Buying

A Step-by-Step First Time Buyer's Guide

Buying a home is one of the most thrilling milestones of your life. This step-by-step first time buyer’s guide will help you navigate the journey of buying your home.

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Step 1: Research

Do you already know where you would like to live? Would you prefer a condo, co-op, townhouse, or detached home? Which features would you like, or dislike? What’s available on the market now? In addition to looking for homes that interest you, also take note of changes in asking prices, number of days on market and inventory levels. These metrics provide valuable insight into market trends in specific neighborhoods and will help when the time comes to present an offer.

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Step 2: Determine Your Budget

How much do you have available to spend? How much can you afford? ~50% of all transactions in NYC are completed with mortgage financing. In you go this route, consult your mortgage banker/broker to help determine your budget, and obtain a mortgage pre-approval letter. This letter will indicate the amount the bank is likely to lend you, it will be required in your offer presentation to show that you are a qualified, serious buyer.

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Step 3: Engage Your Buyer's Agent

Working with one professional broker is the most effective way forward. Ask them for their undivided attention and commitment in finding you the best property. That broker, knowing you are committed, will go the extra mile to please you. Sellers pay buyer’s brokers, so your buyer’s broker’s services and expertise are yours at no cost to you. Most listings are shared, so a good broker can get you in to see every property on the market, and get you the best possible price and terms.

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Step 4: Find Your Home

This should be the most enjoyable step of the entire process (other than moving in!). An experienced, knowledgeable broker will save you a substantial amount of time and effort by only presenting properties to you that match your specific criteria. They will have already addressed essential questions about each building’s policies, location, comparable listings and recent pending and closed sales. Most buyers see 10 to 30 properties before feeling ready to purchase. Be sure to explore the neighborhoods and keep an eye out for necessities like public transportation, schools and grocery stores. 

My Goal Is to Provide You With the Most Personalized Service and Effective Strategies to Help You Buy Your Dream Home.

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Step 5: Present Your Offer and Negotiate

Sellers won't engage in price negotiations without an offer from a properly qualified buyer first, and negotiability varies by seller depending on their particular needs, and on market conditions. 

Complete offer presentations usually consist of:

1.) an offer letter written by your agent

2.) a completed and signed REBNY Financial Statement 

3.) if applicable, your mortgage pre-approval letter (not a “pre-qualification" letter) 

4.) proof of funds for the down payment or full price – 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 board approval process, and items 3 and 4 show how you intend to pay for the property.

Note: All properties remain unsecured until you have a fully-executed contract from both you and the seller.

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Step 6: Signing the Contract

In New York City, after agreeing on terms negotiated by their agents both the buyer and seller then engage the services of their own respective transaction attorneys for execution of the Contract of Sale. The seller’s attorney issues a contract to the buyer’s attorney, along with all necessary documents pertaining to the building’s financials, meeting minutes, by-laws and legal structure. The buyer’s attorney reviews all due diligence materials, and both lawyers negotiate any changes to the contract. Once the buyer’s lawyer is comfortable with the contract, the buyer/s sign the contract and issue a 10% deposit which is held in the seller’s attorney’s escrow account until closing. Once the signed contract is received with the 10% deposit, the seller/s signs too, thereby fully-executing the contract. Contingencies in the contract can include mortgage financing, board approval, closing dates, etc. Legal transfer of ownership occurs upon closing.

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Step 7: Financing

If financing, a mortgage application and property appraisal must be completed in order for you to receive a Mortgage Commitment Letter from the bank or lender. The mortgage application can only be completed after the Contract of Sale is fully-executed. For board approval, (in either condo or co-op) you must present your Mortgage Commitment Letter in your purchase application.

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Step 8: The Purchase Application

Each building’s purchase application will be very particular about what is required. Most boards require full disclosure of your financial assets and income, including supporting documentation, current salary, the past 3 years of tax returns, credit history, and personal and business reference letters. Buyers who are unwilling to divulge this information are in a better position to purchase a condominium, although many condominiums require much of this information too. If you are not financing, this part of the purchasing process could take 2-4 weeks.

In the board package, your broker will strive to present you in the most appropriate manner for your specific building. Once the board package is reviewed, fine-tuned and duplicated, the package is then submitted to the building’s managing agent for further review and distribution to the board members.

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Step 9: Board Approval

Most boards typically meet once a month. They usually assign a few board members to ‘introduce’ you to the building. Your broker will guide you through usual questions and answers. The co-op board may grant you an interview, or they can decline your application on grounds that may never be revealed. On the other hand a condo board can only exercise their right of first refusal, and have the building community purchase the apartment from the seller instead of you. This is extremely unlikely. After the interview, the managing agent usually relays news of board approval.

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Step 10: Walkthrough and Closing

Upon board approval, the managing agent, lawyers, banks and title company coordinate a mutually agreeable closing date, time and location. Your attorney will advise you of where to be, when and with what. Your agent will schedule a walkthrough of the property on the evening before or morning of the closing, to determine if any credits are due to you at closing. Properties are usually delivered ‘as is,’ broom-swept and with working appliances. At the closing, the buyer pays the additional down payment amount, bank fees, taxes, lawyers fees, and signs various documents that legally transfer ownership of the property. The process ends with handshakes, congratulations, and keys to your new home.

Estimated Buyer Closing Costs

 

CONDOS 

CO-OPS 

TOWNHOUSES 

Buyer's Attorney

$2,500 and up 

$2,500 and up

$2,500 and up

Home Inspection

$0

$0

$1,500 - $3,000

Managing Agent Fee

$450 and up

$450 and up

$0

Recording Fees

$250 - $1000

$250 - $1000

$250 - $1000

Mansion Tax 

 

 

 

     $1,000,000 to $1,999,999

1 % of purchase price

1 % of purchase price

1 % of purchase price

     $2,000,000 to $2,999,999

1.25% of purchase price

1.25% of purchase price

1.25% of purchase price

     $3,000,000 to $4,999,999

1.50% of purchase price

1.50% of purchase price

1.50% of purchase price

     $5,000,000 to $9,999,999

2.25% of purchase price

2.25% of purchase price

2.25% of purchase price

     $10,000,000 to $14,999,999

3.25% of purchase price

3.25% of purchase price

3.25% of purchase price

     $15,000,000 to $19,999,999

3.5% of purchase price

3.5% of purchase price

3.5% of purchase price

     $20,000,000 to $24,999,999

3.75% of purchase price

3.75% of purchase price

3.75% of purchase price

     $25,000,000 or more

3.9% of purchase price

3.9% of purchase price

3.9% of purchase price

Lien Searches

$750-$1,000

$750-$1,000

$750-$1,000

Move In Fee/Deposit

$500-$1,000

$500-$1,000

$0

Title Insurance

$436 per $100,000 of purchase price

$0

$436 per $100,000 of purchase price

If Financing…

 

 

 

Bank Fee/Points

0% - 2.5%

0% - 2.5%

0% - 2.5%

Application, Credit & Appraisal, Bank Attorney

$1,500 and up

$1,500 and up

$1,500 and up

Mortgage Recording Tax

 

 

 

     Loans up to $500,000

1.8% of loan

1.8% of loan

1.8% of loan

     Loans over $500,000

1.925% of loan

1.925% of loan

1.925% of loan

Mortgage Title Insurance

$364 per $100,000 of loan

$0

$364 per $100,000 of loan

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