Buyer’s GUIDE
Frequently Asked Questions
Frequently Asked Questions
What do I need to facilitate the buying process so I do not miss out on a great deal?
The New York City real estate market is extremely competitive. The most desirable and affordable properties can go to contract in a matter of days. The most important factors in getting a deal to closing include the following:
Annual Income – Generally you can borrow up to about 2xs gross annual income. Monthly mortgage and maintenance payments should not exceed 1 weeks gross salary. If you have significant liquid assets you may be able to borrow more.
Financial Statements – should be prepared by an accountant. It should list net worth including assets, liabilities, salary, bonus, etc. SPiRALNY submits offers with financial validation. The most qualified buyers are usually the ones whose offers are accepted. Having a complete financial statement is very important when there is an apartment or a property with multiple bids.
Asset Valuation – A down payment alone does not qualify a buyer for a coop or a condo in Manhattan. Usually, a coop board or condo association wants guarantees for mandatory maintenance fees. They want assurances against unexpected loss of income. Many coops require liquid assets totaling 1 year’s worth of maintenance and mortgage payments after closing. Also, some buildings require liquidity up to three years of combined costs. Ask your SPiRALNY agent to assist you with specific requirements.
What is the importance of a credit check and how does it fit into the buying process?
A credit check is generally performed by a mortgage broker and pertains to your credit history. Resolve disputed claims and have them removed immediately from your credit report. Keep all pertinent documentation which illustrates that the issue is resolved. Also, we recommend buyers choose a mortgage broker because mortgage brokers can save time and money. We work with various brokers throughout the New York Area; if you are interested ask your SPiRALNY agent for more information.
What does being pre-qualified mean?
Pre-qualified, also called pre-approved, is when a prospective buyer tells a lender income level, debt and credit information, so the lender can provide an estimated loan amount, based on these criteria. Being a pre-qualified buyer will reassure a seller that any offers made are bona fide and that a buyer can actually make the purchase. In fact, most offers submitted by SPiRALNY are often accompanied by a buyer’s pre-qualification letter; this letter notify sellers that financing is an option.
Ask your SPiRALNY agent to provide you with information about financing, estimated monthly mortgage payments, and any other necessary qualifications. Pre-approval letters make for strong offers because the lender has already pulled a credit report, checked debt/to/income ratio and done an analysis of your finances. Also, it is preferable to be pre-approved so that there will be no surprises when the credit report is received.
Why select a real estate attorney?
The real estate market in New York City is a very dynamic market. Having a real estate attorney who specializes and has experience in New York City real estate is very important. They not only know the intricacies of the laws and regulations but they can respond quickly to any problems that arise, which helps to expedite the closing. Ask your SPiRALNY agent to assist you in selecting a qualified real estate attorney to help you through this process.
What are the steps in the application process?
For mortgage applications and for coop or condo boards, buyers need to gather relevant financial documentation. Required documentation includes 2 months of most recent bank statements, brokerage statements, and any other assets. In addition to current income verification, boards and banks require a minimum of 2 years of federal income tax returns. Self-employed buyers need to provide at least 3 years of federal tax returns and a letter from an accountant verifying income.
When do I need to move?
Find a target date for moving. If looking to finance, expect to take about 3 months from purchase to close. Buyers, begin your search 4-6 months before prior to an estimate moving date.
Where do I want to live?
New York City is a city of diverse neighborhoods, all with their own unique appeal. Before beginning your search, decide what is important. For example, proximity to public transportation or proximity to your job. Are your preferences for a quiet residential neighborhood or a bustling hub of activity and nightlife? Try to be open to different areas as sometimes neighborhoods other than your first choice are more affordable and offer many of the same features. Visit our detailed neighborhood guide for information on all our neighborhoods. SPiRALNY agents are familiar with neighborhoods across New York City and can help you find one that best suits your needs.
What is the best way to win over sellers?
If you really want to buy a particular home that seems to have a lot of interest, make sure the seller knows you are a qualified buyer. It doesn’t matter whether you plan to buy a studio or a building, chances are that there is a limited number of properties available in your price range. In a competitive market, high-interest properties can be in contract before they even appear in the classified ads.
Brokers tend to notify serious buyers first. This is when being extremely prepared becomes important. Make sure that you have all your paperwork ready and in order, including financial documentation and pre-qualification for a mortgage. Communicate your needs, budget, timetable, and neighborhood preferences.
Make yourself available to view properties. By being flexible with viewing properties during the work week, you can avoid weekends shoppers, congested open houses. Further, a lot of prime properties tend to show properties between 10-3, M-F.
How do I make the deal happen?
After finding the property you want, immediately make a verbal offer. Your SPiRALNY agent will help you decide the best way to extend an offer to a seller. There are a lot of different reasons, other than money, that influence a seller in choosing the right buyer. If the verbal offer is accepted, have your broker get confirmation of the offer and acceptance in writing. Once the written offer is accepted and signed, your SPiRALNY agents will prepare a transaction summary. This is sent to the seller’s and to the buyer’s attorneys for review. Using the signed offer and acceptance, the seller’s attorney then prepares a contract of sale. After the buyer’s attorney reviews the contract, negotiates terms and evaluates the property’s financial statements, the buyer then signs the contract and presents the down-payment check. Generally, down-payments range from 10% – 20% of the contract of sale. This money is often held in the selling attorney’s escrow account to be sent to the seller’s attorney. The seller then executes the contract.
Note*: Verbal offers are not legally binding. In fact, in the New York City area an offer is legally binding when both the buyer and the seller sign a contract of sale. Sometimes sellers are tempted by higher offers. To avoid problems, be prepared and have your attorney move quickly through reviewing financials and completing the contract.