The New York City real estate market is extremely competitive. The most desirable and affordable properties can go to contract in a matter of days. The most important factors in getting a deal to closing include the following:
Annual Income - Generally you can borrow up to about 2xs gross annual income. Monthly mortgage and maintenance payments should not exceed 1 weeks gross salary. If you have significant liquid assets you may be able to borrow more.
Financial Statements - should be prepared by an accountant. It should lists net worth including assets, liabilities, salary, bonus, etc. The most qualified buyers are usually the ones whose offers are accepted. Having a complete financial statement is very important when there is an apartment or property with multiple bids.
Asset Valuation - A down payment alone does not qualify a buyer for a coop or a condo in Manhattan. Usually, a coop board or condo association wants guarantees for mandatory maintenance fees. They want assurances against unexpected loss of income. Many coops require liquid assets totaling 1 year's worth of maintenance and mortgage payments after closing. Also, some buildings require liquidity up to three years of combined costs. Ask your Broker to assist you with specific requirements.
A credit check is generally performed by a mortgage broker and pertains to your credit history. Resolve disputed claims and have them removed immediately from your credit report. Keep all pertinent documentation which illustrates that the issue is resolved. Also, we recommend buyers choose a mortgage broker because mortgage brokers can save time and money. We work with various brokers throughout the New York Area; if you are interested ask your Fortitude SCS INC. broker for more information.
Pre-qualified, also called pre-approved, is when a perspective buyer tells a lender income level, debt and credit information, so the lender can provide an estimated loan amount, based on these criteria. Being a pre-qualified buyer will reassure a seller that any offers made are bona fide and that a buyer can actually make the purchase. In fact, most offers submitted is often accompanied by a buyer's pre-qualification letter; this letter notify sellers that financing is an option.
Ask your broker to provide you with information about financing, estimated monthly mortgage payments, and any other necessary qualifications. Pre-approval letters make for strong offers because the lender has already pulled a credit report, checked debt/to/income ratio and done an analysis of your finances. Also, it is preferable to be pre-approved so that there will be no surprises when the credit report is received.
The real estate market in New York City is a very dynamic market. Having a real estate attorney who specializes in the NYC market is very important. First, they know the intricacies of the laws and regulations. Second, they can respond quickly to any problems that arise and can therefore expedite the closing. Ask your broker to assist you in selecting a qualified real estate attorney.
A closing is where a buyer gives the seller money in exchange for ownership and title to a particular property. This bargained for exchange, or consideration, transfers ownership of the property. The seller also needs to sign different documents including a deed. The place of closing is normally at the bank attorney's office. The parties present will be: seller, bank attorney, brokers, seller's attorney, buyer's attorney and title closer.
For mortgage applications and for coop or condo boards, buyers need to gather relevant financial documentation. Required documentation includes 2 months of most recent bank statements, brokerage statements and any other assets. In addition to current income verification, boards and banks require a minimum of 2 years of federal income tax returns. Self-employed buyers need to provide at least 3 years of federal tax returns and a letter from an accountant verifying income.
Find a target date for moving. If looking to finance, expect to take about 3 months from purchase to close. Buyers, begin your search 4-6 months before prior to an estimate moving date.
New York City is a city of diverse neighborhoods, all with their own unique appeal. Before beginning your search, decide what is important. For example, proximity to public transportation or proximity to your job. Are your preferences for a quiet residential neighborhood or a bustling hub of activity and nightlife? Try to be open to different areas as sometimes neighborhoods other than your first choice are more affordable and offer many of the same features. Visit our detailed neighborhood guide for information on all our neighborhoods. Also, ask your broker to include any recommended, areas as you may not be aware of them and they may best suit your needs.
If you really want to buy a particular property that has a lot of interest, sell the seller on the fact that you are a qualified buyer. It doesn't matter whether you plan to buy a studio or a building, chances are that there is a limited number of properties available in your price range. In a competitive market attractive properties can be in contract before they appear in the classified ads.
Brokers tend to notify serious buyers first. Make sure that you are ready to buy; have all your paperwork in order including financial documentation and pre-qualification for a mortgage. Communicate yours needs, budget, timetable, and neighborhood preferences.
Make yourself available to view properties. By being flexible with viewing properties during the work week, you can avoid weekends shoppers, congested open houses and a lot of the best buildings tend to show properties between 10-3, M-F.
After finding the property you want, immediately make a verbal offer. Consult your broker for the best ways to extend an offer to a seller. There are a lot of different reasons, other than money, that influence a seller in choosing the right buyer. If the verbal offer is accepted, have your broker get confirmation of the offer and acceptance in writing. Once the written offer is accepted and signed, your broker prepares a transaction summary. This is sent to the seller's and to the buyer's attorneys for review. Using the signed offer and acceptance, the seller's attorney then prepares a contract of sale. After the buyer's attorney reviews the contract, negotiates terms and evaluates the property's financial statements, the buyer then signs the contract and presents the down-payment check. Generally, down-payments range from 10% - 20% of the contract of sale. This money is often held in the selling attorney's escrow account to be sent to the seller's attorney. The seller then executes the contract.
Note*: Verbal offers are not legally binding. In fact, in the New York City area an offer is legally binding when both the buyer and the seller sign a contract of sale. Sometimes sellers are tempted by higher offers. To avoid problems, be prepared and have your attorney move quickly through reviewing financials and completing the contract.