Buying a condo in New York City can be thrilling, but it’s also a major financial commitment. It helps to know what to expect so the process is as smooth as possible.
Here is a look at the basic steps to buying a condo in NYC.
How To Buy a Condo in NYC
1. Set Your Budget and Find a Lender
Before you begin looking, it’s essential to secure financing (unless you plan on paying cash). The New York City real estate market moves very quickly, so if you see a condo you love, you’ll want to make an offer as soon as possible or you may lose it. Plus, it’s essential to know how much a lender is willing to give you to set a realistic budget. Take a look at your finances, and then find a lender willing to offer you a preapproval letter to determine an accurate budget.
2. Decide Whether or Not You Will Use an Agent
Next, you should decide whether or not you’re going to hire a real estate agent. Most buyers should use an agent because they bring a wealth of knowledge and experience, making the home buying process much smoother. But, if you feel confident in your abilities and understanding of the NYC real estate market, you aren’t required to hire an agent.
3. Search for Apartments
Once you have your team in place (including your lender, attorney, and agent if you have one), you are ready to search for properties. It’s OK to start broad and look at many different areas. But eventually, you’ll want to focus on one particular neighborhood or general community. Also, be realistic about your budget – NYC is known for its expensive real estate, and what may afford you a mansion in other parts of the country may only afford you a modest home in New York. So be sure to focus on the neighborhoods where you can get the best deals for your money.
4. Submit an Offer
Once you’ve found the perfect place, you should prepare your offer letter to submit to the lender. This step is where having an experienced real estate agent will come in handy. Your agent will be able to advise you whether you have the leverage to make an offer below the listing price or if you should go higher to beat the competition. Take your time to be sure that you make an educated offer, but don’t wait too long, or someone may beat you to the punch.
5. Negotiate with the Seller and Due Your Due Diligence
Depending on the circumstance, the seller may accept your offer right away, or you may go through several rounds of negotiating. During this phase, you may reach an agreement or decide to walk away and find a new property. The due diligence period begins once a seller accepts your offer and sends your attorney a deal sheet. During this period, you should conduct an inspection to look for any issues with the home that the seller didn’t disclose. You should also perform a title search to see if there are any unresolved liens or ownership issues and acquire title insurance to protect yourself. You can always return to the negotiating table if any problems with the property or title arise during the due diligence period.
6. Finalize the Mortgage Underwriting Process
Next, you should finalize the mortgage underwriting process and obtain a commitment letter. During this process, your lender will carefully scrutinize your financial documents and credit history to determine whether or not you can afford the loan and how much of a risk of default you pose. As long as you were honest in your initial interview and haven’t made any sudden financial changes, you should be approved for whatever rate your lender initially quoted. But if there are any discrepancies or causes for concern, they will be addressed during the underwriting process.
7. Complete the Condo Board Application
Once your lender officially approves your loan, the next step is to complete the condo board application. Not every condo requires board approval, but many do, so it’s wise to prepare.
NYC condo boards have the “right of first refusal,” which means they can buy the unit for the same price you negotiated before you purchase the apartment. They seldom exercise this right, but they can if they so choose. Condo board applications are relatively straightforward and not nearly as rigorous as co-ops. So as long as you are honest and cooperative, you shouldn’t have a problem seeking approval.
8. Conduct a Final Walk-Through
You are officially in the home stretch after the lender and condo board have approved you. But just before closing, you’ll want to conduct a final walkthrough. The final walkthrough is the perfect time to verify that the seller has removed their belongings and made any necessary repairs. It’s is the last chance you’ll have to inspect the unit before you sign the closing documents. So, if there are any issues, this is the time to voice them. It’s much easier to renegotiate or make requests before the closing. Once you sign the paperwork, it’s assumed that you’re satisfied with the condition of the unit.
9. Close on Your New Home
If everything checks out, the only thing left is to pay the closing costs and sign the paperwork. Review all documents with your agent or attorney to understand what you’re signing. A few days before the closing, you will receive a closing disclosure statement and instructions on writing the final check. Your lender will supply most of the funds, but you will still be responsible for paying the closing costs. Once the contracts are signed and you exchange funds, the title will be transferred into your name, and you will be the official owner of a NYC condo.