“I have a graduate degree in Applied Physiology from Columbia (with Summa Cum Laude written after my name), but I never felt as ignorant, confused and young as I did when buying my first home.” — Christa R.
Christa isn’t alone. In the past 20 years I had the privilege of helping many smart, successful people who are flummoxed by the complexities of the New York City real estate market. Hedge fund managers, rocket scientists, technology wiz kids and more all need help.
The journey from deciding to purchase a home in New York City to getting to the closing table is not for the faint hearted. The smartest people are frequently confused because it is a long, somewhat opaque journey. It is easy to get it wrong by not understanding that the process is complicated and different than anywhere else in the United States. There are more steps, a different order of operations, more hurdles and more potential pitfalls.
The reality of vertical living is that while it may offer stunning views and resort-worthy amenities, it comes with many rules. As a homeowner when you make decisions, they potentially impact every other owner in the building. Couple this more complex process with the high price tag and it can make for some sleepless nights when you are attempting to transact. Here are three ways purchasing in NYC is different.
- Vertical living comes with rules around renting. Some co-ops will let you rent your home but only after you have lived there for a certain amount of time and then they are likely to restrict how long you can rent. For example, it is not uncommon for a co-op board to state that you must live in your home for two years and then can only rent it out for two years in a five year period of time. Every building has different policies so check the upfront. Condominiums can be rented from the day you purchase your apartment but many buildings stipulate that there is a twelve month minimum so don’t assume you can use your palace for six months out of the year and rent it out the other six months.
- When getting a mortgage the bank will not only need to approve your application, but they will also need to approve the building. Banks take a look at a number of factors when approving a building in the underwriting process. One of the most common is to look at how many apartments are rented in a building. If more than 50% of the homes are not owner occupied, some banks will not issue a mortgage even if your financial record is stellar.
- Closing dates are not on a fixed day in New York City. This is one of the hardest concepts for buyers and sellers alike. Getting to the closing table requires coordinating many moving pieces which cannot always be guaranteed. Therefore all purchase contracts will read on or about the date of closing and that date can be delayed up to 30 days.
Thinking of purchasing in NYC? Your best bet is to partner with a local real estate professional to guide you through the process. Reach out today if you have any questions. My team and I have been guiding buyers home for over 20 years.