Real estate questions for buyers run the gamut from “how do I find a great deal?” to “should I renovate?” Naturally the response depends on the state of the real estate market but in general the same questions are asked over and over again.
Here are the five questions real estate agents get asked most frequently from buyers and sellers alike.
- How is the market right now?
The best real estate agents in NYC love it when you ask this question. They know when people ask this question they are really asking what is my home worth or can I afford to purchase right now?
If you ask this question to a real estate professional and you get a rather short or nondescript response, you can be certain that is not the agent with whom you wish to engage. However, if the agent begins by asking you qualifying questions such as: where do you live? Or what neighborhoods are you considering? Or even your budget, then you can be certain you have a knowledgeable agent, who not only knows quite a bit about the market, but is willing to help you, should you wish to transact.
In NYC if you are searching for a price up to $3 million you will find this is typically a very different market than if you are looking in the luxury space, defined as $5 million or above.
In addition to a price point divide, the real estate market in New York City is composed of many smaller sub markets. If you have ever read one of the quarterly brokerage reports, you will notice that it references different sections of the city such as the Upper West side or the Upper East side. The report will also separate statistics out by housing category, with condos, co-ops and town houses all having their own set of statistics because there is enough meaningful data to create a micro market in these categories.
So there are not only markets within a geographical area and a price range, but also within the types of housing. If you find an agent who can describe these different micro markets, and how they are doing in the market in a meaningful way, you have found yourself an excellent agent.
- How do I qualify to purchase a home or condo?
If you are planning on getting a mortgage for the purchase, we always advise our clients to start by getting prequalified. Now you don’t need it in order to work with us, but we find that some homeowners will ask for a pre-approval letter before granting an appointment. Even if you don’t encounter this practice, you should have a pre-approval letter on hand not only for your knowledge of what you can afford but also because if you find the dream home quickly, you will be required to submit that document with your offer.
All cash? Be certain to have proof of funds with the account number redacted.
If you do not qualify to purchase on your own, you have some options. You might ask a relative to be a co-purchaser rather than throw money away on rent. Many parents will purchase a condominium when their adult children are coming to New York City for university, or to begin their professional lives. They may ask their children to pay the monthly common charges and real estate taxes, which are likely to be the same as rent. When they no longer need the apartment, they can simply rent it out or sell it.
In either instance, they will find themselves far ahead financially than if they simply chose to rent. This is also true for a co-op yet many co-ops do not allow co-purchasing so you must choose carefully. Additionally, many of them have rental restrictions. If you know in advance the property is solely for a primary residence, this could be a way for you and your co-purchaser to invest in New York City real estate at a lower price. Condominiums typically trade at a premium above a co-op because of their flexibility.
- How long will it take for me to find a home?
In general it takes between three to six months to find a home and move in but many factors determine the length of time it takes. Naturally, inventory levels play a large part in the timeline. When the inventory is low, it could be hard to find a home that suits your lifestyle and investment goals.
The other determining factors will be your shopping style and decision making style. Some buyers prefer to sit down and think sequentially through the purchase and make a list of items they must have, and then only look at the homes which match their criteria.
While other buyers have a need to see many homes so they can understand the available housing stock and find the one that simply feels like home, they might not be able to decide what neighborhood. They might consider Murray Hill condos and condos for sale in Harlem. Such disparate search parameters are common but lengthen the amount of time it takes to find your home. NYC has many neighborhoods from which to choose and it is a big part of the selection process. Most of us are somewhere between the two extremes.
Your decision making style also plays a large role in the time the process takes. Do you make decisions quickly or do you need a great deal of time because you dither a bit before deciding? In a fast paced market, the one who hesitates can lose out on homes which go to a faster moving buyer thereby restarting the search and adding time to how long it will take to find a home.
In New York City, we have an added layer of complexity, which includes putting together a purchase application or board package depending on whether or not you’re buying a condo or a co-op. In either case, that package of information will be submitted to a managing agent, who takes time to process the information, and they then pass it onto the building’s Board of Directors. The amount of time every managing agent and Board of Directors takes to look at the material and respond varies. Even when you are cleared to close, it can take a few weeks to set up the closing and closing dates are not set in stone so you need plenty of wiggle room as you get to the closing table.
- What are closing costs?
There are closing costs for sellers and for buyers. One point of confusion is always the notion of a flip tax. It is not actually a tax paid to the government, it is simply a “tax“ which the building imposes on sellers as a means of building up their reserve funds. Some buildings will simply base it on the Purchase price and take a very small percentage. In a co-op it is not uncommon to levy a dollar amount per share.
For example in a condo it might be 3% of the purchase price while in a co-op it could be $10 per share. The important part to note is who pays that flip tax. Generally it will be paid by the seller but there are times when buildings ask the buyer to pay it. This should be a part of your offer negotiations so be certain you are aware of it before you submit your offer.
Other common closing costs for sellers include the city and state transfer taxes, which are a percentage of the sale price depending on the range of the sale. Then there is the buyer’s mansion tax, which always gets plenty of eyes rolling considering that it is easy to purchase a one bedroom for $1 million in New York City, which is the threshold for when you must start paying the mansion tax.
Your mortgage banker and real estate agent will be able to give you a full list of closing costs, but they will only be an estimate until you actually know what property you are purchasing and what the final purchase price is as so many of the fees are related to the price of the property. What does it mean if a home has been on the market for a while?
- How long has this property been on the market?
Get more information before you draw a quick conclusion when you see a property on the market for what you think is a long time. It is always best to ask the listing broker what the story is behind the listed days on market. It could simply be that what you consider to be a long time on the market is actually not based on the current speed of the market. Knowing the average days on market is critical when you begin to ask these questions.
You may also discover that the seller began with a very elevated sense of what price the property might fetch and ultimately found the right price level after a few downward adjustments. Through no fault of the owners, there may have been a buyer who simply walked away, and the property has been tied up for some time as a result. Occasionally, there are even board rejections, although rare.
Restricted showing times is another factor which can add to days on the market. Anyone who has ever had an infant knows disturbing a nap cannot be tolerated for the parents’ sanity. Thereby limiting times for agents to show an apartment.
Restricted showing times have become more common as people work from home and cannot be disturbed on zoom meetings. Not having access to show on a regular basis can slow the process down and have no bearing on whether or not the property is in good condition or priced appropriately.
Finally, there is the issue of the condition of the property. There are plenty of properties which look fine in photos, and while the agent might not be trying to hide anything, when you inspect the property in person, it requires more work to bring the property up to your standards than you might imagine.
Unless the homeowner recognizes that their property needs an upgrade, the agent might not be able to describe the actual condition online in great detail or price it appropriately.