Buyer Information:
Home ownership is both enriching and rewarding. But the process of finding a suitable home and closing on a purchase in New York City’s vast and complex real estate marketplace can seem both daunting and overwhelming.
The first step in ensuring a smooth and predictable home buying experience starts with the selection of the right Broker. When you choose The Dressler Group you are assured of having a complete team of seasoned real estate professionals at your disposal. Be it knowledgeable and experienced sales (and rental) agents, residential property managers, an on-staff real estate attorney, savvy mortgage professional(s) or a leading architect, The Dressler Groups has compiled a complete team of experienced industry professionals to ensure that we are exceptionally well suited to address and assist you with all of your home buying needs.
The Dressler Group believes that in a market as complex and diverse as New York City’s, having the right team is a necessity. Unlike other firms that just sell or rent, we are uniquely qualified to assist you with every component of the purchasing process from beginning to end. To this end, we have compiled an overview of relevant (Buyer) information that you should review at the onset of the home buying process. This will assist you in making the best decisions based on your individual needs and help set the expectation for what’s to come.
Property Classifications
New York City has four (4) principal types of home ownership. These four (4) property types offer different benefits and come with varying degrees of restrictions.
Cooperative:
Cooperatives (commonly referred to as Co-ops) have been the most common and prevalent form of ownership in New York City for almost a century. Nearly two-thirds of all multi-family housing units in the City are Co-ops. While Co-ops have an outward physical appearance like that of a condo or rental building, there are some notable differences in the way title for the property is held and the way ownership is conveyed. Until the late 1990’s most all buildings in New York City were Cooperative forms of ownership. The older buildings (prior to 1995) in New York City are almost all Co-ops.
The primary difference between a Co-op and other types of residential real estate is the way in which the title of the Co-op building is held and the way rights are conveyed to the purchaser. When you purchase a Co-op, instead of a deed, you are issued shares of the corporation that holds title to the building. This corporation holds title for the entire building as one entity. In exchange for purchasing the (unit specific) shares of stock that are assigned to the unit you are purchasing you are issued a Proprietary Lease which grants you the right to live in the subject apartment for as long as you own the specific shares assigned to that particular unit.
Some additional points of difference are:
- You pay one (1) monthly fee called Maintenance which is inclusive of (but not limited to) common element fees such as water/gas/electric, staff salaries, building management fees, repairs, insurance, property taxes (for the entire building since the units are not individually deeded) and also any Underlying Mortgage payment if applicable.
- The Tax Deductibility percentage you see associated with a Co-op sales listing is comprised almost entirely of the unit’s apportioned share of the property tax liability.
- Cooperatives are private corporations. As such, they have a board of directors. In order to purchase a Co-op you must first be vetted and approved by the Cooperative’s Board of Directors. The vetting process consists of a comprehensive board package (which is comprised of tax, income, asset, employment and personal information) that is to be filled out by the Purchaser(s). Once the information has been compiled by you, the prospective Purchaser, it is then submitted to and verified by the management company. Upon completion of the verification process, it is then passed along to the board members for review. Once the review process is completed and found to be satisfactory by the Board you will be schedule for an interview with some or all of the Board members. Upon the satisfactory completion of the vetting process you will be notified of the board’s decision. If approved, you can then schedule the closing.
- Co-op boards set a policy of what percentage of the purchase price (or market value in the event of a refinance) can be financed.
- The rental policies of most Co-ops are restrictive. Anyone that wishes to rent a Co-op apartment is subject to the same vetting process as a purchaser.
- Because the corporation owns the building and the “unit owners” have a collective interest in the entire building/corporation (and not just their own unit) and common elements, the board must approve all significant actions such as sales, rentals, renovations, etc.
Many of New York City’s finest buildings are co-operatives. They are great in number and are an excellent option for a majority of purchasers. That said, it is imperative that you have a clear understanding of what Co-op ownership entails and a clear understanding of what is and is not permissible. Those of us here at the Dressler Group have a keen understanding of Co-op strengths and shortcoming and you can be assured that we will work diligently to make sure you will be well matched with a property that is both to your liking and well suited to your needs.
Condominium:
Condominiums, unlike co-ops, are “Real Property”. As such, a purchaser receives a deed for the property at the closing of the escrow. Each unit is treated as an individual entity, is recorded as an individual unit and receives its own individual tax bill. That said, because the units are in clusters, they share common elements such as hallways, stairwells, common areas, amenities, staff & management fees, etc. In order pay for the maintenance, upkeep and administration of these common elements a monthly Common Charge is assessed. These charges are billed to each unit owner, on a monthly basis and are not tax deductible.
It is also worth noting that a Condominium Association, which has an elected (governing) Board of owners, also requires prospective Buyers (and Renters) to compile and submit a completed board package to the management company for verification. Once verified, the information is then passed along to the Board for review. This is more of a formality than anything. The condo board cannot deny a purchaser the right to purchase a unit unless the Condominium Association exercises its First Right of Refusal which would require the Condominium Association to purchase the unit at the same agreed upon sales price as the contract they are superseding. Unlike Co-ops, Condominiums, with few exceptions, do not restrict the amount you can finance in a purchase or refinance transaction.
Cond-Op:
A Cond-Op is a hybrid property in which ground level commercial space is incorporated as a Condominium and the upper floors are incorporated as a Co-operative. The Condo units are then retained by the developer or sold to individual owners. While Cond-Ops are often less restrictive than traditional Co-operatives and are characterized as “a co-op that has rules like a condo” this is an over generalization and is not technically correct.
Townhouse:
A townhouse is the least complex form of property ownership. It is titled as Fee Simple. Townhouses can be both single and multi-family and the owner has few if any restrictions as it relates to habitation as long as the owner resides in part or all of the property. The owner is solely responsible for all costs associated with ownership and may convey the property at will.
Real Estate Financing
Obtaining financing, when applicable, is the most vital and complex aspect of the purchasing process. And given the challenges of today’s financial climate, now more than ever before, it’s imperative that you identify, retain and work closely with an established, knowledgeable and experienced New York City mortgage professional. The Dressler Group understands this as well as anyone. We have identified and work closely with some of New York City’s top mortgage industry professionals. If you would like for us to assist you in selecting a mortgage professional we are more than happy to direct you to mortgage professionals with whom we have long standing relationships.
The first thing you must do before you begin the search for your new home is determine your budget and what, if any, restrictions you may have as it relates to buying a home. This information is ascertained during the initial call to a mortgage professional through a process called Pre-Qualification.
As part of the Pre-Qualifying process you will be asked a battery of cursory questions that will assist your mortgage professional in determining your search parameters. It is vitally important that you do this at the onset of your decision to purchase a home so that you have a clear understanding of things such as budget, property types you will qualify for as well as to identify any potential issues (such as erroneous credit report information) that need to be cured before you can obtain financing. You will be asked for and must furnish a Pre-Qualification letter (issued by your mortgage professional that is property and term specific) when you submit an offer to purchase a property.
Purchase Timeline
Once you have identified a property, successfully negotiated an agreed upon sales price and have contacted your attorney and mortgage professional to make them aware of your intent to enter into contract here is a timeline of what you can expect to happen from time of accepted offer.
- Seller’s Attorney to Prepare the Contract: 1 day
- Negotiate, Amend and Finalize Contract & Sign Contract: 2-5 days
- Submit Completed Loan Application to Mortgage Professional: 7 days
- Loan Approval & Commitment Letter from Bank: 28 days
- Property Appraisal: 35 days
- Submit Completed Board Application: 35 days
- Board Package Review: 49 days
- Board Interview: 56 days
- Board Notification: 60 days
- Closing: 65 days