In New York City, buying a co-op is not the same as buying other kinds of property. Find out how to buy in a community building by reading this. About 75% of the flats for sale in New York City are in cooperative buildings. What does a co-op mean, and how is it different from a condo? What do you need to know about NYC co-ops before you buy one? Find out by reading on.
Co-op in New York City
Condos, single-family houses, and co-ops are not the same thing. A co-op apartment is not the same thing as real estate when you buy it. But instead, you’re buying shares in the company. When you buy shares, you become a partner. As payment, the company gives you something called a proprietary lease, which makes you a renter in the co-op building. You will own more shares in the cooperative if your room is bigger.
How to Buy a Co-op in NYC?
Gather Team of Professionals
Putting together a team of experts is the first thing you need to do when you want to buy a co-op. You should already have a lawyer, a real estate agent, and a mortgage agent or banker lined up who you want to work with to buy your co-op. When you find a good place in New York City, you need to be able to move quickly because the market changes so quickly.
Obtain a Pre-Approval
In the event that you are not paying cash for the co-op, a pre-approval letter will tell you how much financing you have been accepted for. Usually, the letter tells you about the loan program, the loan amount, the price of the house, and the interest rate you can get. This strong piece of paper is important because it shows both Brokers and Sellers that you are serious about buying a home. You won’t be taken seriously if you don’t have a letter of pre-approval.
Go Apartment Shopping
Start by looking for co-ops for sale in New York City or find a broker with a lot of experience in the NYC co-op market. You can save a lot of time by having a good broker show you homes that meet your needs.
Confirm That You Qualify
The down payment for a co-op can be anywhere from 10% to the whole amount in cash. But in New York City, the normal down payment for a co-op is between 20% and 30%. Co-op boards also want to see that you have some extra cash on hand, like enough in the bank to cover a year’s worth of repair costs. Co-op boards also want to meet you and ask any questions they have about your application, your life, and/or your financial background. Sometimes they need to meet with you more than once.
Submit Your Offer
Send in your offer right away! If your offer is accepted, you should start getting the letters of recommendation and financial papers you will need for your board package ready. This process should go more quickly if your broker and/or lawyer can help.
Sign the Contract
When a buyer signs a contract, they usually give the seller’s lawyer a 10% earnest money deposit to hold until the close. Usually, co-op contracts have terms that depend on board approval. If the Board turns down your application, you will get your deposit back.
Submit Your Board Package
At this point, you’re trying to persuade the building’s managing owners that you should be allowed to live there. Financial papers like the ones you gave your mortgage lender will be needed, along with letters of recommendation from real people. Making sure that your board package is “airtight” is pretty much the only way to keep it from being rejected. Also, act like you’re on a job interview. Be honest and yourself during the interview.
Close on Your NYC Co-op
A “closing” is the event where the property title changes hands from the seller to the buyer. You or your lawyer will write checks or wire money at closing to close the deal. It usually takes about three hours to finish this process. Sometimes, the operating agent for the coop, the mortgage lender, the real estate agents, and the lawyers for both the buyer and the seller are all at the closing.