How to Buy a House in NYC: A Step-by-Step Guide
Wondering how to buy a house in NYC? In this blog post we will break down the home buying process step by step. From contacting your first real estate agent, to closing, we’ve got you covered.
Definitions
Coop: Building ownership structure characterized by residents owning shares in the corporation that owns the building.
Condo: Building ownership structure characterized by residents owning their individual apartments.
Real Estate Agent: A licensed real estate professional who has a fiduciary duty to represent the best interests of their clients.
Earnest Money Deposit: Usually 10% of the property’s value contributed by the purchaser at the time of contract signing to show good faith and protect the seller’s interests were the buyer to back out of the contract.
How to Buy a House in NY
There are nine steps you’ll go through in your home buying journey:
Contact a Real Estate Agent: Reach out to a trusted real estate agent who can guide you through the buying process and represent your best interests.
Prep Your Documents: Get a pre-approval letter and accurately fill out a summary of your financial health.
Create a Plan: Your agent will help you to outline your goals to create a clear strategy to find your dream home.
Explore Properties: Go on tours for properties to see and compare what’s available on the market.
Make an Offer: Work with your agent to submit a competitive offer on the property you want.
Sign a Contract: Once your offer is accepted, sign a purchase agreement to secure the property.
Secure Financing: Finalize your mortgage application, lock in an interest rate, and obtain a loan commitment from your lender.
Get Board Approval: Submit the required application and financials, as well as be interviewed by the board for review and approval.
Close: Complete the final paperwork, pay closing costs, and receive the keys to your new home at the closing table.
Step 1: ContaCt a real estate agent
Once you’ve decided you’re interested in exploring your home buying options, you’re smartest first step is to get in contact with a real estate agent. A knowledgable agent will explain the intricacies of and guide you through all the subsequent stages of the process.
How To Find the Right Agent
Finding the right agent is crucial, as they will be intimately involved with every aspect of your home purchase. Real estate agents are the quarterbacks and project managers of a transaction; they make sure that everything is moving in the right direction in a timely manner and make all the pieces of the puzzle fit. Having the right agent can make or break your experience, so don’t just go with the first agent you talk to. If you’re looking for a buyer’s agent, there are some tried and true methods of finding one you’ll rave about. You can also contact me for a FREE consultation call and strategy session.
Step 2: prep your documents
One of the most important aspects of the home buying process is knowing just how much home you can buy. Your agent should provide you with a list of highly qualified mortgage lenders. The lenders will let you know how much a bank will lend to you and issue you a pre-approval letter. This will help ground your property search and ensure you only see homes you can afford.
Additionally, Your real estate agent will likely have you fill out what is called a REBNY (Real Estate Board of New York) Financial Form. This form provides a high level overview of your financial health. This is an important part of the process in New York City, as there are many cooperative buildings that have stricter financial requirements than a bank.
Step 3: Create A Plan
Your real estate agent will look at your REBNY and figure out what types of property and what purchase prices you should be looking at. This is a crucial step in the process, as it will prevent you from wasting time looking at properties that you might not qualify for.
At this point it’s important that you and your agent to also talk about how they will be compensated. Most often you and your agent will have what’s called a Market Area Agreement, which will cover them for any purchase you may make in a particular area. However there are a myriad of different options available.
Important Note: Because of a recent the NAR (National Association of Realtors) settlement, it is a legal requirement throughout most of the country for all NAR agents to have buyers sign a representation agreement before touring any properties.
Step 4: Explore Properties
You and your realtor will collaborate to come up with a list of properties that pique your interest. During the initial phases of the process, it is important to keep an open mind. You may start out with one vision, but remember that it’s hard to tell what you’ll like until you’re actually standing in the middle of a property. Trust your realtor if they show you a couple of homes outside your initial parameters.
Step 5: Make An Offer
Once you find a property you like, it’ll be time to submit an offer. What kind of offer you submit will depend a lot on the market conditions and the type of property. Your realtor will advise you on how to submit a competitive offer. In New York City, offers are non binding - which means you are not obligated to purchase the property even if your offer is accepted.
Step 6: Sign a contract
Once your offer is accepted your real estate attorney will make sure everything with the building and the unit is in excellent order. The seller’s attorney and your attorney will both go over a standard purchase contract and add amendments as needed. Once everyone reaches an agreement, both you and the seller will sign the contract and you will wire your earnest money deposit.
Step 7: Secure Financing
Once you are in contract, you will need to reach out to a handful of mortgage lenders to find the best interest rate. You’ll want to explore your options because rates can vary extensively based on the bank, loan product and size. Financing won’t happen overnight, and you can expect this part of the process to take at least 2 months to fully complete.
Step 8: get board approval
Condos and coops both require board packages. But cooperatives tend to be more difficult to gain approval for.
Condo boards have what’s called the “right of first refusal;” they can either buy the property themselves - which rarely ever happens - or chose to sell it to you.
Cooperatives on the other hand can reject an applicant for a wide variety of reasons, so it is extremely important that you and your agent put together a meticulous board package. Cooperatives also interview applicants. Make sure you’re prepared for your board interview. It’s a good idea to look up some questions the board might ask you in advance.
Step 9: Close
There is some extra paperwork involved in a cooperative purchase, so if you are purchasing in a cooperative, you’ll likely need to wait a few weeks after approval to get a close date. You’ll need to bring a photo ID and the remainder of the down payment - in the form of a cashier’s check - to the closing table. There will be a number of documents that will require your signature. Your real estate lawyer will explain each of them to you as you sign. After all the paperwork is done, you’ll get the keys to your new place!
YOUR DREAM HOME IS WAITING
If you’re on your journey to buying a home in New York, I’d love to help guide you through the process. My name is Kristen Shaker, and I’m a licesned Real Estate Salesperson in New York city. Whether you’re just starting your search or ready to make a move, you can contact me to get started here. Let’s make your NYC real estate dreams a reality! And don’t forget to download my FREE Ultimate Buyer’s Guide — it’s packed with valuable insights and tips to help you make the best decision for your future.
