited partnership, company, corporation or other person.
Escrow
Funds or assets temporarily transferred to and held by a third party, usually on behalf of a buyer and seller to facilitate a transaction. A deposit or down payment will be held in escrow in advance of the closing, and lenders also often hold a portion of future tax and insurance payments in escrow during the life of a loan.
Equity
The difference between what you owe on your mortgage and what your home is currently worth. The longer you pay your mortgage, the more equity you earn.
Fixed Rate Mortgage
An installment loan that has a fixed interest rate for the entire term of the loan.
Flip Tax
Many co-op boards impose these transfer fees on sellers, often as a percentage of the sale price or of the seller’s financial gain in the co-op interest. Some new development condos also charge these fees for sales before a certain period of time following purchase.
Land Lease
An agreement between two entities, whereby a commercial tenant pays a landlord (often a city or state government or private institution) to lease land and build upon it; also referred to as a ground lease. The term is generally between 50 and 99 years.
Limited Liability Company (LLC)
A business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation; some purchasers prefer to use an LLC for the personal liability protection and favorable tax treatment.
Loan Commitment
A lender’s promise to offer a loan or credit of a specified amount to a borrower; can be either secured or unsecured.
Mortgage Interest
The interest charged on a loan used to purchase a piece of property. Mortgage interest compounds and may be either fixed or variable. The majority of a borrower’s payment goes toward mortgage interest in the earlier part of the loan.
Non-Resident Alien (NRA)
An alien who has not passed the green card test or the substantial presence test.
PILOT
“Payment in lieu of taxes”; a payment made to compensate a government for some or all of the property tax revenue lost due to tax exempt ownership or use of real property. Some properties may be subject to a PILOT tax as part of common charges; this typically functions similarly to land lease taxes.
Pre-Approval
A preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer; a conditional commitment to actually grant you the mortgage, although it does not guarantee a specific interest rate.
Pre-Qualification
An estimate for credit given by a lender based on information provided by a borrower; the first step in a mortgage approval process which should be taken prior to formal home shopping to determine the appropriate budget range.
Title Insurance
A one-time payment paid at closing that protects you from financial loss and related legal expenses in the event there is a defect (ex: back taxes, liens and conflicting wills) in the title to your property.
