Everybody knows that New York City is one of the country's most competitive real estate markets. Every new change in the market brings challenges for prospective buyers. Here are a few tips for you to gain an edge over the competition.
Secure your mortgage pre-approval letter
50% of all residential transactions in NYC are completed with mortgage financing. If you go this route and haven't done so already, secure your mortgage pre-approval letter before seeing too many more apartments.
Multiple offers, bidding wars, and low inventory are the norm right now, so securing your mortgage pre-approval letter in advance is a necessity. The vetting process for your pre-approval letter will ensure that you are shopping within your financial means and give you a sense of what to expect with a co-op board's post-closing liquidity and debt-to-income requirements. Once you have your pre-approval letter in hand, you will be ready to present an offer as quickly as your all-cash counterparts when you find the right apartment.
Be sure to get a pre-approval letter, not a pre-qualification letter. Also, co-op offers presented with pre-approval letters from online mortgage companies are less competitive in our market, so it's best to stick with the major bank lenders.
Slow and steady does not win the New York City market race. Do your research on the subletting, pet, alteration, and purchasing policies of the co-ops or condos you will be visiting ahead of time. Our office is happy to provide refined lists of properties that only match your criteria. This way, you won't waste your time looking at apartments, only to later discover that you can't install a washer/drier, have a dog, or remodel the kitchen the way you wish. In a fast-moving market, making a decision to purchase within 24 hours of first seeing a property gives your offer the best chance of being accepted.
Be Prepared for Competition
Competition is stiff, with so many people competing for the best apartments in New York City. If you see a home in your budget that is move-in ready and in a good neighborhood, it won't last long. When competition is like this, put your strongest offer on the table. Sellers need certainty. Let them see that you are serious and have more than a passing interest in their property.
Make it Personal
We always include a bio in our offer presentations, which includes information on why you love their seller's home, and basic personal information about your profession, hobbies, who will be residing in the unit, etc. This also helps to convey your profile for the board approval process. It makes your offer stand out and helps the seller connect to you on a personal level.
Anatomy of an Offer
Sellers don't engage in price negotiations without an offer from a properly qualified buyer first. The usual response to the question, "is the price negotiable" is, "present an offer from a qualified buyer – then we'll talk."
Complete offer presentations for apartments usually consist of:
1.) an offer letter
2.) a completed and signed REBNY Financial Statement (we'll cover this document in another post)
3.) if applicable, your mortgage pre-approval letter (not a "pre-qualification" letter)
4.) proof of funds for the down payment – usually a most current bank or brokerage account statement. (Be sure to redact all account numbers.)
Items 1 and 2 convey your profile for the co-op board approval process and items 3 and 4 show how you intend to pay for the apartment.
The REBNY Financial Statement provides co-op sellers with an understanding of your overall financial profile and shows that you meet the co-op's debt-to-income ratio (usually <28%) and post-closing liquidity requirements (usually 24 months' worth of mortgage and maintenance payments.
Don't Get Discouraged.
Don't worry if your first or second offer isn't accepted. We will find the home that is right for you. Home buying can seem daunting, but it is SO rewarding once you finally have those keys in hand and spend your first night in your new place. The key to transforming this shifting and often nerve-wracking process into (practically) a guided tour to the closing table is to engage an experienced broker with the will to win and the integrity to represent your interests. We'll guide you home.