Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
Depending on the price range you are looking for, you will be facing fierce competition. Competitors will range from working professionals to wealthy foreign cash buyers happy to leave their apartment vacant in order to park some cash into the US.
Competition for homes up to $2.5 million is known to be extreme in the city due to the large numbers of working professionals making $500,000+ a year who can afford in that price range.
Ideally, buy when the market is soft. However, given that having unlimited cash and flexibility in timing is not a luxury for everyone, we will deconstruct every piece of advice you’ll find on the internet written by people (who have never bought or sold an apartment!).
The typical piece of advice will suggest to get “pre-approved” so that you have a sense of what you can actually borrow and afford to purchase. The best brokers will not work with you unless you can demonstrate you are a real buyer.
That means if you’re going to need financing, you have already been “pre-approved” by your mortgage broker or bank and have 25% down or more. A bank pre-approval letter is much stronger than a simple pre-qualification letter from a mortgage broker.
Being pre-approved means the bank has already partially underwritten your loan.
The prequalification letter is much easier to secure, typically as quickly as after a 15 minute phone call where no documents have been submitted or verified by the lender. As a result, if you’re going to need a mortgage, make sure you get pre-approved before you begin your search.
Listing agents will be taking your inquiries and offers much more seriously if you let them know you’ve initiated the process to get a loan. And if you are planning on working with a buyers’ agent, they will take you much more seriously as well if you have demonstrated your intent and ability to buy by already having a pre-approval letter.
Find a Great NYC Real Estate Buyer’s Agent
The typical article will suggest you work with someone you trust, ask friends and family for a referral. The primary flaw of this advice, much to the detriment of all home buyers, is that it does not present (specially to first time home buyers) the possibility that they can get a buyer agent commission rebate to help getting cash back.
It is frustrating that after being legalized in New York by the New York State Attorney General, no news article, real estate newspapers, blogs or google results on home buying that even mention the possibility of a commission rebate.
The key for buyers to understand is that even though the services of buyers’ agents are pitched as being free, you are paying for it collectively in the form of higher sale prices.
Just because sellers have to pay the broker fee does not mean they don’t markup sale prices to account for this cost. It makes sense then to ask for a commission rebate to account for the higher purchase price you are paying.
We suggest first deciding whether the average $20,000 off your purchase price (in the form of a buyer agent rebate) is worth it to you.
If it does not, and you just want to work with someone you already know and are comfortable with and the money does not matter, then congratulations and you probably do not need to be spending time reading this in the first place. If however, you think that 2% off your purchase price is worth it, you can use a broker giving you a cash back rebate.
While there may be unprofessionalism and listing broker discrimination, brokers have the obligation to co-broke with a member of REBNY such as NestApple.
Condo or Coop?
You should have an idea of whether you want to buy a condo, co-op or townhouse in NYC.
Generally, condominiums and townhouses are more popular but priced higher because they are “real property” with all the traditional rights of real estate ownership.
However, buying a coop is a popular choice for many working families because they are cheaper than comparable condos. Co-operative apartments are just shares in a corporation that actually owns the entire building. A co-operative owner receives a stock certificate and a proprietary lease with the right to occupy a certain unit in the building.
Co-operative boards have much more power than condo boards as they are the Board of Directors of the corporation. Since it’s required to have a real estate attorney represent you in New York, make sure to ask them any questions you might have.
Have an Attorney Ready
One of the most common first-time home buyer mistakes is to submit an offer without having hired or even interviewed a real estate attorney.
When they inevitably get an accepted offer, they end up having to scramble to find and enlist a real estate lawyer. This can result in several critical days of delays. Sometimes, the sellers and listing agents take this to mean that the buyer was only window shopping and not serious.
Given that real estate offers are non-binding, this will almost certainly result in the listing agent continuing to show the property and flashing your offer to other buyers.
Unlike many other states where purchase contracts are really just standardized forms and real estate lawyers are not required for transactions, New York requires buyers and sellers to involve a lawyer in a real estate sale.
Lawyers are a critical part of your team when buying a home, along with your buyer’s agent and mortgage broker or bank.
A real estate attorney will review and negotiate the complex purchase contract and any riders on your behalf. Your lawyer will schedule an appointment at the managing agent’s office to review the board minutes and any original documents that must be reviewed on site.
Your lawyer will conduct legal and financial due diligence on your behalf by reviewing the building’s financial statements, original offering plan and other important co-op documents such as house rules, sublet policy, proprietary lease and bylaws.
The lawyer of our choice will guide you through closing and make sure your mortgage commitment letter and other mortgage documents are in good order. Your lawyer will give you a good faith estimate of your closing costs, handle any escrows and make sure the lender’s fees are correct.
Your lawyer will review the title report or coop lien search and help you resolve any issues such as existing liens on the property. Your lawyer will also prepare all of your closing documentation, calculate how much money is owed by whom and make sure that all payments are accurately made at closing.
Begin Your Search
What is more important is to clarify the advantages at this crucial stage of searching with an agent vs searching by yourself.
What’s important to realize is that one of the primary advantages of working with a buyers’ agent is that they actually do have fresher and more accurate listing data than consumers have access to. A buyer will typically use a website like Streeteasy or Zillow to search; however, these websites do not refresh their feeds continuously.
In contrast, real estate agents in NYC are contractually obligated to update their listings immediately or face stiff penalties from the local real estate trade organization. An agent in NYC must update a listing’s status change within 24 hours or face fines that range from hundreds to thousands of dollars and suspension from their local inter-broker database. And because agents update their listing data directly to their local inter-broker database, which also happens to refresh almost instantaneously, the data they have is by default always fresh and most up to date.
Don’t Reach out Directly to Listing Agents
Assuming you’ve decided to work with a buyer’s agent, you need to respect industry conventions for buying a home and not make the “substantive first contact” directly with the listing agent.
Doing so may give cause for the listing agent to refuse to work with your buyer’s agent because you are arguably a direct buyer. We realize this can be tough sometimes as you are eager to buy, looking at homes yourself on the internet and want to have your questions answered immediately. However, resist the urge to hit “Contact Agent” on a listing and instead send a list of your questions and listings you want to see to your buyer’s agent.
Your buyer agent will reach out, schedule showings, sign you up for open houses and get your questions answered.
It may seem cumbersome to have to work through a middleman, but the upside is you’ll have a loyal, dedicated agent who does have better data than you do who will help you schedule, negotiate and be with you every step of the way when buying a home.
What Happens If I Reach out to a Listing Agent Directly?
Most real estate agents who are REBNY Members will behave professionally and realize that it sometimes happens that a buyer agent’s client will reach out to a listing agent directly.
Most listing agents will not make a big deal out of it and will not have an issue with buyers going to open houses and even private showings alone.
Because it makes the lives of buyers’ agents easier and every listing agent will also be a buyer’s agent for another client. And because agents need to be able to work harmoniously with other agents to be able to close a deal, they typically behave professionally so they can get the same lenient treatment in return.
There will of course always be examples of bad real estate agents causing trouble for buyers’ agents who don’t show up, but these are typically small minded people who don’t do a lot of business.
Moreover, there is no specific REBNY rule that requires a buyer’s agent to accompany the buyer to a showing. Some new development “sponsor sales” may have a separate co-brokerage agreement specifying that the buyer’s agent must attend the showing, but even that is not often enforced in practice.
Who’s the Listing Agent for a Property?
It can be tricky to navigate all of the ads you see these days on popular real estate search websites. Most of these search portals rely on advertising income from real estate agents who pay to be “accidentally” contacted on listings.
In the quest for ever rising revenue these real estate search sites have made it ever easier for buyers to accidentally click “contact agent” and get mislead into contacting a random agent who paid to advertise versus the listing’s agent.
This will be a headache for you when buying a home as you will have yet another intermediary. The advertising agent may take a while to respond because they themselves will have to find answers from the seller’s agent. And if the seller’s agent does not know he or she will have to ask the seller or the building’s managing agent.
This is why it is beneficial to work with a seasoned buyer’s agent such as NestApple when buying a home in NYC. Your buyer’s broker will always be able to contact listing agents directly, and can often find out more about the property before you can due to access to broker databases with more detailed property information.
Better still, by working exclusively with a NestApple buyer’s agent, you will have only one point of contact for your entire property search. This beats getting added to newsletters and incessantly called and emailed by dozens of random advertising agents, listing agents etc.
Perhaps you wish to save your buyer’s agent some time by finding out more information about properties directly from the listing agent. The best way to do this is to use a disposable email address or an alias. This way you can avoid harassment and not cause any conflict if you decide to make an offer on the property through your buyer’s agent.