In new york, where real estate costs and stakes are high, the home buying process is complex and can be very emotional. Here’s a detailed guide that will help you from looking for a new home to making an offer on a property to receiving the keys.
Step 1 – Get a mortgage pre-approval
Before you make an offer you will need to know how much house/condo/co-op you are able to afford. You do it by counting your money or obtaining a mortgage pre-approval.
A mortgage pre-approval is essentially an offer from a lender that you’re qualified for a loan up to a predetermined amount if specified terms are met. In addition to this sum, the pre-approval includes basic provisions, like the rate of interest and term. To have a pre-approval you’ll submit bank statements, W2’s, tax returns, calculate your debt-to-income ratio, and find a credit score from at least one of the credit agencies.
Having a mortgage pre-approval with agents to represent you. The seller or selling agent will take you seriously. You’ll need to make a decision whether to use a mortgage broker or a direct lender, according to your precise needs.
Step 2 – Find a property that you want to buy
Today, most folks search online to find the properties they’re interested in. You may search for listings, save properties and buildings you’re interested in to receive current notifications, and reach out to listing agents.
It’s a fact that there is a lot of helpful information online without enlisting a real estate agent to assist you. However, the ideas and knowledge of a real estate agent can prove to be invaluable. You can send listings that you find online to your agent and they can handle the process from there.
Step 3 – Make an offer
If you have a real estate agent that representing you. He/she can do a comparative market analysis and advice you on making a reasonable offer. Depending on the area and popularity of the house you interested in. You might or might not get a second chance for making another offer.
If you don’t have a representing buying agent. You may submit your own offer to the listing agent. Many listing agents will permit a buyer to create an offer by email as part of the first negotiation. Be certain that you’re sure about the number that you want to offer as you’ll be expected to follow the following steps if your offer is accepted.
Until a Sales and Purchase (P&S) agreement is signed and a deposit submitted these offers aren’t binding in New York. So there’s still time to check at other properties.
If your offer is accepted the listing agent will circulate a trade summary, commonly known as a Deal Sheet to all agents and attorneys involved in the purchase.
Step 4 – Engage a real estate attorney
If you snag upon a fantastic deal you are going to want to hire a property attorney fast, if you have not already done so, to get the paperwork managed and lock down the trade. You don’t need to waste time searching for an lawyer. Often it helps to have done your homework on different attorneys before you reach this stage.
Whenever the attorneys are in touch, the seller’s lawyer will send a draft purchase contract to the purchaser’s attorney for review.
The buyer’s lawyer will normally dictate the title search and insurance. This is really an important step that’s not well known by many buyers. A title insurance policy protects insureds against past and future losses. What exactly does that mean? Unlike car or health insurance, title insurance is like a time machine as it protects the insured against claims for previous occurrences. When there was a dispute on your property dating back to before birth or your the birth of the country in the event of a historic property, a title insurance policy has you covered.
Separately, at this stage, a vendor is expected to complete a Seller’s Disclosure form in which they are expected to disclose anything which may be a problem with the home.
Step 5 – Get a review
Most contracts state the purchaser is buying the property “As Is” with no seller agreeing to make any repairs. When there isn’t any inspection contingency it is important to be aware of the condition of the property prior to signing.
A home review is a lot more important if you’re purchasing a house rather than a condominium or co-op. Townhouses and single-family houses in New York are usually a hundred years old or more. In addition to the structure and inner mechanics of the home, the contractor should check the roof and inspect for termites.
In a condominium or co-op, the review is generally a great deal quicker and very straight forward compared to your home. This is especially true when the building is new and the inspector has looked at other units in the house.
If there are any flaws that the purchaser had not expected, there are 4 choices:
Request a reduction in the sales price
Ask the seller to make repairs prior to closing (this is an addendum to the contract)
Agree to Buy the home anyway and make the repairs yourself
Withdraw the deal
Step 6 – Execute contract and make a deposit
The seller’s attorney usually supplies the contract of sale. After both parties are in agreement, your lawyer will go over the final record with you. You’ll sign the agreement and deliver the contract together with an initial deposit of 10 percent or more to the seller’s lawyer. Needless to say, the greater the deposit, the more powerful your offer.
Note too, that in the majority of the US, a deposit will be less than $5,000 as 10 percent isn’t always needed for the sale of a single-family house or condo. If it’s required, as in the case of programmer sold possessions, it is rarely over $50,000. However, in New York, 10 percent of a $1,500,000 apartment is $150,000.
The deposit amount (often called a good faith deposit or an earnest money deposit) is generally held at the seller’s attorney’s escrow account. Therefore, the earnest money check is typically made out to the seller’s lawyer.
The contract is only binding when it has been completely implemented and the earnest money check was deposited. This is often a vulnerable time for the purchaser in a sellers’ market as some sellers can take this chance to shop the bargain around without ever executing or depositing the deposit check.
Step 7 – Complete your mortgage application and get a commitment letter
In case you’ve already got a mortgage pre-qualification and discovered a property, this measure should be a formality. It may ask you to submit a couple of updated files, though sometimes the creditor may require significant documentation at this late period.
Take note that finalizing your mortgage in a timely manner is extremely important to final on time. Your sales contract is only going to offer you a limited time to shut and if you do not receive a mortgage in this period the vendor has the choice to select another buyer.
When all of the paperwork has been reviewed and approved by your lender, they will issue you a commitment letter and clear you to shut. Note that once you’ve gotten a cleared to shut letter you can still get declined for a mortgage if your lender decides to execute a last credit check prior to the closure or check on your job status and you’ve taken a loan lately, missed a payment or lost your job. These last-minute checks occur more commonly in FHA mortgages.
Step 8 – Complete your board package (Co-ops and Condo only)
Many condominium and co-op boards won’t review an application until you’ve received a commitment letter from your financial institution. If the underwriting takes a long time this may be a particularly fraught period. Co-ops particularly, and progressively condos, can put buyers via an exhaustive approval procedure. There’s generally a processing fee for the program.
A condo board bundle typically includes a 3-5 page application together with a couple of signature pages and assorted standard documentation (signed purchase contract, loan application, mortgage commitment letter, tax returns, bank statements, references) you will be asked to submit. If you have done your homework and have this documentation on hand it can be a quick procedure.
The crucial thing to know about purchasing a condo is that you can’t be refused by the board unless the condominium building itself agrees to get the unit at exactly the exact same cost as your proposed trade.
Step 9 – Schedule the final
You are almost at the finish line! So as to schedule a closing These conditions must be fulfilled:
The creditor (if you’re obtaining a mortgage) has given you a “clear to shut “.
There aren’t any title issues
You’re accepted by the condo/co-op board
You’ve bought home insurance
All parties are available to attend the final (in person or virtual)
If one of the parties is not able to attend the purchaser must give one of the buyers or their lawyer a power of attorney to sign up documentation on their behalf
If the purchaser is buying all-cash ie with no mortgage– they need to get a cashier’s check, or the actual cash If approved by the title company, to shut.
Step 10 — Can a final walkthrough
A last inspection enables the buyer to make sure all of the repairs (if stipulated in the contract) have been accomplished by the seller and no damages have occurred to the property since the previous inspection.
A closing walkthrough also gives the buyer an opportunity to check that all the items to stay in the house as stipulated in the contract (appliances, light fixtures ) are still present and that no leaks have occurred.
Measure 11 – Attend the final and get the keys
A property closing is the last step in purchasing a property. It’s where the deed (or stock certificate for a co-op), conveying the property will be signed, together with the mortgage claim to cover and other documents related to the closing. It’s also where money changes hands, from the purchaser to the seller.
These people can be present at the final:
The purchaser
The seller
The Purchaser’s lawyer
The seller’s lawyer
the Purchaser’s bank’s lawyer
The name closer (in non-co-op trades )
The seller’s bank’s lawyer
The Managing agent (in co-op trades )
The real estate agents
The final can occur at either the buyer’s or seller’s attorney’s office (often it’s in the buyer’s lawyer ) or possibly online or partially online.
Following the final, keys are exchanged and the purchaser becomes the official owner of the house.
Step 12 – What are my rights after closure?
Buyers have a limited chance to sue a vendor if they detect defects after the sale of a house has happened. This is referred to as a Caveat emptor — a legal term that translates to”allow the buyers beware”. Ie. You purchase what you get. As a consequence of this, in New York, buyers are expected to perform a home inspection before purchasing a property. The buyer can’t rescind the real estate contract if flaws that might have been found at a house inspection are found.
However, there are caveats to the caveat! If the seller intentionally attempted to hide a flaw by lying about it or concealing, there could be some room for a buyer to sue or contest. The case has to be beyond any shadow of a doubt to have any weight.
New York law requires that the seller provides the buyer with a disclosure statement prior to the contract is signed. This disclosure statement is then connected to the contract itself and then integrated into it.
If the seller offers disclosure and doesn’t cite a known defect, the seller could be liable to the purchaser for damages when the defect is material.
If material defects aren’t disclosed in writing, then the purchaser can sue under New York law.
When a buyer buys directly from a developer/sponsor the caveat emptor is restricted because sponsor-sold houses come under a particular legal guarantee known as the warranty of fitness.
If the house isn’t fit to live in once the host sold it, the buyer can sue. It’s never a great idea to rely on this guarantee, however. New homebuyers should always have the property inspected before closing, a fact any suspect in a lawsuit will increase.