Renting has its perks—especially in a city like New York—but when you’re tired of living at the whim of a landlord (or you’re ready to upgrade your built-ins and wallpaper the foyer), it could be a sign that it’s time to buy. The process feels daunting (we repeat, especially in a city like New York)—but it doesn’t have to be. We sat down with one of Trump International Realty’s top Manhattan brokers to demystify the process and tell us how it’s done.
Ready to buy?
Consider the type of property you’re looking for—do you want a condo or a co-op? What neighborhood do you want to live in? Do you want to be in Manhattan or are you interested in making your money go further in Brooklyn or Queens? Lastly, what’s your budget? Does it make more sense to buy new construction, a property that has already been renovated or would it pay off to take on a small renovation yourself to add value to your home?
Consider all the costs
Look at the carrying costs—the monthly common charges, maintenance and taxes—as well as the interest and/or principal on your mortgage. Determine what you’ll need to budget for renovations (and pad the number as these projects have a tendency to grow). If you’re buying an older unit, keep in mind that appliances may break or HVAC units may need to be replaced.
Condo vs Co-Ops
Roughly 75-80% of the properties in Manhattan are co-ops, meaning that when you purchase a co-op, you’re buying shares of a corporation and in return you’re getting a proprietary lease. You don’t actually own your apartment—instead, you own shares of the co-op corporation that owns the building. With a condominium, you buy the actual property, which means you own your specific unit.
Your broker = your new BFF
The relationship between a buyer and a broker is a critical one. You’re trusting this person with one of your most important financial investments. You want to find a broker who will walk you through every stage of the process—and once you find that person, it’s good form not to work with any other brokers at the same time.
Get prequalified before you fall in love
If you are getting a mortgage, you should get prequalified, as this will be important when you submit a bid that’s contingent on financing. To do this, you’ll need to go to your bank, where they will run your credit and look at your assets to determine how much you’re able to spend. Come prepared with your most-recent W2s or 1099, 2-3 recent pay stubs, bank statements, retirement accounts and any other proof of assets that will show you’re able to afford the apartment.
Line up your board package in advance
Whether you purchase a condo or a co-op, your application will require a board package. This includes much of the information you will have already gathered to get prequalified. Create a folder with copies of your most recent tax returns, pay stubs, W2’s and bank statements. You’ll also want to have a letter of employment from your company, as well as letters of reference from a few colleagues and friends and a statement of assets and liabilities. It will benefit you to line these up in advance as timing can be everything and you want to be able to move quickly.
Ready to seal the deal?
Consider similar units in the building and neighborhood and decide with your broker on the price you’re willing to pay as an initial offer. Ideally, you’ll negotiate with the seller until you land on an offer you both find acceptable. At this point, your real estate attorney will start the due diligence process where they examine all documents involved in the transaction. Once complete, you’ll sign a contract and put down the deposit—typically 10%. Now, you and your broker will work together to complete the board package. Upon its completion, the board will issue a waiver that approves the purchase. At that point, the real estate attorneys will work with all parties to select a close date, at which time you’ll receive the keys to your new property!