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Buying a Home in NYC: Step by Step

Founding Member of Moshes Law, P.C.
During his years of practice, Yuriy has concentrated in litigation and real estate transactions as his areas of expertise.

Buying a home is a big decision. You should take time to make sure that you find the right place and that all the details of your home purchase are perfect before you sign on the dotted line. It is one of the most important decisions you’ll ever make, so take your time and do it the right way. You will be glad that you did! If you are buying a house in NYC, this article can help you prepare for the home-buying process and make sure that you know what to expect along the way. 

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    Importantly, as you begin the process, keep the following tips in mind: don’t allow yourself to be pressured by the seller or the real estate agent. Take your time. Make a list of the positive reasons for buying the house. Make a list of the negative reasons for buying the house. Don’t make the decision too quickly. 

    What Kind of Home Do I Want? 

    Before you start the groundwork for the home buying process, take some time to think about what type of home would be best for you. NYC has a lot of options, such as: 

    • Condos
    • Co-ops
    • Townhouses
    • Fully detached homes
    • Lofts

    Whether you are buying a condo, an apartment, or buying a house in NYC, your space should be your own and it should fit your needs. Think carefully about what is best for you and your life. The type of home that is best for you will depend on a number of factors: your finances, the types of activities you enjoy, the size of your family, your taste, etc. When starting your home-buying journey, it can be helpful to make a list of the things you want most in a home to help you stay focused on your needs and desires during the home buying process. Your list can help you stay focused when you feel pressured by a real estate agent or get sidetracked by all of your options. Buying a home is one of the most important decisions you’ll ever make, so don’t go into it unprepared and unfocused.

    Step 1: Organize Your Finances

    The first, and probably the most important step in the home buying process is making a careful assessment of your finances, especially when you are buying a house in New York. Your finances will determine what type of home you can afford and whether it is the right time for you to buy. You should consider your current salary, the amount of cash you have in the bank, your credit score, and any financial obligations you currently have that might affect your ability to buy a better home. You should also ask yourself some questions: Could changing my spending habits help me afford more space or a better location? Do I plan to make any major life changes that might affect me financially (like having a child or adopting a pet)? Do I want to change jobs soon, and if so, will my salary remain the same? Your finances are the metaphorical key to getting the actual key to your next house in your hand. 

    buying house in nyc

    A great place to start with your personal financial review is to check your credit score:

    Check your Credit Score

    Your credit score has a huge impact on the type of home you can afford. Lenders will use your credit score to determine how much to lend you for your home purchase. The better your credit score, the better your lender options. It’s simple and fast to check your credit online. The New York Times recommends using annualcreditreport.com.

    Ideally, your credit score should be above 700, but there are a variety of loans available for people with lower credit scores. If your credit score seems low, you can also take steps to raise your credit score, such as paying bills on time and paying down credit card debt. 

    Once you have reviewed your credit score and carefully examined your finances, it’s time to get pre-approved for a mortgage!

    Get Preapproved for a Mortgage

    Being pre-approved for a mortgage allows you to know how much a lender will allow you to borrow for your new home. Lenders will review your finances and your credit score (see why we said you should check your credit score?), and then determine what loans they can offer you and how high of interest rate you would pay on your loans. Pre-approval is important. If you do not get pre-approved for a mortgage, you may waste a lot of time and energy looking at homes you cannot afford. Getting pre-approved for a mortgage will also help you see if it is really the best time for you to buy. After seeing the mortgage rates in your pre-approval letter, you may find that it would be better to save more money or to work on your credit score before you buy. 

    Step 2: Location, Location, Location–Determine Where You Want to Live

    Neighborhoods are like people, each one is unique. Finding the right neighborhood is an important part of loving your home. Each NYC borough has its own special characteristics and the style, size, and home prices vary greatly depending on the area of Manhattan in which you look. Price is likely to play a big part in what neighborhood works best for you. So, a good place to start your search is to find neighborhoods that have homes in your price range. 

    Once you have some prospective neighborhoods selected, you can learn more about the neighborhoods by visiting each neighborhood at various points during the day. Try seeing what the night life is like in a neighborhood by stopping by in the late afternoon. Talk to your potential neighbors about their thoughts on the community. And, most importantly, ask yourself whether the neighborhood has the amenities you want and need. Does it have the stores you like? How about a gym or decent deli? How far is it from work? You are buying a home, and your neighborhood should feel like home, too.  You won’t regret spending extra time to ensure that the area is right for you and your lifestyle before you buy your house. 

    Once you find a house and a neighborhood you like, tour the homes you have selected and see if any of them feel right for you. You can attend open houses and request private walk-throughs, too. Your real estate broker can help with scheduling your walkthrough. 

    Step 3: Find a Real Estate Broker

    Your real estate broker will be your best friend and your guide during the home buying process. A good broker can help you find the best deal, a very important feat in New York where the housing market can be very competitive. Also, an experienced broker can save you time and money by helping you negotiate the terms of your purchase and helping you find locations that you may not have considered. You have the option to search for your own property and to go through the home-buying process alone. But, having a good broker on your side can save you a lot of headaches. 

    Step 4: Make an Offer

    Once you’ve found a home you love, you can truly begin the “buying” part of the home-buying process. This means that you can make an offer on that dream home! Consulting with your broker (and potentially your attorney) before making an offer is an important way to make sure that you do not overpay for your home. An experienced broker can help you make an offer that will be enticing for the seller while staying within your budget. 

    Once you make an offer on the house, the seller can either

    1. Accept your offer, 
    2. Decline the offer, or
    3. Make a counter-offer, in which the seller proposes different terms for the sale. 

    If the seller counter-offers, you can then accept, counter, or decline as well. You can also negotiate with the seller as long as necessary until you reach a mutually beneficial agreement, or one of you decides to walk away. 

    In determining your offer, something to consider in your offer are contingencies. Contingencies are things you expect to happen between the signing of the purchase agreement and closing that could change or end your contract. Standard contingencies include mortgage and appraisal contingencies. These protect you by allowing you to walk away if you are denied a mortgage or the appraised value of the home returns lower than expected.

    You can also include non-financial things to help with your offer. If you know the seller is in a rush to move, you could offer to close quickly. If you know they are house hunting themselves, you could offer to rent the home to them after you close so they can take their time moving out.

    Step 5: The Contract Process

    Once the seller accepts your offer, the seller will have a contract prepared using their own attorney. Then, the seller’s attorney will submit the contract to you for review. This is where an experienced New York real estate attorney will come in handy. You will need a knowledgeable real estate attorney to review the contract the seller sent to you and to help you ensure that the terms of the contract are fair and reasonable. 

    When your attorney reviews the contract, he or she will make the necessary changes to reflect what is best for you, the buyer. In reviewing the contract, you may find provisions that reflect the seller’s real estate listing. There are different types of real estate listing agreements. These are not necessarily relevant to you as the buyer, but you should be aware of them in case a listing agreement is listed in the contract when you are buying the property. These include: 

    • Exclusive right to sell the listing: In this agreement, the agent gets paid no matter who sells the property, regardless of whether it’s the agent or the seller. 
    • Exclusive agency listing: In this arrangement, agents get paid only if they sell the property. No fee is earned if the owner alone sells the property. 
    • Open Listing: With an open listing arrangement, sellers have the right to use as many brokers as they want. However, the seller isn’t obligated to pay any of them if he or she sells the property without the broker’s help. 
    • Net Listing: Net listing: The agent gets to keep everything he can get that is more than the sale price the owner wants. This is illegal in New York. 
    • FSBO Listings NYC: This is where the seller has no agent. 

    When you are buying a home in NYC, if the contract is acceptable to you and you sign it, you can submit a check for a percentage of the contract price and then the seller’s attorney will arrange for the seller to sign the contract. From that point, you have your agreement and your well on your way to buying your home. 

    Step 6: Hire a Real Estate Lawyer

    From the point the contracting begins through the closing, hiring a real estate attorney familiar with New York laws will be crucial to the success of your home purchase. An experienced real estate attorney will help you make sure the remainder of your home-buying process runs smoothly. Your attorney will help you review your mortgage documents, contracts, deeds, and other purchase-related documents to ensure that your desires are reflected and your interests are protected. Your real estate attorney can also help you with the closing process and help you finalize the transfer of the title into your name.

    Buying a home in New York is not quite the same as buying a home anywhere else in the country. Even the New York Times strongly suggests hiring a real estate attorney to help with your home purchase in NYC. The New York Times states, “[buyers in New York City rely upon lawyers because real estate transactions can be extraordinarily complicated. . . . . Not to mention that the sellers on the other side of the table usually come armed with their own lawyer.”

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      Your real estate attorney will help guide you through the home buying process and keep you from making deals and decisions that are to your disadvantage. Without an attorney representing the buyer’s side, sellers can easily take advantage of unwary buyers and leave the buyer with a bad deal. 

      Step 7: Perform a Home Inspection

      When it comes to buying property in NYC, as part of your offer, you’ll definitely want to include a provision stating that the home inspection must pass before entering into contract.

      A home inspection is an assessment of a home’s condition. Home inspectors not only identify problems with houses, they can give buyers information that will help them with the upkeep. In fact, if you ask any realtor or attorney, a home inspection is one of the most important requirements to buy a house in NY.

      In performing a home inspection, the first thing you need to do is research the home inspector you’ll be using. In addition to hiring a home inspector that is certified, you’ll want to ask the inspector

      • How long have you been inspecting homes?
      • How many inspections have you done?
      • What are your qualifications, certifications and training?
      • What was your job before you were a home inspector? (Ideally, your pro was in contracting or building.)

      Another good tip when it comes to home inspection is to be personally present at the inspection. Simply reading the inspection report isn’t enough to give most homeowners the full picture. If you don’t see the problem and be present for the inspector to physically show it to you, you most likely won’t comprehend the full scale of the problem with the home.

      Finally, upon inspection, you’ll want to actually read and understand the inspection report. Just glancing at the inspection isn’t enough. You’ll want to read the entire report and you’ll want an inspector who uses clear and concise language so that you’ll be able to understand it fully.

      Step 8: Securing a Mortgage

      The next step in buying a house in NYC is to secure a mortgage for the purchase. In obtaining a mortgage, you’ll want to discuss your situation with a knowledgeable and reputable lender. In fact, even before you start searching for homes, you’ll want to discuss your financial condition with a lender and obtain a loan pre-approval.Prospective buyers need to immediately start with the lender in order to see what you can afford and see what your hurdles are going to be. Such hurdles may include student loans, significant recent cash deposits, and the manner in which self-employed income is reported.

      In determining your mortgage, you’ll also want to focus on your debt-to-income ratio, which will help establish how big a loan you can afford. The debt-to-income ratio calculated by your lender will help identify what you can and cannot afford. You’ll also have to worry about your credit score and review the different interest rates for the type of loan you’re wanting.

      The NY real estate disclosure form is required by sellers in NY to be completed or provide a $500 in lieu of doing so. This form must be filled out by the seller in which they must disclose any and all defects to the house based on their actual knowledge. Furthermore, if a seller makes a knowingly false or incomplete statement on the form, you, as the buyer, may be able to make a claim against the seller even after the transfer of title. Accordingly, when buying a house in NYC, you’ll want to discuss the NY real estate disclosure form with an experienced and knowledgeable ny real estate attorney to determine just what defects are being disclosed, review the answers, and see if any follow-up questions to the buyer must be given.

      buying a condo in nyc

      As stated above, under the New York Property Condition Disclosure Act or PCDA, the seller is required to make these disclosures to the buyer or else pay a $500.00 penalty to the buyer at closing. While the PCDA requires you to complete a standardized disclosure statement and deliver it to the buyer before the buyer signs the final purchase contract, in practice, most home sellers in New York opt not to complete the statement and instead pay the credit. However, if there is a known defect that is not disclosed by the seller, the seller may still be liable to the buyer for any loss sustained as a result of that non-disclosure.

      The PCDA addresses the following areas:

      • General Information: age, ownership, utility surcharges and possession of the property
      • Environmental: whether the property is located within a flood plain, wetlands, or agricultural district, near a landfill; whether the property contains asbestos, lead pipes, or fuel storage tanks; whether a radon test has been performed on the property; or whether petroleum products or hazardous or toxic substances are known to have been spilled, leaked, or otherwise released on or from the property
      • Structural: water, fire, smoke, or insect damage and the condition of the roof, and
      • Mechanical systems and services: utilities, water source and quality, sewers, drainage, flooding.

      In obtaining a mortgage, the buyer will generally incur certain costs including an application fee, appraisal fee, and the bank’s legal fees amongst others.

      Step 9: Obtain Title Insurance

      As part of the process of buying a home in NYC, you will want to order real property title search. Your real estate attorney can help with this process. The title report will help determine if there are any outstanding liens or encumbrances on the property. Although the seller may tell you that the property is free and clear of any problems, the reality is that there may be liens or unknown defects in the title. Accordingly, when you buy a home, you will want to obtain a title search to ensure that no issues exist. 

      Once the title search is complete, you can obtain title insurance. Title insurance protects the buyer and the mortgage lender against future claims for any unknown defects in the title to the property at the time of sale. 

      There are two kinds of title insurance policies: 

      • Owner’s title insurance–protects the buyer
      • Lender’s title insurance–protects the lender.

      An owner’s policy provides coverage equal to the amount you are paying for the property. It protects the owner if a problem is discovered after the title search. The insurance company provides legal assistance and pays any valid claims. Paid at closing, this type of policy provides protection as long as you own the home. 

      Step 10: Closing

      You did it! The final step in buying your new home: the closing. After you have been approved for a mortgage, the title is free and clear of defects, and, in the case of a co-op, have received approval from the board, it’s time for the closing to take place. During the closing process, you will want to bring the following: 

      1. Photo ID: this will allow the closing agent to correctly verify your identity. 
      2. Cashier’s or certified check: this is to cover any down payment and closing costs you owe. Do not bring a personal check or cash. Federal law requires the closing company to disclose exactly how much you need to bring to the closing. The closing agent will tell you in advance of closing the amount to write the check for and to whom the check should be addressed. 
      3. Proof of insurance: the closing agent needs to see proof that you have the insurance in effect on closing day and a receipt showing you paid the policy for a year. 

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        At the closing, you, the seller, and any other party involved will sign the final documents and complete the sale. The closing agent, your broker, and your attorney should help you this process, so no need to fret! Just enjoy that proud feeling you have knowing you own your very own New York home. 

        FAQs

        When Is The Best Time To  Buy A House in NYC?

        According to Curbed New York™, the ideal time to buy a home in New York is usually the spring or the fall. The site suggests that springtime can be more competitive, but fall brings better deals for buyers.

        How much Will My Down Payment Cost For My NY Home?

        The down payment is also case specific. The price of your home, your mortgage rate, and several other factors will determine how much of a down payment you need to get into your dream home. A 20% down payment is a great amount to aim for, as it will lower your mortgage rate and help you afford more home. There are other alternatives to the traditional 20% down payment, including FHA loans and first-time buyer loans that can bring the down payment down to as little as 3.5 %

        How Long Before I Can Move Into my House?

        According to one source, the estimated time between closing and moving into your new home is about 90 days in New York. The time it takes to move into your new home will depend on a lot of factors, though, including what you and the seller agree to do. The time it takes to get into your home will be determined on a case-by-case basis. But, your attorney and your broker can help you contract for a time frame that works best for you.

        What Is An Ideal Credit Score When Buying A House in New York?

        For a conventional mortgage loan, the minimum credit score is 620. Of course, a better credit score would likely improve your mortgage rates and have an impact on the overall cost of buying your home. In New York, 725 was the average score for homeowners with open mortgages in 2020. A score above 720 is definitely in the right direction.

        How Much Are Closing Costs In New York?

        The closing costs depend on a lot of different factors, including your down payment, your mortgage rate, the cost of the home, and other factors, too. Closing costs can be a substantial part of the overall cost of buying a house, co-op, or condo in New York.

        Final purchase and sales contract: Just in case you need to double-check a detail against closing costs.

        As a buyer, you’ll also need to tell the closing agent how you wish to take title of the home. You will likely decide between these three common selections:

        Sole owner: An unmarried person buying a house alone has the easiest task. Title is taken as a sole owner in the individual’s name.

        Joint tenancy: When a married or unmarried couple buy a house together, things get more complicated. If they choose to take title with joint tenancy, each has the right of survivorship. If the spouse or partner dies, full ownership goes to the survivor. There are tax advantages for the survivor as well, regardless of marital status.

        Tenants-in-common: When two or more individuals buy a home together as tenants-in-common, they are partners who may own unequal shares and who can sell their shares of ownership independently.

        You’ll want to decide before you attend the closing how you wish to take title to the property. Again, you’ll want to consult with your own real estate closing attorney to decide the advantages and disadvantages of each type of ownership.

        Law Office of Yuriy Moshes

        At Law Office of Yuriy Moshes, we are experienced and knowledgeable and are one of the top real estate law firms NYC because we keep up-to-date with the NY real estate law blog, NY real estate commission law, and NY real estate law. We represent sellers in the greater New York City area including all its boroughs, including Manhattan, Brooklyn, Queens, the Bronx, and Staten Island) as well as Northern New Jersey, Long Island, and Upstate New York. If you’re purchasing your home, you need to consult with the best real estate law firms NYC.

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