Gea Elika's Blog, page 98

An Escalation Clause Raises Risk

Although New York City’s housing market has noticeably cooled, there were some buyers inserting escalation clauses into their proposals not long ago. It is useful to understand when the market heats up. While it increases your chances of purchasing the property, the strategy also entails higher risks.

What is an escalation clause?

When you submit your offer, you can add an escalation clause. This contains your bid, but also states that your offer will increase by a certain amount should a higher bid emerge. It is also typical to include how much your offer will go up in case a bidding war arises. There is also a maximum offer you can put in.

For instance, if an apartment is listed at $800,000, you may put in an offer at $750,000. However, you add an escalation clause that automatically puts in a bid $3,000 above an offer that is higher than that amount. Since you do not want this to go on indefinitely and cost yourself a lot of money, you cap your last offer at $795,000.

Why should buyers do it?

It is a preemptive move to get ahead of a bidding war. You do not have to go back-and-forth with the seller since your counter offers are essentially in place already. You have also put in the maximum price you are willing to pay. In theory, this introduces price discipline to your purchase strategy.

With your next steps planned, an escalation clause might place less stress on you.

Risks to the buyers

There are risks involved, though. To use poker parlance, you have essentially given away your hand since sellers know your next moves and how high you are willing to push your offer.

A buyer can shop your offer around, and use it as leverage. You can wind up paying more than you would have, even if the other potential buyers are not serious.

While putting a maximum price in the escalation clause mitigates paying more than the property’s fair market value, you could still end up doing so. A bank will balk if it turns out the loan is more than its appraised value. This means you may have to renegotiate, come up with additional cash, or walk away.

You may still lose out on the property, even if you have the highest offer. There are other things sellers may favor. This includes the ability to pass a co-op board’s muster, a quicker close, or an all-cash deal.

Sellers may balk

Using an escalation controls the process, and sellers may want to make it a more open competition. While the buyer puts in a maximum price, the seller may prefer a less controlled process, where emotions come into play. That way, he or she might sell the property for more than the listing price.

Under an escalation clause, the seller has no way of knowing if the buyer was willing to expend more than his or her maximum price set in the contract.

When to consider it

Keeping in mind the risks involved, you may wish to use an escalation clause if the real estate market is hot, or there are other reasons your exclusive buyer’s agent expects multiple offers on the property.

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Happy Thanksgiving

May this be an extra special Thanksgiving for you and your family! Wishing you a Thanksgiving overflowing with peace, love, and laughter. Thank you for visiting our blog.

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Great Manhattan Neighborhoods to Live In NYC

No matter what city your living in, what neighborhood you choose will be a big decision. This is especially so New York where things can feel very different depending on what neighborhood you prefer. If you’re not aware, NYC has five boroughs, each one very different to the others. For this article, we’ll just be looking at Manhattan. Each neighborhood here, like in any borough, has its distinct feel, culture, and vibe. If you feel set on making Manhattan your borough of choice, the next decision is which neighborhood suits you best. Manhattan has a lot of neighborhoods, 53 to be exact. Rather than list them all (which would require a book-length article) here are five neighborhoods that we feel provide you with the best experience. Just ask yourself which of these neighborhoods sound like a place you’d like to make a home?

Upper West Side

If you’ve ever watched a TV show set in New York, there’s a good chance it featured the Upper West Side. This is where Jerry Seinfeld lived (both on the show and in real life). Where Liz Lemon lived on 30 Rock and where Meg Ryan and Tom Hanks lived on You’ve Got Mail. All this makes it sound glamorous, but you may be thinking it’s all but inaccessible to anyone not on a celebrity budget. While there are undoubtedly million-dollar homes available there you can make it work on a tighter budget.

It’s very popular with families, and you’ll often see them there pushing strollers and walking dogs on weekends. It’s also nestled right between Central Park and Riverside Park, so there’s no shortage of green spaces. If you love culture, it’s where you’ll find the Lincoln Center, home of the NY Philharmonic, the Metropolitan Opera, and NY Ballet. Although expensive, this is a neighborhood that is close to almost everything and has more than enough to keep you entertained.

NoHo

If you want the trendiness and chic of SoHo without the hordes of tourists, then NoHo is the place to be. Located between Greenwich Village and East Village, NoHo is a neighborhood of cobblestoned streets, classic cast-iron architecture and quiet lanes lined with trees and retail boutiques. It’s only a few blocks wide and is mostly composed of apartment buildings, most of which are under five stories. The whole neighborhood has been designated a historic district, so you can be confident that it won’t be changing anytime soon. It’s all very artsy, and you never have to walk far without finding something unique. Here you can find the Astor Place Theater, The Hole (a contemporary art gallery) and SubCulture (an underground listening room).

What draws people here is the many spacious condos and co-op apartments and loft-style apartments that are perfect for artists. Due to its central location, it’s also incredibly accessible with five different subway lines, the B, D, F, V and 6. If you can afford the steep prices, you won’t regret it. It’s a great place filled with students’ artists and professionals. It’s also located right next to SoHo, East Village, Greenwich Village, and Nolita.

Tribeca

This is the one that regularly tops the list for the most expensive neighborhood in the whole city. Filled with cobblestone streets, world-famous restaurants, and many of the whos-who and celebrities of NYC, this is the most exclusive neighborhood in the city. You’ll find many classy joints here like restaurants by world-famous chefs, upscale fashion outlets and it’s also home to a little thing called the Tribeca film festival. The neighborhood is mostly made up of old warehouse buildings that have been converted into luxury condos and loft apartments. Many of these are very trendy and new which lends a fresh look to the neighborhood.

It’s also family-friendly with beautiful public parks right on the waterfront, plenty of playgrounds and high-quality schools all right in the area. Those who work in the Financial District can walk to work which is not a comfortable luxury to find in Manhattan. Even if you work elsewhere, you’ll still have little trouble getting around as nearly every subway line passes through it.

East Village

Once the gritty hub of the city’s art scene, East Village has seen a lot of changes since it’s bohemian days. Massive gentrification has taken a lot of the edge off it, but it remains a favorite spot for loveable misfits. The neighborhood has the highest concentration of bars in the city, and there’s never a lack of things to do. There are creative classes, comedy clubs, and plenty of live music. The dining options are fantastic. Make sure to try the steakhouse burger at Brindle Room which you can then wash down with a pint at McSorley’s, the oldest still-running bar in the city. After that, you can spend an evening at the Anthology Film Archives or The Public Theater. Apartments here tend to be a bit smaller than other neighborhoods, but you make up for it in location.

Chelsea

Chelsea is one of those neighborhoods that offers a little bit of everything. Bordered by Hell’s Kitchen to the north, the Flatiron District to the east, the Meatpacking District to the south and the Hudson River to the west, it’s a neighborhood that puts you in the center of Manhattan without feeling like you’re in the center. The buildings you’ll find there are just as diverse as the residents. On the east-west streets, there are historic brownstones while on the north-south avenues you’ll find an abundance of luxury condos and rentals.

What makes it so loved is the level of entertainment. There are over 100 art galleries to visit, the Joyce Theater is never short on performances and on 23rd street you’ll find more movie theaters then you can see in a day. Then there’s the Chelsea Piers Sports and Entertainment complex, 30 acres of golf, bowling, basketball, baseball, and gymnastics. When you need to eat you’ll never be short for options. Here you’ll find a mix of American cuisine, ethnic cuisine and even food trucks on 6th Avenue and 18th Street. Another perk is the famous Chelsea Market which offers two dozen specialty shops such as bakeries, cheese, gourmet coffee, and wines. If you’re looking for a place with a mix of everything while still being a short commute to the midtown area, then Chelsea will not disappoint.

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Why Did You Show Me a Home With a Contract Out?

You find a great apartment online. Your agent reaches out to the listing agent to show it to you and – YES, IT’S AVAILABLE! So you see it and immediately fall in love. You spend an hour inside looking at every corner, imagining where your furniture is going to go, all while the listing agent spurs you on and tells you how perfect the property is for you.

After talking it over with your banker and your lawyer, you decide to make an offer – except now that you’ve decided to move forward, you learn that the property has a contract out to another buyer. Furthermore, this contract was out before you even showed up to the property. So why did the listing agent even show you the property in the first place if they knew it wasn’t going to be yours?

It’s all about fiduciary responsibility

When an owner hires an agent to sell a home, they enter into a fiduciary agreement. This basically states that the agent works solely for the seller. While we could delve into the language behind this, what it means is that the agent has to do everything they can to get the best terms for their seller and make the deal come to fruition.

Buyers often show up to properties and start asking the agent lots of questions. As they get to know the agent, they sometimes forget that this person was hired by someone else for one sole purpose, and that purpose isn’t negotiating for a buyer. This agent works for the seller.

Does that mean a seller’s agent can lie to me if I’m a buyer?

They shouldn’t lie to you, but they don’t necessarily need to tell you the whole truth. In New York City, we have a saying that nothing counts until the contract is signed and the check is in the bank. While a property may have an accepted offer on it, accepted offers don’t always translate into signed contracts. Buyers back out for a variety of reasons. Sometimes they just decide it’s not the right time to purchase. Other times, they might find something they like better. Therefore, while a deal is in the stages of “contract out,” a good seller’s agent will still be showing the property, ensuring that if the current deal goes south, there is a backup in line.

How can I guard against this?

Unfortunately, this can lead you, the purchaser, to feel misguided. The simplest way to get around this is for you or your agent to inquire into properties by asking “Is this home still available and can you confirm if there are any contracts out?” If you only ask if the home is available, all that means is that there is not a signed contract for this piece of property. You need to specifically ask about contracts to know if you have competition.

You should keep in mind that just because a contract is out on a property doesn’t necessarily mean you shouldn’t see it. If you’re beginning your search and are trying to get a sense of the market, seeing a home with a contract could be a waste of your time. However, it is possible for you to submit an offer while a contract is out and for you to be the one who walks away with the apartment. If your terms or price are more favorable to the seller, they may back away from their pending deal to take yours. If you feel ready to jump on a home, you can absolutely see a home with a deal in play, so long as you’re prepared to move quickly.

Finally, think about how you would feel if it was your home on the market. You would want your agent to keep showing until you were holding a check. So remember, if this does happen to you, you’ve actually come in contact with a stellar agent.

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What is a Duplex Apartment in NYC and Should You Buy One?

In your search for an NYC apartment, you may come across the phrase “duplex apartment.” For new arrivals who have encountered the term before it may cause some confusion because in New York what constitutes a duplex apartment is different to other states. These types of apartments come in many different sizes but what they all have in common is a space on two separate but adjoining floors. Let’s look closer into that definition. Maybe a duplex apartment is just what you’re looking for.

What is the definition of a duplex apartment?

The term is quite common in real estate terminology, but it needs to be pointed out that in New York, “duplex” means something different. Most states define a duplex as any two-unit dwelling that is connected by a common wall or floor. This is essentially a multi-family home. These are often purchased so that the owner can rent out the adjoining apartment. But in NYC, especially in Manhattan and Brooklyn, a duplex means a two-floor apartment that is connected by a stairway and elevator. In other words, it’s what you get when you turn two apartments into one. Sometimes the bottom level can be a basement but not always.

Most were constructed when the owner of a co-op or condo apartment purchased the unit above or below their home and redesigned it for their own needs. You can also find some that are connected from side-to-side, but they’re less common than top-to-bottom conversions.

What are the benefits of owning a duplex?

Space, and lots of it! Duplex apartments come in many different sizes. The most desirable being those in which the square footage of the top floor closely matches or is identical to the lower floor. Families covet these especially as they allow for maximum use of living space along with the novelty of a two-story layout. Separate floors mean sperate rooms and living areas so you’ll get a little more privacy than regular apartments.

Considerations when buying a duplex

Having that extra level sounds great, but you need to take account of the fact that you’ll need to use those stairs on a daily basis. They do add an interesting look, but they’re more of a space saver than an ideal mode of transport between floors. Most come in a spiral form so you can forget about dragging a king-sized mattress up and down one. You’ll also need to take extra caution when using them after a late night of adult beverages. If you’re not thrilled by this then perhaps a duplex isn’t for you. You can always get around this by finding one that includes an elevator. It all comes down to a personal choice so think hard about it before deciding.

Triplex apartments

Although rarer than duplex’s, it’s also possible to find triplex apartments. As the name implies, these are apartments that cover three floors. These types are usually only located in buildings where each floor is taller than normal. Although it’s possible to find ones that are part of the original design, it’s more common to find ones who have gone through a renovation to connect the three floors.

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Pros and Cons of NYC Boroughs

Newcomers to New York are usually a bit confused about the five boroughs. Are they neighborhoods? Are they cities or are they all New York City? To put it straight they all comprise NYC, the borders of which were all established in 1898. Each of the five boroughs – Manhattan, Queens, Brooklyn, the Bronx, and Staten Island – have their own unique flavor and residents will argue endlessly over the merits of each one to the others. While each borough is separate, travel between them is common and it’s not unusual to travel through two or more boroughs each day on your daily commute. Anyone who’s considering moving to NYC needs to weigh up the pros and cons of each one. Hopefully, this guide will help you decide with borough is the right one for you.

Manhattan

May as well start with the most famous one. Manhattan is the place every non-New Yorker is talking about when they say ‘New York.’ This is where you’ll find the beating heart of the city. It’s also the most densely populated borough in America’s most densely populated city. Of last year’s record number 62 million tourists to the city, most would have stayed in Manhattan. It’s where you’ll find Broadway, the Empire State Building, Central Park and many more iconic places. But for a lot of reasons, it’s not the first choice of boroughs for new arrivals looking to move. The cost of living is incredibly expensive and with an extreme lack of space, it can be tough to break into.

Pros: It’s an incredibly exciting and cool place to live. Almost everything that happens in the city happens here. Top bands play here all the time, almost every major industry has a convention or tradeshow here, and it’s where you stand a good chance of spotting numerous celebrities. It’s also quite easy to get around so you’ll save time and money on commuting.

Cons: Being the center of attention it tends to be a tough place to live. Housing is almost unaffordable for middle-class families; personal space is almost unknown, and Manhattanites can be a tough group of people to live with. If you can’t handle the crowds, costs and fast pace of everything you’re better off looking elsewhere.

Brooklyn

For many years Brooklyn was seen as the cheaper alternative to living in Manhattan. But heavy gentrification over the last few years has seen that change. It’s now being called the “New Manhattan” and when you look at the housing prices it’s easy to see why. But what makes the borough so loved is that it’s home to artisanal everything. Here you’ll find a niche for everything from stores exclusively selling feathered gloves to meetup groups for dogs that look like vegetables. Brooklyn is the cool and ‘weird’ borough where no matter what you’re into you’ll find your people.

Pros: if you love art, culture, and food, there’s nowhere else that does it like Brooklyn. It tends to feel like a cluster of small towns tied together and it’s all incredibly accessible by the subway. If you love nightlife it has a huge selection of watering holes where you can find good times and maybe that special someone.

Cons: As mentioned, Brooklyn is fast catching up with Manhattan when it comes to housing prices. While commutes around the borough are relatively fast, getting to Manhattan can vary from easy transit over the bridge to an hour long commutes on the local F or R train.

Queens

Queens is the largest of the five boroughs by square kilometers and it’s by far the most ethnically diverse. As of 2014, 48% of its residents were foreign-born. This means you have a huge international cuisine to choose from. Whether you prefer Nepalese or Cantonese, Dominican or Liberian, it’s all there to test out your palate on. The borough is also more affordable than Manhattan or Brooklyn with far more housing options to choose from like high rises and more suburban neighborhoods. But in NYC pricing is all relative so it still remains expensive compared to other cities. But compared with Manhattan and Brooklyn it’s definitely a more affordable alternative. Just so long as you don’t mind a long commute.

Pros: it’s more affordable and many neighborhoods are fast started to rival Brooklyn for arts, dining/drinking, and creative entertainment. Its diversity makes Queens almost like the poster child for human beings living in harmony.

Cons: It’s the biggest borough and therefore a bit of a pain to get around. Getting into Manhattan is an easy ride but when traveling between neighborhoods you’ll need a lot of patience. There’s also an area of northeastern Queens that is inaccessible by the subway. Simply put, you’ll definitely want to consider commute times when choosing a neighborhood.

The Bronx

The borough has quite a marred reputation from the previous decades. But since then it’s experienced a comeback and is no longer like it was in the Carter years. Most of the borough has a nice small-town feel to it and once you get settled there you can meet a lot of friendly people. It’s now becoming a popular place for artists and performers that are moving into its new creative spaces.

Pros: It’s a very affordable borough but you’ll want to move fast because prices are starting to rise, especially in the south end which is going through a revitalization with new bars and restaurants opening all the time. You can find a very strong sense of community here once you get settled in and make some friends. It can also be very beautiful with many great parks, sunny beaches, and cultural institutions.

Cons: Things there have gotten a lot better since the 70’s but safety can still be an issue in some neighborhoods. Hunt’s Point, in particular, has the distinction of being the most benighted neighborhood in the whole of New York. Transport is another major issue. The Cross-Bronx Expressway is good for getting to and from Manhattan but is less reliable for getting around the borough itself. Owning a car is practically a requirement for getting around.

Staten Island

Outsiders often try to argue that Staten Island isn’t even part of New York. It certainly has a very different vibe to the other boroughs and is the only one that is not connected to the metro. But if want a sense of suburbia while still being just a ferry ride away from the city it’s hard to argue against it. It’s also the most affordable borough with a lot of great apartments to choose from.

Pros: Apartments are very affordable and if you can’t handle the noise levels of the rest of the city you’ll it very quiet here. If you’re looking for a free-standing house with multiple bedrooms there’s a lot of vintage housing available that are perfect for families. Although there’s no metro the free ferry can be a very charming ride. It also provides some of the best views in the city.

Cons: If you’re moving to New York for the hustle-and-bustle you may be a bit disappointed with Staten Island. There’s little of the excitement here that you’ll find in the other boroughs and not being able to hop on the subway can really put the brakes on your social life. There is a railway for getting around the borough, but the schedule can be a bit unreliable.

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The Rental Brokerage Fee in NYC Explained

New York City is a notoriously difficult place to find attractive, affordable apartments to rent. Given that, many people choose to use a broker. However, it is common for the renter to pay the fee in New York City. This differs from many other places, where an agent is not typically used. If the owner feels the need for one, usually the landlord pays the fee.

The brokerage fees are typically quite substantial. There are certain instances where it makes sense and others where it does not.

How much?

The fee is typically steep. This amount, which renters pay upon signing the lease, is usually one month’s rent or up to 15% of the annual rental amount. The 15% figure is essentially the standard. In Manhattan, the median rent for newly signed leases was approximately $3,500. A 15% fee would amount to a $6,300. Of course, rentals are much higher in certain neighborhoods and buildings, meaning you pay a larger commission.

Why pay the fee?

It is simply a matter of supply and demand. Historically, in New York City, there are many more people looking for apartment rentals than there are units. This gives the building owners a lot more leverage in setting the rent and determining who pays the commission.

Therefore, if you want an apartment, particularly in a desirable neighborhood, you may wish to pay the brokerage fee. Your agent can help weed out undesirable apartments. This can save you a lot of time and frustration.

When you shouldn’t pay

You may not have to pay the brokerage fee in neighborhoods where the competition is less intense. In these areas, you may find an apartment on your own. Alternatively, the brokerage could list the apartment as “no fee.” In some cases, the building is handling the rental internally. It could also mean the landlord is paying the commission.

There are several other reasons the landlord might pay the commission. He or she might feel this is a way to fill the occupancy quicker. In this case, the brokerage commission may outweigh the lost rent. Alternatively, if the owner has had the vacancy for a long time, the apartment may have scared off renters. In this case, you should carefully consider whether you want the apartment.

In a no-fee situation, you should check to make sure the rental amount is not higher than if you paid the commission. Many landlords merely bake the commission into the monthly fee, resulting in no savings for the prospective tenant.

If you are going to try to find an apartment on your own, you need to prepare yourself to do a lot of legwork. You can start online, but many listing will have an agent attached to it. Large apartment buildings, if you are comfortable living in one, may not use an agent.

Is the fee negotiable?

You can certainly try to negotiate the commission. Generally, it is an uphill battle, though. There are certain things that can bolster your case. Agents want future business, and if you can provide it, he or she might work with you. If you have referred clients, this is a major point in your favor, and agents might negotiate a lower commission.

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Tips to Help Make Buying an Apartment More Affordable

Anyone who’s been paying attention will have noticed that buying a home has become much less affordable in recent years. A rather grim report by Harvard University found that almost 40 million Americans live in housing that they can’t afford. What this means is they are spending more than 30% of their income on the place they own or rent. The problem is that home prices have gone up while wages have not kept pace. Now millions of Americans feel hampered from becoming homeowners not just by student debt and bad credit but also reduced buying power. So how can this be overcome?

The facts may look grim, but there are ways to turn things in your favor and find more affordable housing in NYC. Some of these have nothing to do with your income. Below are several strategies that can help reduce the cost of buying a home and make homeownership for you a reality.

Boost your credit score

Let’s get the most obvious step out of the way first. How much financing you can secure for a home purchase will dictate your options. The key to obtaining that financing along with generous interest rates is a strong credit score. The very best rates and borrowing amounts are provided for those with a credit score of 700 plus. If your credit could be a lot better, then make a plan to raise it. Pay all your bills on time, build your credit history and avoid opening new lines of credit when possible. It bears mention that how much you can borrow and whether you’ll even be approved for a mortgage isn’t just determined by your credit score. But it still plays a big part and is one you to a degree have control over.

Shop around for the best rates

It’s worthwhile getting pre-qualified for a mortgage before you even make an offer on a property. It makes you a more serious buyer in the eyes of the seller. You’ll still have to get pre-approval before receiving the green light. But it gives you a rough approximation of how much you can expect to borrow and at what rate. Shop around for the best rates and don’t settle for the first lender that approves you. A simple tactic can be to counter one lender’s offer with another’s to get the rate you want. Also look into different loans types and discuss them carefully with a financial planner to find the one that suits you best.

Make some trade-offs for location

Everybody wants a neighborhood that has great amenities and location, but affordability puts a limit on your options. You may already have a neighborhood you’re interested in but be willing to look around and reduce your expectations. The most desirable areas have the best amenities and transportation. As a result, the prices are much higher. What this all comes down to is researching the housing market. Prices change all the time so stay informed about the median selling price in your preferred and less preferred neighborhoods. When deciding where to live, consider those qualities that are most important to you. If you’re willing to sacrifice on transit time, then you’ll find more affordable options.

Go DIY on repairs and projects

Whether you’re a renter or owner, you’ll still have to deal with occasional maintenance to maintain a living space. Buying a property “as-is” has the advantage of being less costly but presents some risks as it’s hard to estimate how much any renovations or repairs will cost once the deal is done. Some repairs are very expensive and require professional help such as roofing or doing an entire kitchen renovation. But with a bit of searching and patience, you can find reasonably priced properties that only require small repairs done over time. If you can spread out the cost of repairs and do what you can on your own, you’ll immediately increase your buying options. Any improvements will also build equity on your home which will make a difference when it comes time to resell later down the road.

Avoid overpaying

Even in a buyer’s market you still have to be careful that you don’t overpay. One clear sign that a property may be overpriced is if it’s been on the market longer than average. Have your buyer’s agent pull statistics on the property. How long has it been listed? Is that longer than average for homes in that neighborhood and in that price range? You’ll want to do a home inspection to learn more about its market value and any issues you might run into after the closing. The best way to ensure you don’t overpay is to run a Comparative Market Analysis (CMA). This will take into account real-time factors that influence the property’s value to help you find the ideal offer price.

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An Accepted Offer: Not a Done Deal

A prospective buyer should understand that having a seller accepts your offer does not mean the end of the process. It is a common misconception that the house is yours. However, in New York City, that is not the case.

Therefore, buyers need to understand that the listing remains active, and sellers are likely to continue showing the property. This can unsettle buyers, but the process protects you, too.

Don’t celebrate

Once you agree to mutually acceptable terms, it is not the time to pop the champagne cork. The deal moves into the due diligence phase, and it is in the attorneys’ hands. A lot goes on during the attorney review, including an inspection and back-and-forth negotiations between the lawyers.

Since there is not a signed contract between the parties, sellers are free to continue the active search for buyers. Meanwhile, the buyers are not bound by the offer.

Risks to the seller

Should the seller stop the process based merely on the acceptance of an offer, he or she is putting him/her at risk that the buyer could renegotiate or pull out altogether. If the buyer should do so, there is no recourse.

Should this happen, the seller has lost valuable time. Other interested prospects may very well have moved on to other properties. Furthermore, the listing has remained on the market, and buyers may consider it “stale.”

However, the seller alleviates this risk by continuing the process until both parties sign the contract and the buyer makes an earnest deposit.

Risks to the buyer

Prior to having a signed contract, the property remains on the market and the seller is free to accept other bids. This means another buyer can swoop in with a better offer. He or she could offer more money or make it compelling in another way (e.g. fewer contingencies, more amenable closing date, etc.). Then, this places you in the position of having to amend your offer or walk away.

The buyer can continue searching different listings in case the preliminary deal falls through.

Penalty phase

Once the seller and buyer sign the contract, it is a different story. Typically, there are certain contingencies in the contract. For instance, it is typical that you have to qualify for a mortgage within a certain period of time. If the lender denies the mortgage, the buyer can pull out of the deal without penalty. As a buyer, you may find legitimate issues during this process. For instance, you may wish to renegotiate the price following the inspection.

However, if the buyer wants to walk away after signing the contract for reasons other than the contingencies stated in the contract, there is a financial penalty. Typically, he or she forfeits the earnest money.

From the seller’s perspective, he or she can accept backup offers, but cannot proceed unless your deal falls through.

The Upshot

Neither party is bound by an accepted offer. Since this is the case, you should expect the listing to remain active until both parties sign on the dotted line. You may not like it, but in New York City, it is the prudent way to conduct real estate business.

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Buying a Brownstone in NYC

It’s easy to see the appeal of living in a beautiful brownstone on a picturesque tree-lined Brooklyn block. These iconic buildings can be found not just in Brooklyn but also scattered throughout Manhattan from the Lower East Side to Harlem. Owning one means you’ll be able to enjoy a nice wide stoop for flower pots, a fully furnished kitchen and the privacy of your backyard enclosure for entertaining guests. But once you’ve looked into the costs involved you’ll see it calls for a long-term commitment and far more responsibility than your average apartment. If you’ve got your heart set on becoming a brownstone owner, read on to see what considerations you need to make. A purchase like this requires a lot of patience and care. Don’t jump in without understanding what’s in store.

They require a long-term commitment

Owning a brownstone requires not just a sizeable monetary investment but also a significant time investment. For that investment to be worth it, you should feel ready to stay settled for at least seven t0 ten years. The purchase price alone can run into the millions, and that’s before you factor in harder to predict costs such as insurance, maintenance, and renovations. You’ll want to have a sizeable reserve fund in store after you’ve completed the purchase. None of this prevents a first-time buyer from investing in a brownstone, but they need to feel confident they’re going to stay put for ten-plus years. Otherwise, the costs just don’t make it viable.

You’ll pay more in financing but less in taxes

With asking prices in the millions, financing a brownstone won’t be easy. You’ll need a high credit score and good credit history to get the funds needed. But once you’ve completed the purchase, you can look forward to lower property taxes. Compared to similarly sized apartments, brownstones usually have much lower property taxes. Properties in large multi-unit apartments are assessed at 45% of their value. By contrast, single-family buildings such as brownstones and townhouses are only assessed at 6% of their value. The savings don’t just stop there. You’ll no longer have to pay maintenance fees and common charges which can cost you as much $20,000 in annual expenses.

You’ll need to pay for façade maintenance regularly

Compared with other building materials, brownstone is very susceptible to decay and erosion. As such, they require regular and costly maintenance to maintain their outward appearance. The Landmarks Preservation Commission (LPC) has some stringent guidelines. On how repairs must be made. Prices for this can vary greatly depending on the size of your brownstone and the scale of the repair. Some simple patching won’t cost much, but a full façade renovation on a 3-4-story brownstone will cost anywhere from $70,000 to $100,000. Depending on your income you may be eligible for a grant from the LPC.

Be ready for stairs

Owning a brownstone means you’ll get something very few New Yorkers have, space and lots of it. All that space and multiple levels will mean numerous stairs to climb each day. While this can be a great perk when it comes to style, it won’t take long to realize the downside of no elevator. Those who are able-bodied and in their prime will have little trouble with this, but if you plan to grow old in your brownstone, then you need to consider what this will mean. Four flights of stairs can present quite a challenge for older folks and potential danger. Make sure your banister is sturdy, and the stairways are kept well lit.

You may have issues with insurance

All that privacy you get with a brownstone means you are also fully responsible for repairs and insurance. In the event of extensive damage (e.g., From a storm) most insurance policies won’t cover damage on a brownstone’s original features such as crown moldings, the façade, and mahogany. If you can find an insurance policy that can cover extensive repairs be ready to pay a lot more then you’re used to. Insurance costs can be as much as 40% higher than standard insurance policies.

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