Gea Elika's Blog, page 122

Is Buying a House with Bitcoin Next Best Thing? Or Was it in 2017?

Gone are the days when Bitcoin was used by only a niche audience for transactions on shady websites. The crypto coin has evolved to the point that businesses have started implementing it as a secure form of payment. On the other hand, several governments have also completely banned the digital coin. Bitcoin was released back in 2009 and over the course of the years gained both popularity and notoriety with the public.

 

 

Despite the controversy and being considered highly risky due to massive fluctuation values, cryptocurrency continues to entice both investors and industries—and we’re not talking about just Bitcoin. More than a thousand crypto coins are currently available, some faring better than others. Unregulated by banks, these encrypted digital currencies managed to penetrate almost every market in 2017, including real estate.

Although the market is risky, crypto transactions through the blockchain are considered safe. By design, a blockchain is resistant to data modification and can record transactions between two parties efficiently and in a verifiable, secure and permanent way. As for crypto coins, most of them can be mined (created) using special mining rigs: computers with high-end GPU’s, for example.

Real Estate: One of The Many “Links” of the Blockchain

Given the increasing popularity of Bitcoin and listings already popping up accepting the digital coin as payment, PropertyShark made a case study on a hypothetical Bitcoin real estate transaction. The research revolves around a $45 million NYC luxury condo sold in April 2017. The real estate data provider took a closer look at how sustainable would’ve it been for the owner to sell the property in Bitcoin.

 

 

PropertyShark calculated Bitcoin’s average monthly price from April 2017 to March 2018, to see how many Bitcoins you would’ve needed each month to buy the property.

The condo— formerly owned by Demi Moore—is located in the iconic San Remo building, and, if it had sold in Bitcoin last year, it could’ve banked around 37,000 BTC, as 1 digital coin in April 2017 amounted to $1,206. Fast forward just one month, Bitcoin’s value increased to $1,895, making the condo’s price in May already 13,000 BTC less.

Bitcoin kept surging in June 2017, and decreased a mere 4% in July, keeping the property’s price hovering at 17,000 BTC. You would’ve only needed about 11,000 Bitcoins to buy the 14-room residence in August and September, and by October, close to 8,000 BTC.

It wasn’t until the end of November that the digital currency started heavily increasing. By then, the property could’ve been purchased for only 6,000 BTC, and with the historical spike that occurred in December, it could have traded for under 3,000 BTC. In December 2017, at the currency’s peak point (1 BTC = $17,000), the condo’s price tag would’ve been around 2,700 Bitcoins.

Bitcoin’s value started contracting through January and February 2018, and by March, the apartment’s price would’ve been about 4,800 BTC. In hindsight, the amount of Bitcoin that was needed to buy a $45 million condo in April 2017 could have landed you 13 condos by the end of the year.

Back in 2017, no doubt some crypto investors knew where the market was headed, and that Bitcoin was poised to grow, but nobody would have guessed it would blow up the way that it did. Looking at the data, selling an apartment using Bitcoin would’ve made sense in early 2017, but at the time, the market was uncertain—as it is now.

A couple of assets did trade last year in Florida and California, so those sellers definitely made an impressive profit. Recently, two New York City condos were also bought with Bitcoin, which goes to show that no matter the circumstances, there’s some kind of confidence in the market. Nonetheless, trading and investing in cryptocurrency requires in-depth knowledge of the business, not just speculation or luck.

No matter its volatility, It’s safe to say that the technology is here to stay, although there’s a long road ahead for improvements.

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Getting Lowball Offers Accepted in Today’s NYC Market

The first quarter of 2018 saw a real estate market drop of 24.6% in the number of overall sales, however, the primary home buyer market remains buoyant depending on the location and the desirability of the property. The reasons for this being the new tax laws and the rise in mortgage rates. Not good for sellers but for buyers this represents the shift from a seller’s market to a buyer’s market. Any buyers who don’t take advantage of this now may miss out big.

The NYC real estate market is now experiencing a time when lowball offers have a better chance of being accepted. If you’re a buyer in the NYC market now here’s what you need to do when making offers far below the asking price.

 

Do your research

Knowledge is power. The more you know the better your chance that you’ll find a buyer who will accept your offer. Start with the market. Although the currently changing market makes this a bit uncertain you can still gain some leverage by knowing what comparable properties in the neighborhood are going for. Next, know the sellers. If they’re in the market to make the most money possible there’s little chance of your offer being accepted.

However, if the home was inherited and/or they’re out-of-state owners they’re more likely to accept a lower offer. Finally, know the property. If it’s been languishing on the market for months or there are a lot of renovations needed you can use this as a powerful persuading tool in your offer letter. Let the sellers know that there are other offers available and unless the price is right you’ll move on.

Be reasonable, not insulting

That said, you still want to present your offer in a way that reasonable rather than insulting. Generally, sellers are slower to react to a changing market than buyers. For a lowball offer to have any chance it needs to be presented in a way that outlines the reasons for it.

Mentioning the current market conditions, such as the 24.6% drop in sales or like kind specific market data, could add some weight to the offer. Depending on your strategy, you could frame it as an initial offer and is open to negotiation. Just be sure to outline why you think this is a reasonable starting point.

Prove that your finances are completely in order

Unless you can prove that all your finances are in order your offer has no chances of being taken seriously. This is crucial if you’re buying a co-op. By having a strong and transparent REBNY financial statement, you show that you are both financially sound and a desirable tenant.

Just having the cash to close won’t be enough for a co-op or condo board. You need to show that you have plenty of post-closing liquidity, a clean financial statement and stable employment. Most co-ops require at least two years of maintenance in liquid assets. Without that or professional and personal references to prove you’ll make a responsible tenant your offer has no chance.

Hire a Buyer’s Agent

No matter what research you do for yourself nothing comes close to the experience you’ll gain from hiring a qualified buyer’s agent. They understand market dynamics, how to negotiate and what to look for in a property. The sellers will also feel more confident as it further shows how committed you are to closing on the deal.

The NYC market is set for a switch to a buyer’s market, for now anyway. That can always change so it helps to take the most advantage of it you can. Play your cards right and you could end up scoring a very good deal.

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The Costs Per Square Foot of Renovating in NYC

Chances are, you recently purchased NYC apartment or townhouse will need some renovations before you move in. As you finalize the details of your home purchase, you can begin thinking about what kind of renovations you’ll need. As tempting as it may be to move in right away, taking advantage of the open space you have now before the moving trucks arrive will be far better for both you and your contractors.

 

 

What to renovate and at what cost

With so many variables involved, working out a strict budget can be almost impossible. But by knowing what to factor in you can work out a rough estimate. For a gut or non-gut renovation with stock, materials expect to pay at least $100-200-per-square-foot. A non-gut renovation with some customization starts at $200-300-per-square-foot while a gut renovation with customization averages at $400-500.

1. Flooring installation and refinishing

Start first with flooring. Depending on the materials, a refinish can cost $5-10-per-square-foot while replacements can run to $15-25-per-squate-foot. However, this estimate only applies to “dry” areas such as bedrooms and living rooms. “Wet” areas, like kitchens and bathrooms, can run far higher. Bathrooms start as $400-per-square-foot while kitchens start at $250-per-square-foot. Any custom alterations or spatial challengers will increase the costs.

2. Repairing and painting the walls

Painting is relatively cost effective and a great way to personalize your new home. On average, skim coating costs $4-6-per-square-foot and takes about a week to complete.

3. Kitchen and bathroom remodeling

This is where you’ll see the biggest expenses. Depending on your budget, you can either go for a full remodel or just a few updates. Extensive customization and high-end materials can easily see costs run to $500-per-aquare-foot and beyond.

Other costs: regulations and restrictions

If the apartment is in a co-op or condo building, any renovations will require board approval. Some buildings have very strict requirements for renovations such as insurance coverage minimums. Unless a contractor has the required insurance coverage, they won’t be able to take on the project. Also, before any renovations on a co-op or condo, unit you will be required to file an alteration agreement. This protects the building from any renovations that could cause harm to it. It does so by restricting what you can and can’t change as well as outlining a timeline for the project.

You should check with the Department of Buildings (DOB) to see if there are any restrictions on your building for renovations. The majority of major renovations in NYC require approval before work can begin. However, if you are not moving, removing or adding new walls then no permits from the DOB are required. If though you are relocating any electricity or plumbing you will need an architect to draw up the plans and for an expediter to file for approval with the DOB. These permits are not cheap. Electrical permits can run up to $900; plumbing permits up to $2,000 and an asbestos inspection as much as $500.

There may also be restrictions on the types of tools that can be used and the duration of the project. For instance, if jackhammers cannot be used because of noise restrictions, this will mean higher demolition costs as a workaround has to be found.

Finding Contractors

When choosing contractors try to find someone that you can get along with and understands your needs and expectations. Your buyer’s agent can probably make some recommendations. Because the apartment or townhouse is unoccupied, it won’t take long to perform the initial meetings and walk-throughs before work can begin.

Once you’ve worked out a rough budget allocate an extra 10-15% as a cushion. Most buildings in NYC come with some restrictions and difficulties when renovating so make sure you have a bit extra to ensure you can complete the project.

Read our renovation checklist to get your process started.

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Financial Requirements for Buying a Co-op in NYC

When searching for an apartment in NYC, it doesn’t take long to realize how much more affordable co-ops are to condos. There are good reasons for this such as a higher inventory and the troublesome board approval process. So the next question is – what are the usual financial requirements for buying a co-op in NYC?

This article will cover just that. By its end, you’ll know exactly what you’ll need to make that dream apartment purchase.

 

Down payment

Each co-op has their own rules and regulations, but in general, you can expect the required down payment to be 20%. However, that said, you can also find co-ops that require 25%, 35% or even 50% to guarantee the purchase.

Liquid assets and other reserves

Just because you have enough money for the down payment and closing costs does not mean you’re in the game yet. Another crucial aspect is the amount of post-closing liquid assets to your name after closing. Once again, every co-op has their requirements, but the average requirement is 1-2 years.

Liquid assets are preferred as they’re a better guarantee, but other reserves can also be used such as cash, mutual funds or anything that can be quickly converted to cash. Retirement funds and real estate are excluded. In some cases, co-ops will make exceptions to this if you have limited assets but a high salary, or a low salary but large assets. These cash reserves ensure that you can pay your mortgage and maintenance costs for at least two years after closing.

Calculating post-liquidity

Your post-closing liquidity is calculated by dividing the sum of your liquid assets by your monthly co-op carrying costs. For example, let’s say you have a monthly mortgage payment of $7,500 and a maintenance fee of $2,400 with liquid assets are $200,000. Your post-closing liquidity would be $200,000/$9,900 = 20.20. This gives you about 1.5 years of post-closing liquidity.

Debt-to-income ratio

To ensure that the co-op remains sustainable, the board requires that all buyers can keep up with payments. This makes your debt-to-income ratio as important in calculating your finances. The typical ratio required of most co-ops is between 25-30%. There will be exceptions to this, as mentioned above if you have a lot of liquid assets.

Board members will also take into account your employment record and multi-year income history. They like to see a record of consistent employment and a steadily increasing income. This can be a problem if you’re self-employed. In that case, you’ll most likely need at least three years of tax returns along with a notarized letter from your account for the board to see whether your income has gone up or down in that time.

Boards may also take into account your earning potential. If your current income does not match the board’s requirements or your assets aren’t enough, but you can demonstrate the potential for the increased income they may make an exception. Keep in mind that in such cases you might be asked for a year’s maintenance to be held in escrow.

Calculating debt-to-income ratio

To calculate your debt-to-income ratio, you must compute your total income and find the percentage your debts are of that total. For example, if you have a monthly income of $6,000 and monthly bills of $2,200 your debt-to-income ratio is 36%, as $2,200 is 36% of $6,000.

Working out the financial requirements of a co-op purchase can often be tricky. Enlisting the services of a qualified buyer’s agent can make things much easier and faster but even with that expect the buying process to take some time.

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Home Accessibility Modifications for Aging in Place

Most seniors want to stay in their New York City home and hold onto their independence for as long as possible. In fact, according to 2012 The United States of Aging Survey, about 90 percent of senior respondents had the intention of staying in their homes for the foreseeable future—or at least five to ten years.

Of course, life has a way of throwing a big ol’ wrench in our plans. As we age, our health, coordination, and mental faculties deteriorate. Simple acts we used to do with ease are all of a sudden much more complicated, and navigating your home begins to take a little more time. That’s why if you want to age in place, it is essential to prepare your home by making modifications that assist with accessibility and mobility as you grow older. Making renovations and preparations ahead of time allows you to continue living in your home while also catering to your needs as an aging senior.

 

Bathroom Safety for Seniors

The kitchen may seem like the most dangerous spot in the house with its knives and fire hazards, but believe it or not, most household accidents happen in the bathroom. In fact, The New York Times called the bathroom “the most dangerous room in the house” in a 2011 write-up. Many falls happen in the bathroom because of moisture and slick surfaces. Falls are one of the biggest threats seniors face and are the “leading cause of fatal and nonfatal injuries for older Americans.”

To help keep seniors safe, there are various modifications one can make in the bathroom:

Install a handheld showerhead and bench in bathtubs that make bathing simpler. Avoid taking baths that involve getting down and up in the tub.
Grab bars give you something to hold on to when you need to get up. Place one by the toilet and one by your shower bench. It also doesn’t hurt to put one on the wall just in case.
Nonslip surfaces are your friend. You can find decals that help with traction or replace your current floor material with something that is slip free.

More Home Safety Tips for Seniors

Even if you aren’t in a wheelchair or use a walker, getting up and down stairs becomes more difficult as we age. Consider installing safety ramps over steps to make them easier to navigate. As our eyesight deteriorates, it can become harder to read labels on store-bought items. Buy a label maker that prints large, bold lettering and start to label items yourself, so you always know what you have. Aging causes a decrease in circulation as well as fat loss that make us feel cold more often. Help keep your heating bills down while staying comfortable by having your home re-insulated, and your windows and doors sealed to ensure air isn’t leaking in or out.

The Other Option

If making all the modifications you need cost a small fortune, or your house is too large for you to handle, there is always the option of finding a new home. Many seniors choose to downsize where they live as they age, so they have less to maintain and a smaller space to navigate. This can also be a chance for you to relocate to a place you’d rather be—like closer to grandchildren! Talk to your family about the options available when making this big decision. To get an idea of what it might cost to buy a new home, review listings online or contact a buyer’s agent in your area.

Most people want to stay in their own home as they age, but sometimes the home we have isn’t ready for the challenges of growing older. Making modifications ahead of time helps those who want to age in place, but if your New York City house or apartment is too much to maintain, it may be worth it to downsize and find a new home.

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How Long Does It Take to Close on a House in NYC?

So you’ve done the open houses, the negotiations and now, finally, you have a signed purchase contract that’s ready to go. What comes next? The closing process. How long this can drag on for is a question every budding buyer comes to at some point. The short answer is, it depends.  Here we break down the process and explain each part of it. As you’ll see, how long the closing takes depends on whether you’re paying all cash or through a mortgage.

 

Getting the offer accepted

Just because you’ve made an offer is no guarantee that the sale is done. Far from it. In NYC, the sellers hold most of the cards when it comes to accepting an offer. Until they sign the purchase contract nothing is legally binding. They might have multiple offers and you could find yourself in a “best and final offer” situation. There could be some counter offers as you go back and forth with the seller to find an agreeable price. But once you’ve got the price and terms hashed out and they’ve signed on the dotted line you can move on to the next step.

How long will the closing take?

The typical closing time on most homes in NYC is 60-90 days. If you’re paying all cash you can expect to have your keys in 60 days. If taking out a mortgage expect it to take 60-90 days. If there’s a board approval process such as in a condo or co-op, but especially with a co-op, you can expect things to take longer. Until the board has approved you the home isn’t yours. Thankfully, one of the terms of a standard purchase contract is that you can drop out without any penalties if you fail the board approval process.

What happens after the contract is signed

Once both parties have signed you are now officially “in contract” with neither party able to walk away without incurring legal penalties. The counter-sign typically takes 1-2 days. If it’s taking longer you may need to contact the seller to see where things stand.

Once you have the counter-sign, and if you’re taking out a mortgage, your attention should next be turned to your bank or lender to get the mortgage commitment letter sorted. If you haven’t already, you should have your bank carry out an appraisal. Until your bank has the appraisal they won’t sign off on your mortgage.

Buyers should use this time to complete their due diligence report, which will be handled by their attorney. This will also give the seller time to make their move and get anything else sorted on their end.

Once everything is handled on both ends it’s time to lock in your mortgage interest rate. Commonly known as the “rate lock” this has a typical time limit of 60-90 days. Don’t do it too soon because if it expires before the close you’ll end up paying more.

When all this is done you can look forward to the closing date. Keep in mind that the actual date can change with the usual legal language being “on our about [insert date].”  Until you’ve got the green light from your lender the real closing date cannot be determined.

Closing day

On closing day, you’ll see most members of the transaction present. Expect to see both attorneys, the brokers, buyer and seller (unless they’ve given permission to their attorneys to act in their stead) and the lender’s attorney. Also present will be a representative of the title company who will act as a coordinator between the two parties. Assuming everyone shows up on time it should only take 1-3 hours, depending on if the buyer is taking out a mortgage or not.

Once everything is signed and done the buyer will receive their keys and everything should be wrapped up.

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Timeline for Closing on New York City Real Estate

First time home buyers are anxious to start life in their new place. After all, navigating the concrete jungle is not easy, particularly in this seller’s market. There are certain things that must happen for you to close, and the average time to close on a New York City property is 60 to 90 days.

Each situation is different, and unique circumstances can result in an altered time frame. However, we provide a roadmap for home buyers so they know when they officially become homeowners after reaching an agreement with sellers.

 

 

Co-ops and Condos

Naturally, co-ops typically have a longer closing time than other New York City properties, including condos. On top of the usual steps, which include an inspection, title search, and your lawyer’s due diligence, a buyer needs the board’s approval. Your lawyer needs to conduct due diligence on the building, too. You should prepare for the extra time these steps take.

Generally, a condo sale takes a shorter period of time to close. If you are paying cash, you do not have to wait for the bank to approve your mortgage, further shortening the time.

Hurdles to closing

There are typical steps needed after the seller accepts your offer. These usually go smoothly, but any delay pushes back your closing date.

The closing stage happens once you sign the offer, send the check to your real estate attorney, and the seller signs the offer. You are in control of the first two items, but there are cases where the seller drags his/her feet. It should take one or two business days. If it takes longer, you and your agent need to question the seller and his/her agent since they could use your offer as a bargaining chip in the hopes of receiving a higher bid.

Once the seller signs the offer, the listing is “in contract.” Several things happen, including an appraisal, which you need for your mortgage. This can delay your closing if the appraisal falls short. If this happens you need to come up with additional funds or renegotiate a lower price. Assuming this goes smoothly, the bank grants a commitment letter. At this time, you find out your interest rate, which you can lock in for a certain period of time, typically 60 or 90 days.

We also strongly advise an inspection. If there are any negative surprises, you may want to negotiate with the seller to pay a portion. Major repairs could delay your closing. Your lawyer will order a title search, although these usually do not turn up an issue and present an obstacle to closing.

If this is a co-op, you have to contend with the board, and the extra steps this entails.

You do not have to worry about paying the closing costs, which can either get added to your mortgage or paid when you close, at this point.

Real Estate Closing

There is a bunch of documents for you to sign on your closing day. Under the Consumer Financial Protection Bureau (CFPB) “know before you owe” rule, you will receive the Closing Disclosure three business days prior to your closing date, allowing you to review the mortgage terms and costs. Additionally, your lawyer should explain all the documents as he/she presents them to you.

Typically, the actual closing takes two to three hours, and you receive the keys to your new apartment at the end.

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Buying a Sponsor Apartment Unit in NYC

If you’ve been shopping for real estate in NYC, you may have come across the phrase “sponsor unit” in listings. Getting the chance to buy one of these is very enticing once you know what they are. Here we explain all and why you should care.

 

What is a sponsor unit?

A sponsor unit is an apartment in a co-op or condo that has been retained by the developer or investor after the other units have been sold. In the 1980’s, when many buildings were converted into co-ops the original tenants had the option to purchase or continue renting their units. Once these owners have moved or passed away the original sponsors may decide to sell the units.

What are the benefits of buying a sponsored apartment?

The biggest plus to buying a sponsored apartment, if it’s in a co-op building, is that you can avoid the troublesome board approval process. So long as you have the money you’ve got the apartment. However, once the purchase has gone through you’ll still have to abide by the rules and bylaws of the building such as restrictions on subletting.

From a financial perspective, sponsor units also tend to be less expensive than other units in the building. The asking price is entirely at the discretion of the sponsor. If they’re ok with less money for a down payment, and financing has been approved, you could get away with a 10-20% down payment, a much better deal than the standard 25-30% required in most co-ops. Lastly, with no co-op board to get passed and fewer financial requirements the buying process tends to go a lot faster

What are the downsides?

A big thing to consider with sponsor units is the far higher closing costs. The developer will expect you to pay the hefty New York transfer taxes. Currently, they stand at 2.05%, and that can be expected to continue rising. Another problem is the possibility of shoddy construction. Sponsor renovations are sometimes less than high-end, so it’s a good idea to have a home inspection done, especially if it’s being sold in an “as is” condition. If the building is pre-war, it may have asbestos problems which will need to be handled by specialists, costing you more money.

How can you buy a sponsor apartment?

So long as you’ve got good credit and have the financing to make the down payment, you shouldn’t encounter any problems. Anyone who might have trouble passing a board interview, such as freelancers and the unemployed, will find sponsor units to be a perfect choice.

Where can I find sponsor units?

You can find sponsor units all over NYC. Most of the pre-war buildings are located on the Upper East Side and Upper West Side of Manhattan. However, with limited inventory and lots of interested buyers, it can take a while to find one. Expect to spend 6 to 12 months looking for a sponsor unit. Enlisting the services of an experienced buyer’s agent will speed things up.

Performing proper due diligence is key. Get as much information as you can about the building such as the number of units the sponsor owns and how many rentals there are. It’s much easier to get financing from a lender if there are more owned then rental units.

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CEMA Loans and How they can Help You Save Money

Purchasing a home in NYC is far from cheap. For homes in NYC, the costs come not just from the price of the property but also the closing costs. The high taxes in New York mean that closing costs can be as high as 5-6% of the purchase price. For the past few years, the closing costs in NYC have been rising as lenders are forced to comply with the ever-changing mortgage regulations. So if there was any way to save on these costs you’d naturally want to hear about it right?

Enter the CEMA loan or Consolidated Extension Modification Agreement. This is a type of loan only available in New York. It’s often used by homeowners who are looking to refinance their mortgages. In some rare cases, you’ll also see homebuyers using it.

 

 

How does it work for refinancers?

The vast majority of CEMA loans go to homeowners who want to refinance their mortgage. The loan helps them to avoid paying full mortgage taxes on a second home loan. Instead of taking out a new mortgage and having to pay taxes on both, the CEMA loan allows you to combine and consolidate them into one. You then just need to pay the tax on the difference between the two.

For example, let’s say you want to refinance your loan and you have an existing principal balance of $100,000. The refinance with the new lender is for $150,000. By combining them into a new loan you’ll only have to pay a mortgage recording tax on the difference between the two, in this case, $50,000. Without the CEMA loan, you would have to pay tax on the full $150,000.

In NYC, the mortgage recording tax is 1.8% for mortgages under $500,000 (1.925% for those over $500,000). In the example above, the taxes without a CEMA loan would be $2,700. With the CEMA loan, it’s only $900, plus any CEMA fees from the lender.

How does it work for buyers?

For homebuyers, a CEMA purchase, also known as a “splitter” involves consolidating the two loans from buyer and seller into one. For this, to work there must be a loan on both sides of the transaction. Through this, a seller who is still paying off their mortgage transfers it to a buyer who is taking out a mortgage. The buyer now only has to pay the recording tax on their loan, minus the remaining loan balance they are taking on from the seller.

As for the seller, they save money on their transfer taxes by only paying taxes on the sale price of the home, minus the remaining mortgage debt that is being transferred to the buyer.

Things to consider with CEMA loans

It’s not all good news with CEMA loans, as with most things there are a few catches. For starters, these loans are only available for condos and townhouses. Co-ops do not come with mortgage recording taxes because they are not considered real property.

The CEMA loan comes with fees, the cost of which is up to the bank to decide. The process is also a lot easier when done through your current lender since you don’t need approval for reassigning the loan. However, if you’re switching banks your first lender has to approve assigning the mortgage to the new one.

The downside for buyers is that splitters are uncommon. It’s quite rare to see two banks agree on a CEMA loan. This may change in the future if we see interest rates climb enough that the difference in savings outweighs the cost. Only time will tell.

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What is an Exclusive Listing Agreement when Selling Real Estate?

You’ve thought it out, and now, at last, you’re ready to sell your home. If you’re like the vast majority of sellers in NYC, you’ll be hiring a listing agent to help with the sale. The benefits of having a good agent are well established, and if you’re in a hurry to sell, they can more than pay for themselves. Once you’ve met and interviewed prospective brokers and found one you’re happy with it’s time to sign the exclusive listing agreement. This is a relatively straightforward procedure, but it helps to understand what goes into one. Here’s what you need to know about exclusive listing agreements with NYC brokers.

 

Exclusive Listing Agreement Sample Below

What is a listing agreement?

A listing agreement is a contract between a seller and a real estate agent (listing agent) that says the agent has the right to list your house. These contracts are good for the agent, as it obligates you to work with them for a set time. It’s also good for the seller because it sets out the responsibilities of the agent and what you can do if they don’t meet them. It’s essential that you understand the terms of the agreement as you’ll be bound legally by them.

Usually a page or two long, these contracts are typically written in straightforward language. Brokerage firms usually have their in-house form that individual agents adapt as necessary. Keep in mind that you can have some terms changed or added if you’re not happy with something.

What goes into a listing agreement?

It’s essential that you read the contract carefully. If something seems a bit vague, ask the agent for clarification. Although it’s uncommon to have an attorney look over the contract, it certainly wouldn’t hurt. These are the most important things that you’ll see in any listing agreement.

The Commission – this is the amount you’ll pay the agent. The standard amount in NYC is 6% of the selling price, but you may be able to negotiate a lower rate if you have a previous relationship with the broker or have multiple properties to sell.
Exclusive right to sell – this gives exclusive rights to the agent to list, market and sell your home for the duration of the agreement.
Duration – the contract will specify when it starts and ends. This is usually for six months, but three-month agreements are not uncommon. Three to six months should be fine, but if it hasn’t been sold by then, it could signal that something may be wrong. If so then you can always reevaluate the price or marketing.
Safety and protection clauses – while the contract will have an expiration date it’s likely it’ll also include a clause to protect the broker after that date. This prevents a seller from holding back on a buyer until the agreement expires to avoid paying the commission.
Duties – the exact responsibilities of the agent will usually be spelled out. This is worth looking closely at. If there’s something you disagree with or would like added, you can always negotiate changes.
Representations – you may also be required to verify your legal position to sell the property.
Dispute Resolution – the contract will state how any disputes will be handled should they occur. For instance, through mediation or binding aberration

There are several other things that the listing agreement may state, such as the marketing plan and whether or not co-brokering is allowed, but this is the bare bones of most contracts. One other thing you’ll likely find in NYC contracts is a particular notice on lead-based paint. Any property built before 1978 is legally obliged to disclose to the buyer any information on its presence.

Don’t sign until you’ve read everything and also don’t be afraid to ask for amendments if you’re uncomfortable with something. Listing agreements are very straightforward but as with anything that you’re being asked to sign you should always read through it carefully.

Exclusive Listing Agreement Sample

Date:

Address: 555 Park Avenue, New York, NY 10055

Re: Listing Agreement for 555 Park Avenue, New York, NY 10055

Dear Mr & Mrs Smith

Thank you for choosing ACME Residential to market your apartment. We have already discussed the various steps to be taken to bring you as many well-qualified customers as possible and I assure you that I am committed to getting you the best possible price in the shortest possible time.

The following reflects the agreement between us. If this meets with your approval, please sign and return the enclosed copy.

You have employed ACME Residential as a real estate broker with exclusive right to sell the above-captioned apartment. You represent that Mr & Mrs. Smith, Inc. the owner of the above property.

This agreement shall be effective as of August 20, 2018. It shall continue in full force and effect until November 20, 2018.

ACME Residential is authorized to offer the apartment for sale at a price of $1,000,000 and to represent that the common charge of the apartment is currently $1,000 per month, and the Real Estate tax is $900 per month.

ACME Residential is authorized to solicit the cooperation of other licensed real estate brokers who will act as agents for the prospective purchasers and to work with them on a cooperating basis for the sale of the above apartment. If the apartment is sold pursuant to this agreement, whether to a Purchaser or to the Board of Managers who has exercised its right of first refusal, including a sale to the Lessee whether during the term of this agreement of afterward, ACME Residential ’s fee for service to be paid by you shall be five (5%) percent of the total sale price of the apartment. In the event another licensed real estate broker solicited by us is involved in this transaction, ACME Residential shall pay the cooperating broker a fee for service by separate agreement with such broker and in no such event shall the fee for service paid by you exceed five (5%) percent of the selling price.

During the term of this exclusive right, you agree to refer to ACME Residential all inquiries, proposals and offers received by you regarding the apartment, including, but not limited to those from principals and other brokers, and you agree to conduct all negotiations with respect to the sale or other disposition of the apartment solely and exclusively through ACME Residential.

Within three (3) business days after the expiration of the listing term, we shall deliver to you in writing a list of no more than six (6) names of persons who inspected the premises during the listing term. If within three (3) months after the expiration of the listing term a contract is signed to sell the premises to a person on said list, we shall be entitled to the service fee paid by you which will equal to and in no event shall exceed either: a. five (5%) percent of the selling price when the purchaser is represented by an outside cooperating broker; or b. three (3%) percent of the selling price when the buyer presented is a direct client of ACME Residential.

In the event that any settlement monies due to buyer’s default on a fully executed contract with all contingencies fulfilled is received by you, ACME Residential will be entitled to 10% of said monies. In the situations, when the property subsequently gets sold to another buyer from the said list within three (3) months after the contract expires, ACME Residential shall apply received 10% of the settlement monies toward the amount of the service fee paid by you, which should be equal to but in no event exceeding five (5%) of the selling price for non-direct sale, or three (3%) percent of the selling price for direct sale.

ACME Residential represents you, the Seller, on ACME’s exclusives.

Special Lead Paint Notification:

If your property was built before 1978, you have an obligation to disclose to the Purchaser and the Purchaser’s agent all information known to you regarding the presence of lead-based paint and lead-based paint hazards within this target housing. All information known to the Seller’s agent regarding the presence of lead-based paint and lead-based paint hazards within this target housing will be disclosed to the Purchaser. Federal laws require that the Purchaser is given a 10-calendar day period (unless otherwise agreed in writing) to conduct a risk assessment or inspection for the presence of lead-based paint before becoming obligated under the Contract of Sale to purchase the target housing.

Fair Housing Notification:

ACME Residential is committed to upholding the city, state and federal Fair Housing requirements prohibiting discrimination.

This agreement shall bind and benefit the personal representatives, successors or assigns of the parties.

Facsimile signatures shall be construed and considered original signatures for purposes of enforcement of the terms of this Agreement. Same may be executed in counterparts and taken together shall constitute the whole of this Agreement. This agreement may not be changed, rescinded, or modified except in writing, signed by both of us.

 

Agreed and Accepted by the Property Owner____________________

ACME Residential____________________

 

 

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