THE Buying process
Preparing to buy a home
Once you’ve made the decision to buy a home, the first thing you should do is get your financials in order. This will allow you to determine how much you are able to spend before you start your search.
DIRECT LENDERS VS MORTGAGE BROKERS: You have the choice of searching the mortgage marketplace for the best rates yourself and then applying directly to the lender or you could work with a mortgage broker who will search amongst many lenders on your behalf to find the best mortgage for you.
PRE-QUALICATION: You can potentially learn that you may qualify for a loan before you submit any documentation. During your initial conversation with a mortgage broker or lender, they should be able to determine if you are qualified for a certain loan amount based upon information that you provide. It is very important that you always disclose your financial situation fully and accurately, even in conversation since they will use the information to determine whether you are prequalified. You should arrive prepared with a working knowledge of your salary, commissions, assets and/or liabilities you may have.
PRE-APPROVAL: After your initial conversation with a mortgage broker or loan officer (if you are going straight to the lender), there is some paperwork and additional information you need to provide to move the process forward. First, you will have to provide documentation for a detailed background check and financial evaluation. This evaluation can involve a number of factors, but is usually a review of your tax returns, a credit check and a peek into your income history. Next, the lending institution will send you an official letter stating that you are pre-approved for a loan for a particular amount. For international buyers, certain additional documentation could be required in order to satisfy proof of income and asset requirements.
COndo vs co-op
With your financials now in order the next step in preparation of a successful search is understanding the differences between Condos and Co-ops.
Ownership
CONDO -Condominium owners physically own the “four walls” of their apartment and generally have greater latitude in performing renovations to the unit provided that the condo board is notified, the proper paperwork is completed, the certificate of occupancy for the unit/building is not impacted and certain other requirements are met (ie. the parties performing the work have the necessary insurance).
CO-OP - Residents own shares of the corporation which owns the building (and in most cases the land) rather than their physical apartment, and they sign a proprietary lease in order to be permitted to occupy their specific unit. Most rennovations are subject to the strict approval of the co-op board and any/all specific building regulations.
APPLICATION & approval
CONDO - A condo board generally doesn’t have the right to refuse new owners. It must either exercise its “right of first refusal” and purchase the unit from the owner, or waive that right and permit the transaction to proceed. Condominium apartment purchases can generally be closed in 1-2 months after the signing of a contract.
CO-OP - Cooperative boards typically require an extensive approval process including an interview and full financial disclosure with references. Further, co-op boards have the ability to reject any applicant without cause. Co-op transactions are typically closed 3-4 months after the signing of a contract.
financing
CONDO - As opposed to co-ops, condos generally permit smaller down payments or have no restrictions at all with respect to financing, which makes the process a lot easier than dealing with co-ops.
CO-OP - The majority of co-ops will allow you to finance 70-80% of the purchase. In regards to both condos and co-ops many lenders require international buyers to obtain financing with a greater loan-to-value ratio than is required by the board.
SubLets
CONDO - Subletting is generally permitted but additional fees may be involved. Subtenants will likely have to submit certain financial disclosures including credit information. Additionally many condos impose time frame restrictions.
CO-OP - Subletting is generally frowned upon by co-op boards and if permitted subtenants are often subject to strict board approval. Time limits and several additional fees often apply.
SElling
CONDO - Condo owners can generally sell whenever they want to, to whomever they want to, subject to the right of the condo board to exercise their right of first refusal.
CO-OP - Potential buyers are subject to the same approval process as original owners. Many co-op boards impose transfer fees called “flip taxes” on sellers. These are often a percentage of the sale price.
Monthly charges
CONDO - Common charges are often based (sometimes loosely) on the square footage of the unit to cover costs of building maintenance, common area upkeep and staffing. Real estate taxes are not included in condo common charges.
CO-OP - Maintenance charges are generally based (sometimes loosely) on how many shares are attributed to a unit and include items like heat & hot water, staffing, real estate taxes and debt service for mortgages on the property.
Real Estate/property Taxes
CONDO - Condo owners receive separate real estate/property tax bills and pay such bills individually (or sometimes through their mortgage servicer if they obtain financing).
CO-OP - Due to the fact that the entire cooperative building usually has one (1) tax lot, real estate/property tax bills are usually included in the monthly maintenance fees.
BegInNing your search
Now that you have a clear idea of your financial capabilities and an understanding of what differentiates condos from coops the fun can officially begin. Start to compile a list of all the things your new home and neighborhood must have to be right for you and with consideration of that criteria we will search the market and co-ordinate an itinerary of showings until you find the home of your dreams. This part of the process can vary in time; you could find a place you are passionate about on day one or it could take months before you find the perfect one. Rest assured we will be there to support you every step of the way until the perfect property presents itself.
Buying timeline
This timeline provides an idea of how long the average purchase of a condo (within 60-90 days) or co-op ( within 90-120 days) takes from the day you find your ideal property to the final closing day.
DAY 1:
You have just attended a preview at the home of your dreams and have decided to make an offer which we present to the seller’s agent on your behalf.
DAY 2-6:
Your first offer is either accepted or a negotiation begins that we expertly help you navigate until your final offer is accepted.
WEEK 1-2:
Attorneys for the buyer and the seller negotiate the legal terms of the transaction and the contracts are signed. If you are obtaining financing this is the time to submit your loan application in order to obtain your loan commitment letter.
WEEKS 2-10 (15 if a co-op):
We will now begin to work alongside you to assist in the collection of any information required by the condo or co-op board.
Also during this time the property is appraised and if requesting financing the commitment letter is obtained.
Your attorney will work alongside the lender’s attorney to ensure all closing requirements are met, and that your loan if requesting financing, is cleared to close. If you are purchasing a co-op you will be asked to attend a personal interview.
CLOSING DAY:
A final walkthrough of the property should be performed the day of closing to ensure the property is in the same condition as of when the contracts were signed. The buyer and seller will now sit down with their respective representatives and sign all necessary closing documents. As the buyer you will now receive the keys to the property and take official ownership of the your new home!