This article is designed to be a roadmap for the first
time homebuyer or seller. Throughout this article, I'll guide you through the many steps
of purchasing or selling your property and explain to you in the process
how to avoid the most common mistakes. You will also learn both the legal
and psychological problems often encountered.
For most people, buying (or selling) a home is one of the biggest part
of living the American dream. It's also probably the biggest investments
they will ever make. Not surprising then, that many find this experience
to be very exciting but also worrisome at the same time. Achieving the
final transaction and transfer of funds for the property (referred to as the closing) can leave many home owners feeling exhausted, even depressed.
The same can be said for buyers. However, if the process is done correctly,
it can also be both interesting and exciting for everybody involved. The
ultimate outcome depends on many factors: time, energy needed to devote
to the transaction, thoughtfulness and patience. All these traits are included
in the process, and all can have an impact on your bottom line.
That's why preparation is key in any successful transaction. The process,
complicated by multiple transactions and waiting periods, can be quite
confusing. Those wanting total control of the transaction with
a do-it-yourself attitude can make many costly mistakes. So unless buyers
and sellers have a solid background in Real Estate, they stand to lose
thousands of dollars in any given transaction.
Trying to save a few extra dollars on legal fees may sound like a nice
idea, especially for those with large down payments. But this strategy
can backfire. You may end up being penny-wise, but broke in the long run.
There are many detailed procedures involved in the purchase process that
the vast majority of consumers may overlook.
In one of the biggest purchases of your life, it's simply not the time to bargain shop. Remember the key criteria: if you can't afford to see
the big picture in the transaction you probably aren't ready to close the
deal. The amount of legal fees charged should not be the deciding factor in hiring a particular lawyer. You retain an attorney because
you trust that they will represent your best interest in the transaction. The bottom line is that you want a New York Real Estate Lawyer you can
trust, if trust becomes an issue you are well advised to seek other counsel, no matter how low the fees are. For the most part,
a Real Estate Lawyer aim to satisfy their clients and keep that
satisfaction within the legal bounds of the law --all at the same time.
The happier their clients, the busier the attorney will be with future clients. So it makes
common sense as much as it makes dollars sense to retain a New York Real
Estate Lawyer who aim is to achieve the client's goal in the real estate
transaction. Real Estate transactions involve use of standard legal language.
It is quite understandable then, if a buyer or seller do not understand
the terms used in the transaction. First-time homebuyers have the worst experience. That is the reason why it makes sense to hire a lawyer who can represent your interest
and can help you avoid pitfalls and unnecessary problems. If not detected
prior to closing, once a problem occurs, it can take time and money to
correct the situation. An attorney with experience in New York real estate
law can help steer a buyer or seller away from costly mistakes.
What kind of home fits my needs?
When buying a home, you have to determine what property will fit your
needs. Picking the right kind of property to purchase requires careful
planning, organization, and sacrifice. Since most people don't have the
time, real estate brokers can be extremely helpful in letting you understand
the many issues you might encounter. The questions involved can be overwhelming.
What matters need further inquiry? Which homes come with bad neighbors?
There are many matters which you need to inquire about when you look at
different properties that interests you. However, some issues are common
to most real estate purchases. A simple tip is to determine what borough
you like to live. If you plan on living in Queens, Brooklyn, Bronx, Staten Island, Manhattan or Long Island, you may want to deal with a broker in that borough.
Coop or Condos?
Cooperatives are the most popular property purchased in New York City. One reason for this is a trend away from expense-ridden
properties where foreclosures are common. Another reason for coop popularity is convenience. Deals can be less expensive (about half the
price of a condo and may involve
less paperwork in the closing. Less financial stress and fewer headaches
might sound good, right? But what most buyers don't know is that when you buy a co-op, you're NOT buying
the physical apartment. Actually, you're buying shares of a corporation that owns the building which contains the co-op on its land. Also keep
in mind that, just like any other company, a co-op has officers such as
a president, a vice-president and a treasurer. And just like any other company they're responsible for the well being of the coop. If the coop
suffers a financial meltdown, you could lose your apartment investment
What happens if I do decide to buy a coop?
You receive a stock certificate and a proprietary lease.
The co-op requires that each coop owner pay a "maintenance fee". If
you own a condo, you'll be paying a common charge." Usually, the monthly
fee paid by a shareholder is almost double the fee paid by condo owners.
Sometimes a co-op only owns the improvements, and some other company
or organization owns the land. This form of co-op is not the normal situation,
but it does exist. Your attorney should be able to assist you in determining if you are purchasing such a property.
Where does the maintenance fee go? How is the money spent?
When an entity (i.e. some organization or other company) holds a mortgage
of the co-op, the coop corporation must pay a monthly mortgage payment to the bank. The maintenance fee charged to coop owners helps the corporation
offset this cost. By charging each shareholder a charge per share the maintenance fee helps pay the city taxes on the property as a whole and pay for the expenses in maintaining the property (such as the superintendent or doorman) The common charge for a condo helps offset the expenses associated with
the maintenance of the building. Elevators, painting, cleanliness and any
landscaping all require funding not to mention the common areas of the
It is important to note that the monthly fee is not fixed. Just like
rent, it can be increased. In buying a condo, however, you are buying a portion of the physical building
in which the apartment is located. You then own part of the building and
will receive a deed to the property that shows that you are the legal owner.
The common charges for condos usually tend to be stable. Most co-ops require
that a seller receive approval by the board before attempting to sell.
Likewise, the buyer must also be approved by the board to make sure that
the buyer will be a responsible co-op owner. One exception to this situation
is when the coop has a special status as being a sponsor unit. That means
that when the building was converted into a co-op, the co-op conversion
plans allowed the sponsor of the building to reserve the right to sell
unsold shares without board approval. If you are purchasing the co-op from
the original sponsor, then most likely you will not need to get board approval.
The same applies to subletting the unit. In most cases you will need permission.
In some cases, purchasing the unit from the original sponsor, may entitle
you to the same rights and privileges as the sponsor.
Recently after the cost of fuel skyrocketed, many co-ops and condos
monthly fees increased. So when buying a coop or condo make sure that you understand the financial future
implications. Ask for the financial information before signing on the bottom
Should I buy a single or multi-family residence?
One of the most common dilemmas encountered when purchasing a home is
whether to buy a single-family home or muti-family home. Common sense
dictates that a single-family home will cost you significantly less than
a multi-family home, and will appreciate accordingly. What are the advantages?
The peace that comes with it is enticing for some. Not having to deal with
renting to strangers, and the headaches of hiring (or being) a landlord.
However, on the other side of that argument, a multi-family home can be
a financial plus: the rental income helps with the monthly mortgage payments
and makes ownership less financially stressful.
How can a real estate agents help me?
Normally the first person you may have direct contact with in the purchase
or sale of land or residence, is a real estate agent. Most people use them rather than do it themselves. The agent works for his or her supervisor,
and they are called brokers. The kind of relationship you have with the
agent can have a major impact on how well you as a buyer or seller, understand
the initial process, and transaction. Two important points: Agents can normally provide good advice and suggestions regarding your purchase or
sale. Since they're well-educated in both the property markets and their field, they are can give you past performance for a particular property. However, although the agent may seem to work for you, unless expressly contracted for, they normally work for the seller!
What is a Binder? Why is it important?
A binder (otherwise known as an offer to purchase) is the first document secured by a minimal money deposit. You will normally sign a binder at
the moment that you decide to make the seller an offer to purchase. This tells the seller that you are serious about making the purchase. Once the
Binder Agreement is executed, the real estate broker or agent will present
it to the seller. If accepted, the property will no longer be shown to
potential buyers. It is important to note that the binder, unlike a contract
of sale, is subject to a time limit. Unless the binder details the money
to be refunded, it will be forfeited under most circumstances.
What should I know about the Contract of Sale?
The contract of sale is the first formal stage of the buying and selling
process. When you have retained a lawyer and have made an acceptable offer, at this point in time, you and the seller will
sign a contract of sale. The seller's attorney will normally draft the contract and then the buyer's lawyer will review the contract to make sure that you are protected from any future
problems (both legal and residential issues).
It's also important to note that when the buyer signs the contract, a Down Payment is given to the seller for the seller's attorney to hold in a special account called an Escrow. The seller's lawyer is required by ethical rules to do so. However,
not to worry: the entire amount will of course, be credited to the buyer
and applied to the final outstanding balance at closing.
The biggest mistake a buyer or seller can make is signing a contract
of sale before getting adequate legal representation. A contract of sale is an agreement to purchase and
sell the property. Once it's signed, it becomes a legal binding document. If you change your mind and want to change the terms of the agreement or if you want out of the transaction altogether, then you will find yourself in an extremely frustrating legal bind. That's why an experienced lawyer is necessary throughout the process, especially at the beginning stages. The contract of sale dictates exactly how the transaction
will proceed. It says how payments will be made and collected, and contains
all the important details. Tell your lawyer every detail which you think is important and essential to you intensions. For
example, maybe you are selling another property while simultaneously buying
a home. Since the sale of your property is a condition, that condition is a major detail that you should tell your lawyer. Since, the other party may have not accepted your offer had they known such a condition.
Another issue that sometimes comes up is the issue of occupancy. Generally a house is sold vacant. However, if you would like to keep the existing tenants, it is a good idea to tell your lawyer (assuming it's not a new construction), and that by itself can save you time and
hassle in the process of renting the property later on.
As a seller, should I have my home inspected?
Home inspections can sometimes make or break the deal. Your lawyer should secure a condition in the contract of sale which allows the buyer to refuse to purchase the property if the home inspector determines that the structure is not physically sound. Termite problems or signs of other wood-destroying insects are great reasons for a buyer to opt out
of the contract. In such cases the seller usually return the buyer's down payment and everybody walks away from the table. Home inspections are relatively
convenient, inexpensive and will save you a lot of time and money.
Finding a New York Real Estate
When looking for legal representation, most importantly, you want an attorney whom you feel comfortable with. If you don't feel comfortable with a particular attorney, chances are that you will not have a good working relationship.
An experienced lawyer, who you feel comfortable with, can be greatly beneficial in explaining and reducing the mystery
out of buying or selling real estate in New York. Your lawyer can review and prepare the contract of sale, order title insurance, and conduct key parts of the
transaction. Making sure the property you are purchasing has no undisclosed
liens. If they do exist, your lawyer can take care that they will be satisfied prior to the closing.
The last thing you need is to have doubts and questions about your transaction.
You want to make sure that after all the documents are signed and notarized,
that you understand what just happened and that you are confident that
everything was done correctly.
When should I close the deal?
The closing is the climax of the transaction. The buyer's lawyer is normally the ringmaster who coordinates the time and place of the closing. The closing is where the parties meet to finalize
the deal. Normally the parties you will see at the meeting are the seller and their attorney, the bank's attorney, and the title representative. What occurs at the closing table can be broken down to three major steps:
The bank makes the loan to the buyer and in return the buyer gives the
bank an interest in the property (Mortgage)
The buyer turns that loan over to the seller and in turn receives a
deed from the seller
The title company makes certain that the seller does indeed own the
property they are transferring
Unless there are any serious outstanding issues, the closing can take about 2-3 hours. At this stage, the buyer should have obtained homeowners
Insurance prior to the closing. Since not all insurance companies charge
the same prices for the replacement value of a house you might want to
shop around before the closing.
Lastly, a day or two prior to the closing, it's always a good idea to
do a walk though of the property to make sure that it is in the same condition
as when you decided to buy it.