Buying an apartment in New York City is not that much different from buying a home anywhere else in the country, except there are a few more steps and associated costs.
New York City is known for its expensive real estate. So, the vast majority of those looking to buy a home will likely purchase a condo or a co-op. Here is a look at everything you need to know about buying an apartment in NYC.
How Much Does an Apartment in NYC Cost?
The exact cost of an apartment in New York City depends on several factors, including its location, the number of bedrooms and bathrooms, and the inclusion of any amenities. The median sales price in the city as a whole is around $745,000, but the costs vary depending on the borough and neighborhood. It also depends on what type of unit you get, as co-ops tend to be cheaper than condos.
For instance, in Manhattan, the median listing price for an apartment is just under $2 million. In Brooklyn, it’s around $800,000, and in Queens and Staten Island, it’s around $550,000. The Bronx is the cheapest, with a median listing price of about $330,000.
Is There a Best Time to Buy a NYC Apartment?
While it’s never a bad time to buy a well-priced apartment in NYC, certain seasons often offer better deals than others. The spring and the fall tend to be the best times to buy an apartment in New York, specifically between April and June and September and November.
The winter is usually the worst time to look for a home because there’s less inventory and fewer agents and sellers are willing to come out in the cold. So, the best time to look is right as the market starts to pick up after the winter or right before it starts to get cold again, which is when you’ll find the best discounts.
What’s the Average Down Payment on an Apartment in NYC?
The standard down payment on an apartment in NYC is 20%. While it is possible to obtain financing with as little as 5-10%, some condominium and co-op boards require that the buyer make the entire down payment. Real estate in New York is so expensive and competitive that some buildings want to be sure that you can genuinely afford the apartment before they approve your offer. Others don’t care as much as long as you can obtain the financing – however, your lender may also have their own requirements for larger loans. So, be prepared to save at least 10% – 20% of the sales price.
Steps to Buying an Apartment in NYC
1. Determine Your Budget
The first thing you should do when thinking about buying a home in New York City is to determine your budget. Your budget will largely determine what neighborhoods you should consider and what type of unit makes the most sense. Most experts agree that you should spend up to a max of 28% of your income on mortgage payments. So, you can use that calculation to determine what you can afford to pay.
2. Hire a Team
Next, you should assemble your real estate team. Your team will include your lender, your attorney, possibly a mortgage broker, and any other professionals you may need to carry out the transaction. It would also help to consider whether or not you’ll hire a real estate broker to help you search. While not required, real estate brokers do have access to a variety of exclusive listings and can help prepare you for the board approval process (if necessary). So, you should decide whether or not it’s worth the investment.
3. Start Your Search
Once you’ve set your budget and put your team in place, it’s time to begin your search. You may have a particular neighborhood in mind, or you may decide to look in several different areas and narrow it down as you go. Make a list of your essentials, such as proximity to the subway, good schools, number of bedrooms, etc. That way, you won’t waste time looking at units that won’t work.
4. Submit a Winning Offer
Once you’ve found the perfect place, you should submit the offer as soon as possible so you don’t lose it. Your broker can help you prepare an offer package and determine a reasonable price. You may have to negotiate a bit or strike out a few times until you hear a yes. But as long as you stay patient and make a fair offer based on the current market prices, eventually, you’ll find a unit.
5. Do Your Due Diligence
The seller will likely ask for an earnest money deposit to take the unit off the market. Once the money is in escrow, the due diligence period begins, during which the buyer has the opportunity to have the unit inspected for any potential issues. The buyer has the right to return to the negotiating table to request repairs or make another offer if the inspection uncovers problems. Or they can back out of the sale if they can’t reach an agreement with the seller.
6. Sign the Contract
If everything checks out and both parties agree to go through with the sale, the next step is to sign the contract. The attorney will submit the sales contract right after the buyer makes an offer. It should be signed and submitted to the seller following the due diligence period. This sales contract is officially binding, so both the buyer and seller should review it carefully with their attorneys before signing.
7. Getting Approval from the Bank & Co-Op Board
Once both parties agree to the sale, the buyer must get official approval from their lender. Once the contract is signed, the lender will complete the underwriting process and officially approve the funds. Once the bank approves the loan, they will issue a commitment letter that you can include in your condo application or board package. Those looking to purchase a co-op will have to take an additional step and seek approval from the co-op board. This process includes submitting a lengthy application and undergoing an interview with the current board members.
8. Closing Process and Documents
Finally, if the buyer has made it through the underwriting and board approval process, all that’s left to do is close on the sale. The attorneys will draft the legal documents needed to transfer ownership and exchange the funds. You should carefully review all records with your lawyer and real estate broker to ensure the information is accurate. You will also have to pay all the closing costs, including taxes, attorney fees, escrow fees, and other miscellaneous expenses. But once the paperwork is signed and the funds have been exchanged, the unit is officially yours.
How Long Before You Can Move In?
How long after signing the contracts you move in depends on what you negotiate with the seller. In some cases, you may be allowed to move in immediately after the contract signing, and in others, the seller may request a bit more time to vacate the premises. If you need to move in right away, you should be sure to make that a point during negotiations, so there isn’t any tension or confusion. In general, it usually takes about two to three months from when you submit an offer to when the sale actually closes. So, make sure that you have somewhere to live while you’re waiting to finalize this process.