What did I get myself into? They accepted my offer!
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What is an acceptable offer on a property? How to accept an offer on a home? what happens after your offer is accepted on a home?
They accepted my offer on a co-op in NYC.
Relying on your broker, StreetEasy, social media, friends, and family, you have searched for months for the perfect home.
This one-bedroom apartment with great views in an elevator cooperative is the one you must have. You have your real estate agent make the offer, and the seller accepts your offer.
The prudent purchaser takes a deep breath, slowly exhales, and then decides to hire the right attorney.
The failure to hiring experienced legal counsel may result in multiple problems.
What happens after your offer is accepted on a home? It is crucial to have a good attorney. A trust worthy and recommended lawyer is just a phone call away. This article will discuss the main issues before executing a binding contract and putting down your earnest money deposit.
It is imperative that before the attorney’s due diligence, you perform your own when you have an accepted offer on a co-op home in NYC.
You have probably visited the building a few times during the day for a limited time. Triple check the apartment windows will make the apartment bright and spacious. The cleanness of the common areas will tell you how other owners respect the space.
Try to visit either the early morning and evening hours. That is the time most people will be entering and leaving the building.
Walking around the neighborhood is always a good idea; specially if its not an area you are familiar with.
It is also essential for your attorney to review the minutes of the Cooperative Board’s monthly meetings.
They contain meaningful data that can have a tangible impact. There are multiple topics of discussions within the minutes, some critical issues are: have there been any leaks, noise, insects, rodents, bed bugs, or cigarette smoke?
Do you plan on performing alterations or getting a pet soon? Does the building allow subletting?
Every cooperative handles these issues differently. Often, the minutes indicate how complex or easy an alteration or sublet request gets processed and approved by the Board. Your attorney must carefully review the By-laws, House Rules, Offering Plan, and amendments.
The past few years of audited financial statements of the Cooperative Corporation must also get reviewed when you have an offer accepted on a home.
It is important that the building is financially strong.
For example, when will the building’s mortgage expire or have its interest rate reset?
Given the rising interest rate, higher loan costs apply to all shareholders by increasing monthly maintenance charges. Does the Cooperative Corporation own the land and building? When does the proprietary lease with the Cooperative Corporation expire?
These issues may also have an impact on monthly maintenance charges. How well has the management company performed? Your attorney can review this risk by reviewing the history of maintenance increases, the tax-deductibility of the maintenance, financing restrictions, litigation history, and flip taxes.
While the Clash’s song “Should I Stay or Should I Go” was written in 1981 about relationships, the question is one that every purchaser needs to consider. Consult with counsel after the due diligence period. Sometimes the best long-term decision remains the short-term decision to walk away or, at the very least, prepare for what you are getting into.
The cost of experienced legal counsel for this due diligence period is a worthwhile investment.
Not only will it enable you to make your decision with “eyes wide open,” but the cost you could endure in the years will far exceed that cost. This is especially true since the apartment’s future marketability, quality of life while living there, and your flexible use of the apartment consider your attorney’s advice.
If you discover something during the diligence period, all is not necessarily lost.
Depending upon what you discover and your tolerance for the issues raised, you may decide that you still want to go forward with the purchase. What you find out represents arguments to renegotiate the purchase price.
As you press those elevator buttons, climb those stairs, and log miles searching for your next apartment, keep your eyes open and get ready to contact your attorney. As a team, you and your attorney will ensure that this investment decision is wise. The home buying process is not easy. Surrounding yourself with the right professionals will make the process run smoother and get you all the way to the closing date.
Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.
