Gea Elika's Blog, page 100

What is a Backup Real Estate Offer?

When a seller accepts another offer is accepted, this does not necessarily mean the game is over for you. The seller may have deemed someone else’s offer is superior. For instance, he or she might have accepted a higher price or the promise of a cash deal and quick closing date.

In New York City, an accepted offer is not binding. This means you are in a position to obtain the property you desire should something the deal fall through.

Wait until the ink is dry

In New York, the home buying process is different than certain other states, where the seller’s acceptance of a formal offer creates a contract. In this case, neither the seller nor buyer is prevented from walking away without penalty once the offer is accepted. At this point, it moves on to the next phase, where both attorneys conduct due diligence and review the contract, including the contingency clauses. It is binding only to both parties once it passes the due diligence stage, and is signed by both the buyer and seller, and is considered “in contract.”

This means, if either party backs out prior to an inked contract, you are next in line.

Why parties back out

You should have your buyer’s agent try to find out why the deal fell through. The buyer or seller might have had a good reason that would not give you pause to go ahead. Typically, buyer’s agents do a good job screening their clients. However, perhaps the buyer did not provide his or her financials promptly and there, was concern that he or she could not pass muster with the board. Other reasons might include a buyer’s failure to get financing, or he/she got overwhelmed by the process. The latter might occur if it is a first time home buyer, and/or a friend/relative advised that the deal does not make financial sense.

You should know if there was something else going on, though. For instance, if the seller was making unreasonable demands, you will inherit the same issue.

You are not obligated

Just because you are the backup offer does not mean you have to sit on your hands hoping the accepted offer falls through. You are not legally bound by it, meaning you are free to look at other properties. If the initial offer falls through, you are not obligated to step up and purchase the unit. Should you find another property you like at least as much; you can walk away from the other place.

You are free to change your mind for any reason. Perhaps you have had a change of heart, your financial circumstances have changed, or you may have found a different co-op or condo. You may have no reason at all. In any case, there is no financial penalty for you should you decide not to go through with the purchase.

No harm, no foul

While it may seem you are a seller’s second choice, there is no harm in putting in a backup offer. Someone could jump ahead of you, meaning you may not stand second in line. Although this seems to favor the seller, you retain your right to rescind your offer and walk away at any time.

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Finding a Child-Friendly Apartment in NYC

Searching for an apartment in NYC requires answering a lot of questions and when you add a kid or three to the mix those questions begin to multiply. Is it a safe neighborhood for children? What is the school zone? Does your chosen building have any rules regarding children? These and more will help point you in the right direction for a new home and keep you clear of those areas to avoid. Whether you already have children or plan on having one in the future, you’ll need to be very specific about what your needs are and how they might change over the years. Here’s what you should consider when looking for a child-friendly apartment in NYC.

How secure are the windows and balcony?

By law, landlords in NYC are required to provide window safety bars for any household that has a child aged under ten. That includes even first-floor apartments. When inspecting an apartment, whether through a private showing or open house, note the condition of the window guards to see if they’re fitted properly. Also, if there’s a balcony, check that it’s stable and secure. If you’re unsure of anything, ask the listing agent.

How secure is the building?

As well as checking the crime rate in the area, you should carefully evaluate how safe the building is. Check that the front door can be locked securely, and whether or not there’s a 24-hour doorman. Make sure to ask about other entrances to the building. If there are then who has access to them? Simply knowing the security and layout of a building will help you sleep better at night.

Are there any building rules regarding children?

By the Fair Housing Act, it is illegal for any building to have rules which discriminate against you or your kids. But buildings can still have rules which will impact those with families. Most of these are to do with public safety (not leaving strollers, bicycles or tricycle’s in the hallways) or supervision (requiring any child under 12 to be supervised by an adult). However, some rules can be outright discriminatory, usually through poor wording choice. Know your rights and check this booklet by the National Multifamily Housing Council on the types of rules you might encounter.

What school zone are you in?

While there are options for non-zoned schools, you can still face some tough choices depending on the local school. It’s really worth putting some time into this and enquiring about the quality of the local school. Do parents like it? Do they allow their kids to walk home after school? Are there any parks nearby where your children can play? Your chosen school zone can mean all the difference between your child going to a great school or one well below the average.

Does the building have children close to your child’s age?

Knowing that the building houses other families with young children can be a source of encouragement. It doesn’t just give you a neighbor you can bond with but also a playmate for your child. Not to mention a potential babysitter when the need arises.

How thick are the walls and floors?

Despite their small size, kids can cause quite a ruckus. If you don’t want to constantly receive noise complaints from neighbor’s test how thick the walls and floors are. Or better yet, ask for a ground floor apartment.

Will the apartment meet you’re changing needs?

What are your long-term plans? If you’re buying, then you should already be expecting to stay a minimum of five years. As such your chosen apartment should meet your changing needs over those coming years. Your six-month-old daughter might not require much space now but soon enough she’ll need her own room. Then there’s all the space you’ll need for storing all the stuff that parenthood causes you to build up. Try to think as far ahead as you can and plan for a changing future.

The post Finding a Child-Friendly Apartment in NYC appeared first on ELIKA Real Estate.

Considerations to make When Finding a Child-Friendly Apartment in NYC

Searching for an apartment in NYC requires answering a lot of questions and when you add a kid or three to the mix those questions begin to multiply. Is it a safe neighborhood for children? What is the school zone? Does your chosen building have any rules regarding children? These and more will help point you in the right direction for a new home and keep you clear of those areas to avoid. Whether you already have children or plan on having one in the future, you’ll need to be very specific about what your needs are and how they might change over the years. Here’s what you should consider when looking for a child-friendly apartment in NYC.

How secure are the windows and balcony?

By law, landlords in NYC are required to provide window safety bars for any household that has a child aged under ten. That includes even first-floor apartments. When inspecting an apartment, whether through a private showing or open house, note the condition of the window guards to see if they’re fitted properly. Also, if there’s a balcony, check that it’s stable and secure. If you’re unsure of anything, ask the listing agent.

How secure is the building?

As well as checking the crime rate in the area, you should carefully evaluate how safe the building is. Check that the front door can be locked securely, and whether or not there’s a 24-hour doorman. Make sure to ask about other entrances to the building. If there are then who has access to them? Simply knowing the security and layout of a building will help you sleep better at night.

Are there any building rules regarding children?

By the Fair Housing Act, it is illegal for any building to have rules which discriminate against you or your kids. But buildings can still have rules which will impact those with families. Most of these are to do with public safety (not leaving strollers, bicycles or tricycle’s in the hallways) or supervision (requiring any child under 12 to be supervised by an adult). However, some rules can be outright discriminatory, usually through poor wording choice. Know your rights and check this booklet by the National Multifamily Housing Council on the types of rules you might encounter.

What school zone are you in?

While there are options for non-zoned schools, you can still face some tough choices depending on the local school. It’s really worth putting some time into this and enquiring about the quality of the local school. Do parents like it? Do they allow their kids to walk home after school? Are there any parks nearby where your children can play? Your chosen school zone can mean all the difference between your child going to a great school or one well below the average.

Does the building have children close to your child’s age?

Knowing that the building houses other families with young children can be a source of encouragement. It doesn’t just give you a neighbor you can bond with but also a playmate for your child. Not to mention a potential babysitter when the need arises.

How thick are the walls and floors?

Despite their small size, kids can cause quite a ruckus. If you don’t want to constantly receive noise complaints from neighbor’s test how thick the walls and floors are. Or better yet, ask for a ground floor apartment.

Will the apartment meet you’re changing needs?

What are your long-term plans? If you’re buying, then you should already be expecting to stay a minimum of five years. As such your chosen apartment should meet your changing needs over those coming years. Your six-month-old daughter might not require much space now but soon enough she’ll need her own room. Then there’s all the space you’ll need for storing all the stuff that parenthood causes you to build up. Try to think as far ahead as you can and plan for a changing future.

The post Considerations to make When Finding a Child-Friendly Apartment in NYC appeared first on ELIKA Real Estate.

What is the True Cost of Living in NYC?

Everyone dreams of making New York home, but not many can foot the costs of it. With $15 hamburgers and $200-per month gym memberships, the city’s reputation for being one of the most expensive in the world is well deserved. The income taxes alone are some of the highest in the country at between 7% and 12%. And that’s before we even get to the costs of keeping a roof over your head. Taking everything into account, the cost of living in NYC is at least 68.8% higher than the national average. If you live in central Manhattan, it’s even worse with the cost of living more than double the national average.

If you’re thinking of making a move to NYC, then it helps to fully know what you’re getting into. Here’s the data on what it costs for housing, food, transportation and other living expenses in the Big Apple.

Cost of renting in NYC

As everyone who’s lived there knows, the rent is way too high. This shows no signs of abating either, in fact, it’s going up. In 2017, the median annual asking rent in Manhattan was a crushing $3,150 and in Brooklyn, it was $2,500. Things are a little more affordable in Queens but not by much. Rental prices will vary widely across the city and change from one neighborhood to the next. The U.S. census defines “affordable” as any household with a rent-to-income ratio of 30% or lower. Meaning that if you’re paying 30% or less of your income on rent, you’re doing pretty well. Most renter’s in New York Cory are running close to 50%.

Cost of buying in NYC

Rents may be crazy, but when you start looking at house prices, you start to see why most people rent. In 2017, the median home price in Manhattan was $1,567,000. For Brooklyn and Queens, it was $920,000 and $629,000 respectively. Just like rentals, these are also going through a price surge which could put them further out of reach in the years to come. But with the present buyer’s market in the city, it is possible that you could get a low-ball offer accepted. Also, like rentals, prices will vary widely from each borough and neighborhood to another so do some shopping and asking around to see what’s on offer.

When considering whether to buy or rent in NYC, it’s important to think in the long-term. At a certain point, it’s more economical to buy rather than rent. Recent data from StreetEasy found that this tipping point is 5.6 years. If you’re moving to NYC for a long-term job, then try to see yourself five years from now. Think about how your needs might change and whether any place you’re interested in will meet those. Mortgage payments will be less than your rent, so if you have enough to cover the down payment on a home, it’s well worth considering the buying option.

Cost of transportation in NYC

After housing comes transportation as the next most expensive cost of living in NYC. Most New Yorkers don’t have cars, and it’s easy to understand why. Traffic jams aside, the cost of annual auto insurance rates often exceeds $4,000, well above the national average. Parking spaces are almost like a piece of real estate with the average parking rate in downtown Manhattan being $533 a month. It’s a bit cheaper in other parts of the city like Brooklyn and Queens, but you’ll still be shelling out a few hundred dollars each month. Let’s not forget gas either which is often 5-10% higher than the national average.

The subway is the preferred mode of transport in the city which can quickly get you just about anywhere. But that convenience comes at a high cost with a single ride costing $2.75 a ticket and an unlimited monthly pass costing $121. This is almost double the national average of $67. It’s the same when it comes to using Uber or hailing a cab. Uber rates along in NYC are the highest in the whole country and the seventh highest in the whole world. The one advantage for New Yorkers when it comes to transportation costs is that most people don’t have a car. The costs of it are too high, and the cities extensive public transport makes it unnecessary. This means you won’t have to worry about gas, insurance, and parking when making up your monthly budget.

Food costs in NYC

So far it’s looking like everything in the city costs double the national average. Sorry to say it but it’s the same for food. The cost of a trip to the grocery store is 28-39% higher than the national average. To take an example, if you spend $200 a month on groceries living somewhere else in the country, you’ll spend $260 in NYC for the same amount. For dining out, it’s even worse with the average cost for a meal being $48. This is what a survey by Zagat found which is slightly above the national average of $36. All that said, NYC has such an abundance of food options, and with such competition, you can probably do a lot better than that.

Entertainment costs in NYC

After covering costs for all the essentials, you’ll want to enjoy yourself on the weekend. Well, surprise, it’s above the national average. The cost of a movie ticket is about $14, the national average being $10. You can take heart though with knowing that the price varies a bit depending on location and theater company. Broadway tickets are also on the rise with theatergoers paying an average of $103.88 this season. Which is an increase of 5.5% from last season. As this 2007-2018 chart shows, that can only be expected to climb higher. One benefit New Yorkers can take though is the abundance of free events available all year. The cities many parks almost always have something going on. Many museums also do free events, and if you’re a student, you can expect some pleasant discounts.

NYC is undoubtedly an expensive city to call home but all the same, it’s still one of the most desired cities in the world to live in. You might pay quite a bit more than living elsewhere, but you won’t find the same level of excitement and opportunities as you would here. There are still plenty of free things to see and do in the city and if you’re a student a bit of planning can help you get settled.

The post What is the True Cost of Living in NYC? appeared first on ELIKA Real Estate.

First-Time Home Buyer’s Guide

NYC First-Time Home Buying Guide

The decision to become a homeowner will be one of the biggest you’ll ever make, so it makes sense to know everything about the process. Buying an apartment in NYC can be more complicated than you think, especially if it’s your first time. At present, the city has a high inventory of properties on the market which makes this a perfect time for buyers. With more to choose from brings more negotiating power. The financial and real estate markets are also in harmony, making homeownership less risky and more affordable since 2008.

For now, at least, rates are low and increasing buying power. However, interest rates have begun to climb and will continue to do so, lowering the amount of apartment or house you can afford later on. Buying an apartment or home is still cheaper than renting in New York, but as interest rates climb, this phenomenon is likely to change. Waiting too long may push home ownership out of reach.

But getting a grip on the NYC real estate game can be tricky for a first-time home buyer. There will be much to learn and a fair bit of confusion along the way. Fortunately, we’ve condensed all the needed information into this helpful guide. Read on to learn about the buying process and how you can become the proud owner of your own NYC apartment.

Homebuyer’s Guide – Download Your Free Copy Today!

Homebuyer’s Guide – Download Your Free Copy Today!

Decide Whether or Not Now is the Time to Buy a Home in New York City

It’s a well-known fact that rent in New York City comes at a high price. While renting may offer a few benefits such as leaving you off the hook for property taxes and repairs, it will also mean missing out on the many benefits of homeownership. Buying means you can start putting down some roots and open up new opportunities for career advancement. There are also financial and emotional benefits of becoming a homeowner in New York.

Are you ready to purchase your first home? The answer depends on, in part, your response to the following questions:

Are you prepared to maintain and repair an apartment or home?
Are you willing to stay in the same apartment or home for at least five to ten years?
Do you have a realistic idea of the type of apartment or home and amount of space you’ll need for the next five to ten years?
Are you relatively sure your financial situation will remain stable or improve over the next several years?
Are you a disciplined saver who can build up an account for emergency repairs?

Other important signs to recognize when it’s time to buy are:

1. When you’re sure, you want to stick around.

When you know you want to settle in and stay put for at least five years, it makes more sense to buy. You’ll be spending a lot less per month on a mortgage payment than rent making it better over the long-term. You’ll also get a tax break on the interest you pay toward your mortgage. So long as you feel financially ready and you know you want to stay in New York it makes more sense to buy as soon as you can. It’s also worth remembering that you’ll be paying less each month for the same kind of property or better than if you’re renting. With a fixed mortgage the amount you’ll be paying each month will be “frozen in time” compared to the rising rents of properties similar to yours.

2. When you can get a good ROI.

When your purchase gives you a decent return on your investment (ROI), buying pays off financially. Whether you’re an investor looking for another rental or your permanent residence, you need to make sure the property in question will profit you in the long run. To ensure you’re making the right purchase, confirm that it satisfies these qualifications:

Is it in an area that has seen a steady increase in value?
Is it in a location that is appealing to others? For instance, it is convenient to amenities like the subway/public transit and local shopping?
Does it have evergreen appeal in case you plan to resell?
Is it in good condition or does it need a lot of TLC?

Any property that’s in great condition covers your needs, and is likely to grow in value over time is one to scoop up. On the other hand, any transaction where you’re losing money isn’t one to pursue. The best way to maximize your chances of finding the right place is to carefully explain your needs to an agent and have them scout out the best properties for your needs.

3. When you want to be reigning monarch of your castle.

If you’re not happy with renting for a variety of reasons, whether it’s the lack of freedom to renovate or the intrusive inspections, becoming a homeowner can be the answer to that.

Being a homeowner will give you a higher level of control in how you run your home. You also don’t have to continually renew leases or abide by specific terms (like pet restrictions, etc.). If you feel you’d be happier being the #1 person in charge of your estate, call a realtor and see what your buying options are.

Your Home as an Investment

In the literal sense of the word, the house you live in isn’t a real “investment.” This runs contrary to conventional wisdom, but here’s why it’s true:

Apartment and home prices have grown only slightly more than inflation for more than a century. What this means is that if you bought an apartment or house in 1980, paid off the mortgage, and sold it in 2010, you’d have the same buying power as you did at the start.

The real estate market is a lot like the stock exchange. As a general rule, it tends to increase over time. But trying to gauge the perfect time to buy and sell is an imprecise science.

When you want to sell your home sometime in the future, it (hopefully) won’t stay on the market longer than a year. But no one can guarantee that’ll happen, which leaves you unable to access your capital. This is the biggest problem with real estate as an asset, it’s a very illiquid asset, meaning it can’t be quickly converted to cash in a crisis the same way stocks can. Both can indeed be sold for the profit your investment generated, but with real estate, it tends to take much longer. And just like the stock market, it’s hard to predict what will happen to your neighborhood, development, or market in five or ten years down the road.

That said, some of the wealthiest people in the USA built their wealth by investing in real estate. Even if you aren’t generating a high rental yield, buying the right property nonetheless can be an excellent investment. Owning a home is building wealth; it gives savvy buyers years to compound that wealth and accumulate more property.

For example, if someone had bought a home in NYC 30 years ago, that person’s net worth would have inflated by approximately 1000%. More than three-quarters of investors worth $1 million+ own real estate, according to a study conducted by Morgan Stanley. Directly owning private and commercial property was cited as being the number 1 alternative investment choice, with 33% of the surveyed millionaires saying they planned to buy within the next 12 months.

Owning your apartment or home can be a beautiful thing. It’s a shelter and a source of pride for you and your family. It often provides a cheaper overall housing alternative to renting. But it is not a guaranteed investment. Don’t think of the apartment or home you and your family live in as an investment; it could cloud your thinking and lead you to make buying decisions that aren’t optimal for you. Buy an apartment or house because it meets the needs of your family, the schools are great, and you enjoy being part of the community—not because you think it’ll be a significant investment.

Buying a home makes sense if you plan to live in it for at least five to ten years. Any less, and you may wind up losing money in the transaction. The seller in a real estate transaction can expect to pay up to 10 percent of the sales price of the home in closing costs, allowances, commissions, necessary repairs, and other negotiated expenses. Also, sellers rarely get the full asking price for their apartment or home, unless there is a shortage in housing inventory.

It is possible to get the full asking price if a home has been well-renovated, is in a great location, or if it features distinctive and appealing architectural details. But with the current buyer’s market in the city that seems unlikely. Still, don’t let that make you think you hold all the cards as a buyer. Sellers can still have a few tricks up their sleeve even in a buyer’s market.

Take Care of the Preliminaries

Before you go searching for your first dream home, you have to figure out exactly how much you can afford. Anyone who’s new to the city or thinking of moving to a different borough should start by familiarizing themselves with that area before moving onto the practical details. Then start deciding on what type of building you’re looking for, condo or co-op?

If you’re taking the home loan approach, then you’ll need to check your credit score. Your credit score has everything to do with the type of loan you’ll qualify for. Once you know your score, it’s time to calculate how much you can afford. This is where being honest with yourself counts. In other words, be as realistic as possible with your finances, and don’t forget to include the down payment, closing costs, and additional fees associated with the purchase.

1. Get to Know the City

Getting to know an area before you commit to buying an apartment is always a good idea. If you’re a new arrival to the city, this is especially important. Each borough and neighborhood has a different mix of cultures, characteristics, and subtle nuances that make each of them unique.

If possible, spend some time in your desired area and speak to the residents. Find out the prices that available apartments are going for, what the residents are like, and their feelings about the neighborhood.

2. Chose the Right Borough

What’s it going to be, Manhattan, Queens, Brooklyn, the Bronx, or Staten Island? Choosing the right neighborhood is the next step once you’ve familiarized yourself with the city (assuming you’re a new arrival). Although it seems a bit daunting, making a list of the pros and cons of each area will help you narrow your search. Break your list into columns that include everything from price and location to population and taxes. Think about what defines each borough. Manhattan is a metropolis, whereas Staten Island offers a suburban feel. Once you tally the pros and cons and narrow your search to one or two spots, it’s time to figure out your budget.

3. Decide How Much House is Enough

Keep in mind that you’ll only want to buy as much apartment or house as you think you’ll need, but not much more. In the past, the trend in a first-time apartment or home buying was to purchase a smaller, more affordable “starter apartment or home,” and then sell it in a couple of years when the family (and the household income) grew. Given the variables in the real estate market, that no longer seems like the best strategy. Today, you’re better off buying the apartment or home you think you’ll need for your family for the next ten years.

Apartments and homes with multipurpose rooms, like a dining room that can be converted to an office, or an attic that can become a bedroom, make sense as you try to arrange your home to meet your family’s changing needs. Resist the temptation to buy too much house.

The additional real estate taxes, utility payments, and maintenance and repair costs restrict your ability to save for other family necessities. As the saying goes, no matter how big your apartment or house is, you can only sit in one chair at a time.

4. Be Realistic

What is it you’re looking for? A fixer-upper townhouse, brownstone Brooklyn, or a studio apartment in a walk-up building in West Harlem? You should focus your search as narrowly as possible and do it with a wish list in hand. Shopping aimlessly in a city of endless choices doesn’t work with designer clothing, let alone real estate. An H&M budget won’t get you a suit from Prada, much in the same way a one-bedroom budget in Washington Heights won’t get you a sprawling two-bedroom in the West Village.

5. Have flexibility

Based on the initial wish list you’ve made before you began shopping, you might not be able to afford Park Slope, even though you have your heart set on that neighborhood. Adjacent areas of Brooklyn, however, could offer more space and additional amenities and still be within your budget, so stay open-minded. If you aren’t prepared to stray from your dream neighborhood, adjust your list and scratch off that extra bath, or the outdoor space, both of which add thousands of dollars to an asking price.

6. Planning & Saving

Don’t start thinking about who you’re going to get a loan from one month before you start the hunt. Begin planning for your new home well before you even think about contacting a real estate agent. A few things to consider are what you can realistically afford, where you want to live, and what other costs will be associated, such as HOAs and real estate taxes.

A down payment for a home is usually set to 20%, but you can now get a loan with much less. However, you should consider if a lower down payment is worth the additional costs you may have to pay such as mortgage insurance. If viable, do all you can to save for the 20% down payment. You’ll have a better chance of your offer being accepted, you’ll be more assured of receiving mortgage approval, and you’ll get a lower interest rate.

7. Credit Activity

You can get one free credit report every year from each of the three big credit reporting companies. This means that you can get three a year if you use one from each. Go to annualcreditreport.com for more information on this. Remember, they are the only site that is authorized to do this. Your credit score will impact your ability to get a loan. Plan, and you won’t find yourself being denied every loan you apply for. If your credit score is low (less than 680), then start looking for ways to bring the score back up.

Along with making sure your credit score is healthy, you should avoid making any big purchases while you’re house hunting. Any activity that involves an inquiry into your credit, such as buying a car or signing up for a credit card, can lead to a drop in your credit score.

8. Get pre-approved for a mortgage

Don’t waste your time, a seller’s time, or the time of the brokers involved in the sale by not getting pre-approved. By getting a pre-approval letter before you begin searching for your new residence, you’ll have the ability to make an instant offer should you stumble upon “The One.” Without pre-approval, agents and sellers won’t take you seriously, and they’ll move on to a buyer who has the necessary paperwork. Plus, you’ll know how much cash you qualify to borrow ahead of your search.

9. Hidden Costs

Getting a loan isn’t the only time you’ll have to talk about money during the home buying process. There are plenty of additional costs that can sneak up on you if you’re not careful. One such fee is paying a home inspector. When buying a home, you need to have an inspector’s assessment, especially if you are not buying new. If you wavier the right for a home inspection you are effectively agreeing to buy a home that could have damages not visible to the untrained eye.

Depending on how lucky you are, expect to spend at least a few hundred dollars in repairs on your new home.

Appliances are another cost many first-time buyers don’t consider. Will the home you’re buying come with a refrigerator? What about a washer and dryer? If not, then it’s best to have a budget planned for such costs.

10. What building type should you choose, Condo or Co-op?

Condos and co-ops are very different forms of housing ownership. Each offers its own set of benefits and drawbacks. What looks like the perfect apartment in a condo building may not be worth purchasing if it were a co-op. Likewise, a co-op offers owners levers of control over the future of the building that many buyers insist on.

The financial structure of the two types of buildings differs in substantial ways.  A co-op has an ownership structure closer to that of a public corporation than a typical apartment building. Instead of owning a particular apartment, like in a condominium, those that live in a co-op hold a share of the company that owns the building.  The more valuable the apartment, the larger the percentage of the company the resident owns.

While most buildings being built in New York City today are condos, 85% of all the apartments available for purchase are still cooperatively owned.  Some analysts predicted years ago that co-ops would soon begin restructurings themselves as condominiums. However, the bylaws of most cooperatives require a supermajority, or 66%, vote of approval by the owners to allow this to happen.  Many even need a super-super majority, or 80% vote.  This explains why recent history has made it clear: Co-ops are here to stay for the foreseeable future.

11. Consider opportunity costs

Opportunity costs are defined as the loss of profit or value from something that is given up to acquire or achieve something else. For example, if you’re cashing in an investment like a stock that has consistently returned ten percent a year to cover the down payment on your apartment or home, you’re potentially missing out on all the earnings of those stocks. For younger investors who have 20, 30, or more years for investment growth, the lost profits could add up to a sizeable amount. This is why some financial advisers recommend that genuinely disciplined savers who invest wisely are better off renting than buying. What does this mean for the first-time homebuyer?

If you’re financing your down payment with a second mortgage, or part of it is a gift from family, your opportunity costs are meager. On the other hand, if you’re raiding your 401(k) or another brokerage account for a down payment, be conservative in deciding how much house you can afford. A lower purchase price means a smaller down payment, which means more of your money can remain in long-term investment accounts. Another reason to buy only as much apartment or house as you think you’ll need in the next seven to ten years; you’ll lower your opportunity costs by maintaining a more significant percentage of your other investment accounts.

12. New or resale, which is right for you?

In many instances, a resale is the only choice, especially if you have your heart set on a particular neighborhood or love the idea of restoring a beautiful space in a Pre-War building. However, for many first-time buyers, new construction is the better choice. For example:

Energy-efficient appliances and “green buildings” are becoming standard in today’s newly constructed apartments and homes. Efficiency standards have tightened considerably from 2010 to 2014, so energy costs are usually much lower in new construction buildings. While it’s possible to retrofit older homes with more energy-efficient appliances, it’s expensive and rarely results in the savings available in new apartments and homes.

Most newly constructed apartments and homes come with fire-retardant floor covering and insulation, making them much safer in the event of a fire. Also, many builders hardwire carbon monoxide and smoke detectors into their buildings, which are more reliable and convenient than battery-operated models. New buildings usually have sophisticated wiring capable of handling high-tech electronics, entertainment and security systems, and high-speed communications equipment. Customized wiring isn’t always possible in older apartments and homes.

You’ll save on replacement costs with a newly constructed apartment or home. Most major components have a lifespan of seven to ten years, and it’s possible for many to be covered with warranties that can be extended beyond the first year. With older apartments and homes, it’s possible you’ll need to replace major appliances soon after you move in.

Many developers have mortgage banking affiliates that can customize financing, including down payments and interest rates, to meet your particular situation. They’re often able to defray some of the closing costs too. However, the current market isn’t favorable for that unless the property is either in a wrong location or grossly overpriced. While a seller of a resale home has some flexibility to contribute to settlement costs, they don’t have nearly the same flexibility of a builder’s affiliated mortgage company.

So, which type of housing is right for which type of buyer?

In general, co-ops offer one significant advantage for some buyers: A more thorough screening process for potential buyers. The screening process is an arduous task for potential buyers. The interview with the board of directors alone will take up significant amounts of time, to say nothing of the various credit requirements to be met and paperwork to be completed.

However, once a buyer moves into the co-op, the social makeup of their neighbors tends to be much more stable and homogeneous. This can be either an advantage or a disadvantage, depending on what the buyer is looking for. For those looking for a place to retire or to raise a family, the knowledge that the social and physical environment of your building will not change for a long time offers a great feeling of security.

However, these same tight screening processes and also make them more difficult to sell and often quite impossible to sublet. This is particularly disadvantageous for buyers that don’t plan on living in one place for an extended amount of time.

This heavy regulation of co-ops’ gives condos a relative value increase on the market. This is why investors and more mobile homeowners prefer condos. This additional demand for a much smaller supply makes condos the logical choice for most buyers. A recent study suggested that were the average co-op to convert to a condominium ownership structure, an average net gain in value of $15,500 would be added to each unit.

Get One Cheap

New York apartments don’t typically come cheap. But if you’re willing to make certain sacrifices, you could land yourself an excellent bargain.

Look at larger apartment buildings – those with around 40 or more apartments are much more likely to have lower prices. In the winter months, there is much less activity in the market. As a result, landlords are generally willing to deal with any vacant apartments they have.
Help out with the work – Some landlords have properties on their list that could use a little work. Offer to share the costs of repairs, and you can likely negotiate heavily on the price.
Check lesser talked about areas – Less publicized areas that are not in demand can have nice cheap apartments which landlords are desperate to offload. This might mean having to make do with long commutes and fewer amenities in the area.

Save Some Room in Your Budget

There is no such thing as a perfect apartment. However, once you have secured the keys for one that closely matches your expectations you’ll have the freedom to perfect it. This is one reason it helps to have a budget that will allow you to make the purchase and have some funds left over for necessary renovations. Even brand-new homes can require some post-purchase spending. Factor in decorating or possible repair costs, so you don’t find yourself in a situation where you have to postpone repairs that are needed now.

Buying your first apartment in NYC might be one of the most challenging things you have to face thus far in life, but it can also be one of the most rewarding. In the end, it is not as daunting as you think.

Find a Buyer’s Agent

Buying a home without representation and the help of a real estate buyer’s agent is to take a considerable risk. With so many online conveniences these days it’s easy to think you can go it alone and avoid working with an agent. But buyers’ agents can be an invaluable source of help. They can do the initial scouting and research, screen properties before showing you, negotiate the sales price, facilitate mortgage pre-approval and contract finalization. Along with everything else in-between. Most people don’t have enough time for all this which is why an agent should be considered mandatory.

To ensure you get the best service you should carefully vet research your buyer’s agent. A good agent will have your back and doesn’t just see you as dollar signs. Remember, an agent is there to make the whole buying process more comfortable. If you find that this isn’t the case, then drop them and find a new one A good agent should not only be extremely knowledgeable about their subject matter but also have plenty of experience buying homes in the area you’re interested in. 

Documents

There’s a lot of paper shuffling that goes on during the home buying process. If you’re unsure of what documents will be needed, don’t be afraid to ask your buyer’s agent. This will save you a lot of headaches. The last thing you’ll want is having to dig around your office in the middle of the night because you forgot to send some important document.

Also, read any documents that are sent your way. First-time buyers can get so excited about their new home that they miss something important in a contract.

Making an Offer

If you find a home that you love, make a reasonable offer. If the home is a good deal, then you can be sure you aren’t the only person who has come to this conclusion. Place a strategic offer that you are comfortable with. You can leverage your agent’s expertise for this part. If you are buying in a neighborhood where homes historically sell very fast, then you may not have time to negotiate on minor details, such as changing out light bulbs.

One of the most exciting and nerve-racking steps of buying your first home is making an offer. Counter offers aren’t uncommon in the home buying game, so it’s essential to prepare for a second and sometimes third offer that’s within your budget.

Negotiations

If you choose to go with a real estate agent, they will handle all the negotiations and even make counteroffer suggestions. With a market as competitive as New York, multiple offers from different parties is a large possibility, so keep this in mind when it comes to your offer.

However, if you’re in a buyer’s market situation where you have greater leverage, then don’t be afraid to take advantage of the opportunity. From real estate closing costs to repairs to even pest control subscriptions, you can find something that may help to sweeten the deal.

Getting the Right Mortgage

Congratulations! Once your offer is accepted, it’s time to find the right mortgage for your needs. Whether you choose an adjustable or fixed-rate mortgage, many tax advantages are specific to first time home buyers in New York, so it’s important to weigh all of your financial options before choosing a home loan. Once you’ve got a loan, you can begin moving through the rest of the closing process. When you’re ready to call yourself a homeowner, use the information above to help you along the way.

Buying an apartment or home is an exciting and often overwhelming experience; to help you understand the process and get the best possible outcome with your home purchase, we’ve prepared a Home buyer’s Handbook to help you get started. The information it contains, along with useful tips and recommendations, will give you a good understanding of the apartment or home buying process, and how to avoid costly mistakes.

Homebuyer’s Guide – Download Your Free Copy Today!

Homebuyer’s Guide – Download Your Free Copy Today!

The post First-Time Home Buyer’s Guide appeared first on ELIKA Real Estate.

First-Time Home Buyer’s Guide to NYC

NYC First-Time Home Buying Guide

The decision to become a homeowner will be one of the biggest you’ll ever make, so it makes sense to know everything about the process. Buying an apartment in NYC can be more complicated than you think, especially if it’s your first time. At present, the city has a high inventory of properties on the market which makes this a perfect time for buyers. With more to choose from brings more negotiating power. The financial and real estate markets are also in harmony, making homeownership less risky and more affordable since 2008.

For now, at least, rates are low and increasing buying power. However, interest rates have begun to climb and will continue to do so, lowering the amount of apartment or house you can afford later on. Buying an apartment or home is still cheaper than renting in New York, but as interest rates climb, this phenomenon is likely to change. Waiting too long may push home ownership out of reach.

But getting a grip on the NYC real estate game can be tricky for a first-time home buyer. There will be much to learn and a fair bit of confusion along the way. Fortunately, we’ve condensed all the needed information into this helpful guide. Read on to learn about the buying process and how you can become the proud owner of your own NYC apartment.

Homebuyer’s Guide – Download Your Free Copy Today!

Homebuyer’s Guide – Download Your Free Copy Today!

Decide Whether or Not Now is the Time to Buy a Home in New York City

It’s a well-known fact that rent in New York City comes at a high price. While renting may offer a few benefits such as leaving you off the hook for property taxes and repairs, it will also mean missing out on the many benefits of homeownership. Buying means you can start putting down some roots and open up new opportunities for career advancement. There are also financial and emotional benefits of becoming a homeowner in New York.

Are you ready to purchase your first home? The answer depends on, in part, your response to the following questions:

Are you prepared to maintain and repair an apartment or home?
Are you willing to stay in the same apartment or home for at least five to ten years?
Do you have a realistic idea of the type of apartment or home and amount of space you’ll need for the next five to ten years?
Are you relatively sure your financial situation will remain stable or improve over the next several years?
Are you a disciplined saver who can build up an account for emergency repairs?

Other important signs to recognize when it’s time to buy are:

1. When you’re sure, you want to stick around.

When you know you want to settle in and stay put for at least five years, it makes more sense to buy. You’ll be spending a lot less per month on a mortgage payment than rent making it better over the long-term. You’ll also get a tax break on the interest you pay toward your mortgage. So long as you feel financially ready and you know you want to stay in New York it makes more sense to buy as soon as you can. It’s also worth remembering that you’ll be paying less each month for the same kind of property or better than if you’re renting. With a fixed mortgage the amount you’ll be paying each month will be “frozen in time” compared to the rising rents of properties similar to yours.

2. When you can get a good ROI.

When your purchase gives you a decent return on your investment (ROI), buying pays off financially. Whether you’re an investor looking for another rental or your permanent residence, you need to make sure the property in question will profit you in the long run. To ensure you’re making the right purchase, confirm that it satisfies these qualifications:

Is it in an area that has seen a steady increase in value?
Is it in a location that is appealing to others? For instance, it is convenient to amenities like the subway/public transit and local shopping?
Does it have evergreen appeal in case you plan to resell?
Is it in good condition or does it need a lot of TLC?

Any property that’s in great condition covers your needs, and is likely to grow in value over time is one to scoop up. On the other hand, any transaction where you’re losing money isn’t one to pursue. The best way to maximize your chances of finding the right place is to carefully explain your needs to an agent and have them scout out the best properties for your needs.

3. When you want to be reigning monarch of your castle.

If you’re not happy with renting for a variety of reasons, whether it’s the lack of freedom to renovate or the intrusive inspections, becoming a homeowner can be the answer to that.

Being a homeowner will give you a higher level of control in how you run your home. You also don’t have to continually renew leases or abide by specific terms (like pet restrictions, etc.). If you feel you’d be happier being the #1 person in charge of your estate, call a realtor and see what your buying options are.

Your Home as an Investment

In the literal sense of the word, the house you live in isn’t a real “investment.” This runs contrary to conventional wisdom, but here’s why it’s true:

Apartment and home prices have grown only slightly more than inflation for more than a century. What this means is that if you bought an apartment or house in 1980, paid off the mortgage, and sold it in 2010, you’d have the same buying power as you did at the start.

The real estate market is a lot like the stock exchange. As a general rule, it tends to increase over time. But trying to gauge the perfect time to buy and sell is an imprecise science.

When you want to sell your home sometime in the future, it (hopefully) won’t stay on the market longer than a year. But no one can guarantee that’ll happen, which leaves you unable to access your capital. This is the biggest problem with real estate as an asset, it’s a very illiquid asset, meaning it can’t be quickly converted to cash in a crisis the same way stocks can. Both can indeed be sold for the profit your investment generated, but with real estate, it tends to take much longer. And just like the stock market, it’s hard to predict what will happen to your neighborhood, development, or market in five or ten years down the road.

That said, some of the wealthiest people in the USA built their wealth by investing in real estate. Even if you aren’t generating a high rental yield, buying the right property nonetheless can be an excellent investment. Owning a home is building wealth; it gives savvy buyers years to compound that wealth and accumulate more property.

For example, if someone had bought a home in NYC 30 years ago, that person’s net worth would have inflated by approximately 1000%. More than three-quarters of investors worth $1 million+ own real estate, according to a study conducted by Morgan Stanley. Directly owning private and commercial property was cited as being the number 1 alternative investment choice, with 33% of the surveyed millionaires saying they planned to buy within the next 12 months.

Owning your apartment or home can be a beautiful thing. It’s a shelter and a source of pride for you and your family. It often provides a cheaper overall housing alternative to renting. But it is not a guaranteed investment. Don’t think of the apartment or home you and your family live in as an investment; it could cloud your thinking and lead you to make buying decisions that aren’t optimal for you. Buy an apartment or house because it meets the needs of your family, the schools are great, and you enjoy being part of the community—not because you think it’ll be a significant investment.

Buying a home makes sense if you plan to live in it for at least five to ten years. Any less, and you may wind up losing money in the transaction. The seller in a real estate transaction can expect to pay up to 10 percent of the sales price of the home in closing costs, allowances, commissions, necessary repairs, and other negotiated expenses. Also, sellers rarely get the full asking price for their apartment or home, unless there is a shortage in housing inventory.

It is possible to get the full asking price if a home has been well-renovated, is in a great location, or if it features distinctive and appealing architectural details. But with the current buyer’s market in the city that seems unlikely. Still, don’t let that make you think you hold all the cards as a buyer. Sellers can still have a few tricks up their sleeve even in a buyer’s market.

Take Care of the Preliminaries

Before you go searching for your first dream home, you have to figure out exactly how much you can afford. Anyone who’s new to the city or thinking of moving to a different borough should start by familiarizing themselves with that area before moving onto the practical details. Then start deciding on what type of building you’re looking for, condo or co-op?

If you’re taking the home loan approach, then you’ll need to check your credit score. Your credit score has everything to do with the type of loan you’ll qualify for. Once you know your score, it’s time to calculate how much you can afford. This is where being honest with yourself counts. In other words, be as realistic as possible with your finances, and don’t forget to include the down payment, closing costs, and additional fees associated with the purchase.

1. Get to Know the City

Getting to know an area before you commit to buying an apartment is always a good idea. If you’re a new arrival to the city, this is especially important. Each borough and neighborhood has a different mix of cultures, characteristics, and subtle nuances that make each of them unique.

If possible, spend some time in your desired area and speak to the residents. Find out the prices that available apartments are going for, what the residents are like, and their feelings about the neighborhood.

2. Chose the Right Borough

What’s it going to be, Manhattan, Queens, Brooklyn, the Bronx, or Staten Island? Choosing the right neighborhood is the next step once you’ve familiarized yourself with the city (assuming you’re a new arrival). Although it seems a bit daunting, making a list of the pros and cons of each area will help you narrow your search. Break your list into columns that include everything from price and location to population and taxes. Think about what defines each borough. Manhattan is a metropolis, whereas Staten Island offers a suburban feel. Once you tally the pros and cons and narrow your search to one or two spots, it’s time to figure out your budget.

3. Decide How Much House is Enough

Keep in mind that you’ll only want to buy as much apartment or house as you think you’ll need, but not much more. In the past, the trend in a first-time apartment or home buying was to purchase a smaller, more affordable “starter apartment or home,” and then sell it in a couple of years when the family (and the household income) grew. Given the variables in the real estate market, that no longer seems like the best strategy. Today, you’re better off buying the apartment or home you think you’ll need for your family for the next ten years.

Apartments and homes with multipurpose rooms, like a dining room that can be converted to an office, or an attic that can become a bedroom, make sense as you try to arrange your home to meet your family’s changing needs. Resist the temptation to buy too much house.

The additional real estate taxes, utility payments, and maintenance and repair costs restrict your ability to save for other family necessities. As the saying goes, no matter how big your apartment or house is, you can only sit in one chair at a time.

4. Be Realistic

What is it you’re looking for? A fixer-upper townhouse, brownstone Brooklyn, or a studio apartment in a walk-up building in West Harlem? You should focus your search as narrowly as possible and do it with a wish list in hand. Shopping aimlessly in a city of endless choices doesn’t work with designer clothing, let alone real estate. An H&M budget won’t get you a suit from Prada, much in the same way a one-bedroom budget in Washington Heights won’t get you a sprawling two-bedroom in the West Village.

5. Have flexibility

Based on the initial wish list you’ve made before you began shopping, you might not be able to afford Park Slope, even though you have your heart set on that neighborhood. Adjacent areas of Brooklyn, however, could offer more space and additional amenities and still be within your budget, so stay open-minded. If you aren’t prepared to stray from your dream neighborhood, adjust your list and scratch off that extra bath, or the outdoor space, both of which add thousands of dollars to an asking price.

6. Planning & Saving

Don’t start thinking about who you’re going to get a loan from one month before you start the hunt. Begin planning for your new home well before you even think about contacting a real estate agent. A few things to consider are what you can realistically afford, where you want to live, and what other costs will be associated, such as HOAs and real estate taxes.

A down payment for a home is usually set to 20%, but you can now get a loan with much less. However, you should consider if a lower down payment is worth the additional costs you may have to pay such as mortgage insurance. If viable, do all you can to save for the 20% down payment. You’ll have a better chance of your offer being accepted, you’ll be more assured of receiving mortgage approval, and you’ll get a lower interest rate.

7. Credit Activity

You can get one free credit report every year from each of the three big credit reporting companies. This means that you can get three a year if you use one from each. Go to annualcreditreport.com for more information on this. Remember, they are the only site that is authorized to do this. Your credit score will impact your ability to get a loan. Plan, and you won’t find yourself being denied every loan you apply for. If your credit score is low (less than 680), then start looking for ways to bring the score back up.

Along with making sure your credit score is healthy, you should avoid making any big purchases while you’re house hunting. Any activity that involves an inquiry into your credit, such as buying a car or signing up for a credit card, can lead to a drop in your credit score.

8. Get pre-approved for a mortgage

Don’t waste your time, a seller’s time, or the time of the brokers involved in the sale by not getting pre-approved. By getting a pre-approval letter before you begin searching for your new residence, you’ll have the ability to make an instant offer should you stumble upon “The One.” Without pre-approval, agents and sellers won’t take you seriously, and they’ll move on to a buyer who has the necessary paperwork. Plus, you’ll know how much cash you qualify to borrow ahead of your search.

9. Hidden Costs

Getting a loan isn’t the only time you’ll have to talk about money during the home buying process. There are plenty of additional costs that can sneak up on you if you’re not careful. One such fee is paying a home inspector. When buying a home, you need to have an inspector’s assessment, especially if you are not buying new. If you wavier the right for a home inspection you are effectively agreeing to buy a home that could have damages not visible to the untrained eye.

Depending on how lucky you are, expect to spend at least a few hundred dollars in repairs on your new home.

Appliances are another cost many first-time buyers don’t consider. Will the home you’re buying come with a refrigerator? What about a washer and dryer? If not, then it’s best to have a budget planned for such costs.

10. What building type should you choose, Condo or Co-op?

Condos and co-ops are very different forms of housing ownership. Each offers its own set of benefits and drawbacks. What looks like the perfect apartment in a condo building may not be worth purchasing if it were a co-op. Likewise, a co-op offers owners levers of control over the future of the building that many buyers insist on.

The financial structure of the two types of buildings differs in substantial ways.  A co-op has an ownership structure closer to that of a public corporation than a typical apartment building. Instead of owning a particular apartment, like in a condominium, those that live in a co-op hold a share of the company that owns the building.  The more valuable the apartment, the larger the percentage of the company the resident owns.

While most buildings being built in New York City today are condos, 85% of all the apartments available for purchase are still cooperatively owned.  Some analysts predicted years ago that co-ops would soon begin restructurings themselves as condominiums. However, the bylaws of most cooperatives require a supermajority, or 66%, vote of approval by the owners to allow this to happen.  Many even need a super-super majority, or 80% vote.  This explains why recent history has made it clear: Co-ops are here to stay for the foreseeable future.

11. Consider opportunity costs

Opportunity costs are defined as the loss of profit or value from something that is given up to acquire or achieve something else. For example, if you’re cashing in an investment like a stock that has consistently returned ten percent a year to cover the down payment on your apartment or home, you’re potentially missing out on all the earnings of those stocks. For younger investors who have 20, 30, or more years for investment growth, the lost profits could add up to a sizeable amount. This is why some financial advisers recommend that genuinely disciplined savers who invest wisely are better off renting than buying. What does this mean for the first-time homebuyer?

If you’re financing your down payment with a second mortgage, or part of it is a gift from family, your opportunity costs are meager. On the other hand, if you’re raiding your 401(k) or another brokerage account for a down payment, be conservative in deciding how much house you can afford. A lower purchase price means a smaller down payment, which means more of your money can remain in long-term investment accounts. Another reason to buy only as much apartment or house as you think you’ll need in the next seven to ten years; you’ll lower your opportunity costs by maintaining a more significant percentage of your other investment accounts.

12. New or resale, which is right for you?

In many instances, a resale is the only choice, especially if you have your heart set on a particular neighborhood or love the idea of restoring a beautiful space in a Pre-War building. However, for many first-time buyers, new construction is the better choice. For example:

Energy-efficient appliances and “green buildings” are becoming standard in today’s newly constructed apartments and homes. Efficiency standards have tightened considerably from 2010 to 2014, so energy costs are usually much lower in new construction buildings. While it’s possible to retrofit older homes with more energy-efficient appliances, it’s expensive and rarely results in the savings available in new apartments and homes.

Most newly constructed apartments and homes come with fire-retardant floor covering and insulation, making them much safer in the event of a fire. Also, many builders hardwire carbon monoxide and smoke detectors into their buildings, which are more reliable and convenient than battery-operated models. New buildings usually have sophisticated wiring capable of handling high-tech electronics, entertainment and security systems, and high-speed communications equipment. Customized wiring isn’t always possible in older apartments and homes.

You’ll save on replacement costs with a newly constructed apartment or home. Most major components have a lifespan of seven to ten years, and it’s possible for many to be covered with warranties that can be extended beyond the first year. With older apartments and homes, it’s possible you’ll need to replace major appliances soon after you move in.

Many developers have mortgage banking affiliates that can customize financing, including down payments and interest rates, to meet your particular situation. They’re often able to defray some of the closing costs too. However, the current market isn’t favorable for that unless the property is either in a wrong location or grossly overpriced. While a seller of a resale home has some flexibility to contribute to settlement costs, they don’t have nearly the same flexibility of a builder’s affiliated mortgage company.

So, which type of housing is right for which type of buyer?

In general, co-ops offer one significant advantage for some buyers: A more thorough screening process for potential buyers. The screening process is an arduous task for potential buyers. The interview with the board of directors alone will take up significant amounts of time, to say nothing of the various credit requirements to be met and paperwork to be completed.

However, once a buyer moves into the co-op, the social makeup of their neighbors tends to be much more stable and homogeneous. This can be either an advantage or a disadvantage, depending on what the buyer is looking for. For those looking for a place to retire or to raise a family, the knowledge that the social and physical environment of your building will not change for a long time offers a great feeling of security.

However, these same tight screening processes and also make them more difficult to sell and often quite impossible to sublet. This is particularly disadvantageous for buyers that don’t plan on living in one place for an extended amount of time.

This heavy regulation of co-ops’ gives condos a relative value increase on the market. This is why investors and more mobile homeowners prefer condos. This additional demand for a much smaller supply makes condos the logical choice for most buyers. A recent study suggested that were the average co-op to convert to a condominium ownership structure, an average net gain in value of $15,500 would be added to each unit.

Get One Cheap

New York apartments don’t typically come cheap. But if you’re willing to make certain sacrifices, you could land yourself an excellent bargain.

Look at larger apartment buildings – those with around 40 or more apartments are much more likely to have lower prices. In the winter months, there is much less activity in the market. As a result, landlords are generally willing to deal with any vacant apartments they have.
Help out with the work – Some landlords have properties on their list that could use a little work. Offer to share the costs of repairs, and you can likely negotiate heavily on the price.
Check lesser talked about areas – Less publicized areas that are not in demand can have nice cheap apartments which landlords are desperate to offload. This might mean having to make do with long commutes and fewer amenities in the area.

Save Some Room in Your Budget

There is no such thing as a perfect apartment. However, once you have secured the keys for one that closely matches your expectations you’ll have the freedom to perfect it. This is one reason it helps to have a budget that will allow you to make the purchase and have some funds left over for necessary renovations. Even brand-new homes can require some post-purchase spending. Factor in decorating or possible repair costs, so you don’t find yourself in a situation where you have to postpone repairs that are needed now.

Buying your first apartment in NYC might be one of the most challenging things you have to face thus far in life, but it can also be one of the most rewarding. In the end, it is not as daunting as you think.

Find a Buyer’s Agent

Buying a home without representation and the help of a real estate buyer’s agent is to take a considerable risk. With so many online conveniences these days it’s easy to think you can go it alone and avoid working with an agent. But buyers’ agents can be an invaluable source of help. They can do the initial scouting and research, screen properties before showing you, negotiate the sales price, facilitate mortgage pre-approval and contract finalization. Along with everything else in-between. Most people don’t have enough time for all this which is why an agent should be considered mandatory.

To ensure you get the best service you should carefully vet research your buyer’s agent. A good agent will have your back and doesn’t just see you as dollar signs. Remember, an agent is there to make the whole buying process more comfortable. If you find that this isn’t the case, then drop them and find a new one A good agent should not only be extremely knowledgeable about their subject matter but also have plenty of experience buying homes in the area you’re interested in. 

Documents

There’s a lot of paper shuffling that goes on during the home buying process. If you’re unsure of what documents will be needed, don’t be afraid to ask your buyer’s agent. This will save you a lot of headaches. The last thing you’ll want is having to dig around your office in the middle of the night because you forgot to send some important document.

Also, read any documents that are sent your way. First-time buyers can get so excited about their new home that they miss something important in a contract.

Making an Offer

If you find a home that you love, make a reasonable offer. If the home is a good deal, then you can be sure you aren’t the only person who has come to this conclusion. Place a strategic offer that you are comfortable with. You can leverage your agent’s expertise for this part. If you are buying in a neighborhood where homes historically sell very fast, then you may not have time to negotiate on minor details, such as changing out light bulbs.

One of the most exciting and nerve-racking steps of buying your first home is making an offer. Counter offers aren’t uncommon in the home buying game, so it’s essential to prepare for a second and sometimes third offer that’s within your budget.

Negotiations

If you choose to go with a real estate agent, they will handle all the negotiations and even make counteroffer suggestions. With a market as competitive as New York, multiple offers from different parties is a large possibility, so keep this in mind when it comes to your offer.

However, if you’re in a buyer’s market situation where you have greater leverage, then don’t be afraid to take advantage of the opportunity. From real estate closing costs to repairs to even pest control subscriptions, you can find something that may help to sweeten the deal.

Getting the Right Mortgage

Congratulations! Once your offer is accepted, it’s time to find the right mortgage for your needs. Whether you choose an adjustable or fixed-rate mortgage, many tax advantages are specific to first time home buyers in New York, so it’s important to weigh all of your financial options before choosing a home loan. Once you’ve got a loan, you can begin moving through the rest of the closing process. When you’re ready to call yourself a homeowner, use the information above to help you along the way.

Buying an apartment or home is an exciting and often overwhelming experience; to help you understand the process and get the best possible outcome with your home purchase, we’ve prepared a Home buyer’s Handbook to help you get started. The information it contains, along with useful tips and recommendations, will give you a good understanding of the apartment or home buying process, and how to avoid costly mistakes.

Homebuyer’s Guide – Download Your Free Copy Today!

Homebuyer’s Guide – Download Your Free Copy Today!

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What Is a Pied-à-Terre? The Ins And Outs

Pied-a-terre is a French term, which translates into “foot on the ground.” This is an accurate description. It is not your main home, but it is where you spend some of your time. This is generally not thought of like a vacation home, but perhaps it is a place where you visit quite frequently.

It might make sense for non-city residents to consider, depending on how often he or she comes to New York. In the current buyer’s market, it could present an attractive option. You can purchase a unit in a luxurious building with amenities similar to that of a hotel, such as concierge services and a swimming pool. 

The advantages

If you are a frequent visitor to the city, a pied-a-terre offers you your own place. Typically, people think it is small, but that is not necessarily the case in New York City. You can make yourself comfortable and can bypass the hotel staff, although the majority are pleasant. It also means you can enjoy certain benefits such as a refrigerator, kitchen, and space for your clothing.

For these reasons, many find a pied-a-terre cozier than a hotel room. You can weigh the costs of purchasing one against the expense of a hotel over time.

Traditionally, business people have used these apartments. However, it is becoming an option among college students’ parents. Given the high cost of room and board at schools, it can prove economical, and you have the option to sell it when your kid’s graduate. You should keep in mind that short-term fluctuations in the New York City real estate market can impact your resale value, however.

A New York City option

New York City has plenty of options available for those seeking a pied-a-terre. A 2014 New World Wealth study showed that the city had the second most number of wealthy people owning a pied-a-terre.

You can find these in a co-op or a condo building. A co-op typically has a lower price tag than a condo. However, it is more difficult to buy one in the former due to the board’s restrictions. These include requirements that the unit is your primary residence. If you are looking to sublet the unit when you are not there, many co-op boards forbid this practice. Given the house rules prohibiting pied-a-terre use and subletting restrictions in most co-op’s a condo is the prudent choice.

Make sure you check the rules prior to making your purchase.

Not solely for the rich

Traditionally, pied-a-terre apartments were exclusively for the wealthy. You can still find these in upscale neighborhoods. However, you can also find ones in more modest areas that serve the purpose. These might have fewer amenities, and you also may have to sacrifice convenience due to the apartment’s location.

A potential tax

There has been a conversation about charging a surtax on pied-a-terre owners. The idea is to get more apartments on the market to increase the housing supply. An additional tax could help alleviate this shortage, or if people choose to make it their primary residence, increase the city’s coffers from higher income tax collections.

This was first proposed a few years ago, but we advise those considering a pied-a-terre to keep it in mind. It requires the approval of New York State.

Initially, it called for an additional tax of up to 4% on values more than $5 million on properties that are not a city resident’s primary home.

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Trying to Sell your NYC Apartment in a Buyer’s Market?

If you’ve been paying attention to the NYC real estate market you’ll know that sales are down in Manhattan and Brooklyn. Not only that but asking prices have also fallen as sellers look for ways to compete against a glut of new development properties that arrived on the market this year.

This oversupply, combined with rising interest rates and fewer buyers, puts things now firmly in a buyer’s market. While this is a great time for buyers, it’s far from ideal for sellers. Among other things, a buyer’s market means for sellers that their home will stay listed longer on the market, they’ll face more picky buyers, tougher negotiations and more lowball offers.

If you can’t afford to wait for a market correction and need to sell now, then you can take hope with knowing there are ways you can improve your chances of getting a fair price. Here are some helpful tips for sellers who need to make the most of a buyer’s market.

Find the right price

When you’re in a buyer’s market, having the right price is key. Put down a seller’s market price and your home could languish on the market for months as you watch neighboring properties quickly come and sell before you. Your goal should be to match or undercut comparable homes on sale in your neighborhood. Even if you feel your property is worth more than theirs.

To determine the right asking price you should discuss it extensively with your seller’s agent. If they’re worth their salt as an agent and know the market they’ll be able to give you a sound analysis of why they think a certain price is the right one. The last thing you want to do is overprice. A good indication that you’re overpriced is if you’ve had at least 20 showings and no offers. With so many properties on the market now buyers can afford to wait and be picky.

As a seller, you need to decide what is more important, time or money. If you’re in a rush to sell by a certain date, then you need to price more aggressively. This might call for a price drop of 5% or even 10%+. But if you can afford to wait then you might get lucky. However, don’t count too much on it, unless there’s something spectacular and unique about your home it will be difficult finding a buyer without some price adjustments. Also, don’t be too surprised by the low offers coming in. The market now is encouraging buyers to make low-ball offers.

Prep your home and consider home staging

While in a seller’s market you might be able to get away with selling a property for top dollar in an as-is condition. But when you’re in a buyer’s market you need to go the extra mile to really make your property stand out. This calls for making it the best looking home on the block.

Your first step should be getting a professional deep cleaning of the apartment. Buyers are picky now so make sure there’s not a speck of dust that they can complain about. Next, declutter and depersonalize your home so it can appeal to the most buyers possible. Buyers have a hard time visualizing themselves in a home when you’ve got family portraits and other personal effects lying around. Also, make any repairs you can before listing or even consider some small upgrades that will attract buyers. One surefire way to get the offers rolling is home staging. This means getting your home looking like it’s ready for a catalog. You can hire a professional staging company to do the whole job for you and then have your agent host open houses to get people through the door.

Consider paying the full broker’s commission

This might seem like a sneaky way for a broker to get a better commission but there are valid reasons for it in today’s market. When it’s a seller’s market, brokers don’t need to spend as much on marketing. But when you’re competing against a lot of other properties you need to make your listing stand out. A lower commission split will mean your broker has to cut their marketing budget which will hurt the promotion of your listing. Trying to save now on the commission will directly translate to more days on the market which may, in turn, lead to price reductions.

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10 Years on: How Has NYC Weathered the Financial Crisis?

Last month marked the 10-year anniversary of what has come to be known as the Great Recession. A moment which saw, among other effects, the U.S. housing market collapse. It all started on September 15, 2008, when Lehman Brothers filed for the biggest bankruptcy in U.S. history. While this is hardly an anniversary worth popping the champagne over it’s still useful looking back on and seeing where we’ve come from. New York has weathered other crises as well. Such as that in the 70s which saw the city come close to bankruptcy. It took a combination of federal intervention and global economic forces to put the city back on its feet. The 2008 crisis called for no less. The only difference was that this time it wasn’t just New York that was in trouble, but the entire world.

How did we get here?

The real estate market was ground zero for the crash. To understand how it happened we need to go back to the 90s. Before then, the home-building industry was fragmented and made up of small buildings companies that matched volumes with demand. That changed in the 1990s when the industry began to consolidate. By 2005, one in five homes was built by a large public home-building company. They built homes so quickly that they outpaced demand. To deal with this glut, mortgage companies began looking for ways to get people in these homes. Lenders make their money by charging origination fees, so they had an incentive to write as many loans as possible. When they began to run out of qualified buyers, they started to cut corners.

Remember NINJA loans? This was when things took a bad turn. Lenders began giving out loans to people with bad credit and turned a blind eye to income verification. The result was an explosion in the number of risky mortgages designed for people that couldn’t afford a home. The most infamous of these was the 2/28 subprime adjustable-rate mortgage (ARM). Borrowers were given a below-market rate for the first two years which would then reset to a higher rate. The idea being that they would refinance before the reset, but most homeowners never got a chance before the crisis began and credit became unavailable.

Where are we know?

Despite being hit particularly hard by the crisis, New York has recovered relatively quickly. Home values have risen by 30% since their lowest point in November 2011. That’s an average of nearly 4% per year. It’s also worth pointing out that the downturn didn’t extend to every neighborhood and street in the city. Some areas fared better than others such as West Village which has always been a popular place to live and didn’t see as much oversupply as others.

A recent report by StreetEasy found that investing in the S&P 500 would have been a better long-term investment than real estate. However, recent days have seen a significant drop in both the S&P and Dow, so any investments still need to be weighed carefully. Stocks can also be a lot more volatile whereas if you buy a good property for the long-term, it’s a guaranteed profit so long as you’re not forced to sell.

As for the mortgage securitization chain that caused the crisis, it might sound troubling to know that the same system remains very much intact today. Sub-prime mortgages are also slowly creeping back. However, the critical difference now is that the riskiest mortgages – those with no down payment, unverified income and teaser rates that reset after two years – are being written at nowhere near the same numbers as before. Foreclosure rates are right now at their lowest point in 11 years. Although interest rates have started to climb recently, this market correction is expected to last 12-24 months, so buyers have plenty of time to find the right property.

Is now a good time to buy?

An important lesson to be taken from the 2008 crisis is the need for a diversified portfolio. It no longer works to view the real estate market as one market. Instead, it should be viewed as micro-segments. A good investor needs to look at everything when considering a purchase. For instance, many foreigners made the mistake of buying in Midtown. They’ve felt the market corrections the hardest as most New Yorkers can’t afford the prices there. And even if they could, they still wouldn’t buy there as most New Yorkers don’t even want to live there.

A poor analysis made these investments a bad one. To make a property investment worthwhile in today’s New York a buyer has to approach it with care (as you should with any investment). It has to be the right building in the right location with the right amenities and architecture. At the least, it should be a two-bedroom apartment to compete against a saturation of rental properties. 

If you’re a buyer that’s looking for your primary residence, then now could be a perfect time. The last year has seen a rise in inventory and a fall in sales prices. According to the Q2 Elliman Report, the second quarter of 2018 saw total sales drop in Manhattan by 17% and the average sales price fall by 5% to $2.1 million. The causes range from the new tax changes to volatile markets and a dwindling number of foreign buyers. One of the biggest reasons is the current glut of new condos under construction. The inventory of luxury condos has jumped 10% to its highest level for a second quarter in seven years. Such tough competition for sellers means they have to cut prices and find other ways to entice buyers who now have more options.

If you’re a buyer, then now is the time to get into what is a buyer’s market. Buyers can now afford to be picky and push for tougher negotiations. If you’re selling, then make sure to do plenty of preparation and know the right steps. The Elliman Q3 report also recently came out which showed that sales volumes have continued to fall despite the strong economy and high consumer confidence. The reasons being rising mortgage rates, concerns about the global trade war and scale-back in purchases due to the new federal tax law. All this now puts the average sales price at $1.9 million.

Summary

Despite the bad memories of 2008, there has been steady recover. Unemployment is at an all-time low, and the stock market is now setting new records. Lending is also much stricter, thanks in part to the “qualified mortgage” provision of the 2010 Dodd-Frank reform bill. Which only went into effect in January 2014. Through this those risky loans that were given out before the crisis are a thing of the past. Nowadays it’s much harder to get a mortgage. Although there’s no way to say there won’t eventually be another recession (they’re a naturally occurring part of the financial system), enough plugs have been put in the system to ensure it won’t be as bad as it was in 2008.

The NYC real estate market has seen steady recovery, and while it might not be the best time now for sellers, buyers are in a prime moment. Just as you should with any investment, spend time getting to know the property and neighborhood. Smart diligence will ensure you snatch up a prime property and not a lemon.

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Navigating Open Houses by Yourself

We frequently espouse the benefits of an exclusive buyer’s agent. However, this does not mean you need your agent’s presence to attend an open house in New York City. Open houses may seem passé in the digital age, but there is nothing like the personal experience. You can likely tour the property online, but this cannot replicate physically walking through the lobby and the unit. For instance, you won’t see the condition of the building or experience a slow and outdated elevator online.

Why go alone?

Your agent may have a scheduling conflict, or you are comfortable looking at properties by yourself since it is only your initial foray.

Perhaps you do not have your own buyer’s agent at this point. While that is fine, try to find your own representation as soon as you can. You want his or her expertise working on your behalf, finding out information and helping you navigate the process. A listing agent is happy to represent you, but this creates a dual agency. It is a confusing relationship, and we have suggested buyers should avoid this situation.

The process

If you have a buyer’s agent, let him, or her know which open houses you plan on attending. If there is a way to register ahead of time, your agent can handle this for you. Walk-ins are usually welcome since the seller is trying to drum up interest. You should make sure it is fine, though, since there are instances when you must have an appointment. These are usually restricted to luxury listings, however.

There is typically a sign-in sheet. The listing agent is likely to engage you at some point, and we suggest being upfront and letting the listing agent know you have representation in if that is the case. In fact, you c include your agent’s contact details when you sign in. The seller’s agent cannot make misleading statements, although you should not expect him or her to impart any information that will help you to the detriment of his or her client. A listing agent owes his or her fiduciary duty to the seller.

The listing agent is trying to weed out serious buyers from casual lookers and even the merely curious. If you have a buyer’s agent already, this could show the seller’s agent that you are indeed looking to make a purchase fairly soon. Having an agent could separate you from someone that is not ready to make a decision, indicated by a lack of representation.

Once you have completed the tour, let your buyer’s agent know. If you are interested, he or she can take steps to follow up. You may want to make an offer or schedule another visit. Your agent can help with the next stage, no matter which direction you choose. Even if you are not interested, you should still communicate this to your agent. That way, he or she has more information to help you find the right home.

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