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Frequently Asked Questions
Co-ops
While coop apartments are not entirely unique to NYC, there is no other place where they make up a majority of the housing stock as they do here. The crux of the distinction is that a coop apartment itself is actually not real estate, rather the apartment's owner is a shareholder in the corporation which owns the building and has a lease to reside in the specific apartment.
So what does this mean? It means you still "own" an apartment, but there are some strings attached. Since a potential buyer of a coop apartment is seeking membership in a private corporation rather than purchasing real property, the corporation can pick and choose to whom to extend membership. Thus the dreaded coop board packages and even more dreaded coop interviews. While the corporation can't base its decision to reject a potential shareholder based on membership in a protected class, boards do not articulate the underlying reasons for a rejection which has in the past resulted in the exclusion of minorities. Now it means that a coop board can require disclosure of all financial details and any personal information that will aid in their decision whether to approve a potential buyer. We will advise you on specific requirements and will help you prepare a board package.
In addition to the power to approve or reject potential new shareholders, the board can set rules curtailing certain ownership rights. For example, many coop boards restrict the right of an owner to rent out (technically, sublease) their apartments. Others may require that the apartment is used as a primary residence and not as a pied-a-terre.
Other differences exist, but are less significant. For example, individual owners of a coop apartment are not subject to property tax -- again since they don't own any actual real estate. Instead, the whole corporation incurs real estate taxes for the building, and each unit holder pays their share as part of the monthly maintenance charges. Thus there is a single "maintenance" for coop apartments (on listings the "% tax deductible" figure represents what portion goes to taxes), whereas condo or other real estate owners get separate bills for common charges and real estate taxes. In either case, the real estate taxes are tax deductible for individual unit holders and the total monthly charges are roughly equal all other things being the same.
Another example, a "mortgage" on a coop apartment is not actually a mortgage -- the collateral is not the apartment as it would be in a coop or other real property, but rather a lien on the shares in the corporation. For most intents and purposes, the loan is treated the same as a traditional mortgage, at least when dealing with lenders familiar with the NYC market (out-of-area lenders may be unfamiliar with NYC coops and not able to complete the transaction). Beware, however, that a mortgage recording tax of 1.8% (or 1.925% for loans over $500,000) will apply to loans on condos but not coops.
Some distinctions that work in favor of coop ownership? If the buyer is planning to finance part of the purchase price, coops have much lower closing costs as they are not subject to the mortgage recording tax (since it's not really a mortgage...).
Now that we've covered the difference between Coops and Condos, time for the practical part: What does this distinction mean in terms of inventory and pricing in NYC, and why should a buyer choose one over the other?
First some numbers: There are about 175,000 owner-occupied housing units in Manhattan in TOTAL! Manhattan is a very small island and mostly rentals—625,000. Of the 175,000 total owner-occupied units, 155,000 are coops and condos, and 70-75% of those are coops. Not only are condos fewer in number, they are generally about 30% more expensive on average than a comparable coop. Brooklyn is a bit less lopsided: though the resale market is still dominated by coops, the price difference is less pronounced, with coops about 10% less expensive than comparable resale condos.
In terms of available inventory, the number of new listings for condos has been growing while the coop market has been shrinking. The uptick in the condo supply is due mostly to the proliferation of high-end luxury development, which is pushing the relative prices even further apart with condos now about 44% more expensive on average than coops.
With coops generally more abundant and so much cheaper, why pay more for a comparable condo?
First, some purchasers simply may not qualify for or afford a coop. While they are more expensive, condos often require a lower minimum down payment amount so a liquidity-challenged purchaser may not be able to cough up the 20%+ down payment required by most coops. Even if a purchaser can afford the down payment, they may not qualify to purchase under a coop board's financial requirements. Coop boards may set rules on minimum financial requirements or may more informally deny applicants who they do not view as financially viable. The two biggest financial considerations for the coop board are debt-to-income ratio (usually 25%) and post-closing reserves (usually at least a year's worth of mortgage and maintenance payments after closing costs). This means that if a purchaser has limited savings or a relatively low salary, they might not qualify for a coop, or their budget for a coop might be much be much smaller than their budget for a condo, which has no such financial requirements.
Second, a purchaser might want to pay extra for certain freedoms. Like the freedom of not disclosing detailed financial and personal information to the coop board as part of the application process. Or the freedom to sell their apartment to whomever they choose rather than choosing a most qualified applicant and wondering if the board will approve or reject the purchase.
Beyond curtailing certain freedoms during the purchase/sale process, the coop board can also set rules regarding the use of the apartment. Most coops limit owner's ability to rent out their apartments (for example, may rent 2 out of 5 years, may rent for one year with the possibility of extension, may never rent...) whereas condos have no such controls. Some coops may require that the apartment be used as a primary residence and not a pied-a-terre.
There are many other factors that go into the determination of what sort of ownership is right for a particular purchaser, and many purchasers may fall into a gray area: Some coops might work while others won't, and comparable condos might be out of reach financially, so the trick is finding the right apartment based on individual circumstances and goals. Never fear, real estate agents are there to help sort through these considerations and find you the right home or investment property.
For any questions regarding the NYC home-buying process or residential real estate market, please reach out.
A multifamily home can be a financial boon. Here’s why:
More House for Less Money Each Month
When you own a multifamily home, the rental income offsets your total monthly carrying costs — so you can essentially get more house for less money each month.
Higher Value = More Appreciation
Appreciation on a $2 million property versus appreciation on a $1.5 million property will be more in absolute terms at the same rate of appreciation. In reality, the appreciation rates are rarely the same.
Long-Term Investment Potential
Like a condo, a multifamily owner can keep the property long after they decide not to live there in hopes of maximizing appreciation and generating income. Unlike a condo, however, a multifamily home will usually yield a much higher net annual income (CAP rate) than a comparably-valued condo. While the multifamily can be a more hands-on investment, we almost always see that the net monthly costs are lower and the combined rent combined rent on two apartments is higher.
“Out of Pocket” and The 5 Major Carrying Costs
First, buyers need to determine their ideal monthly “out of pocket” cost. This will help your agent determine which homes will work best for you based on their potential rental income and approximate carrying costs. There are five major expenses to keep in mind: 1) property tax, 2) mortgage payment, 3) homeowners insurance, 4) water & sewer costs, and 5) heating costs. Some of these are easier to estimate than others, but your real estate agent can help you with this.
“Rentability”
When looking at a home with multiple units, it’s important to consider the size and type of rental units it contains. Depending on the neighborhood, some rental products (1 vs. 2 vs. 3 beds) may be far more desirable.
Certificate of Occupancy
In NYC, it’s also important to know a house’s legal CO (certificate of occupancy). The CO determines how the property can be used - townhouse classifications include single, 2, 3, and 4 family, as well as single-room occupancy (SRO). These classifications determine how it is taxed, financed, and insured. Failure to comply with a home’s CO usually results in violations and fines from the city -- and a house with these sorts of outstanding fines and/or violations will be hard to finance.
Inspection
One of the major differences when buying a house, as opposed to an apartment, is that all of the internal systems and structures will belong to, and will be managed by, YOU - not a co-op or condo board or management company. our inspector will examine the entire structure and should point out any issues or damages. They will also review the internal systems in place (heating, cooling, electric, plumbing) and can point out any immediate repairs that need to be made, as well as explain ongoing maintenance.
As a first time buyer in NYC, it is important to know the real price tag on your purchase and create a realistic budget that will help narrow your search to properties you can afford and ensure you are able to make a competitive offer when you find "the one."
1. Downpayment
Most coops will require that buyers put down at least 20% of the purchase price as a downpayment (some may have higher requirements of 25%, 40%, or 50%). Condos have a lower threshold -- usually 10% -- but financing more than 80% will involve a surplus on the monthly mortgage payments so will amount to a costlier purchase.
2. Closing Costs
Closing costs vary based on whether you are buying a coop or a condo, and whether the purchase exceeds $1 million. Your attorney or real estate agent can provide you with detailed information on closing costs for your specific purchase, however, the most basic takeaway is that closing costs for coops up to $1 million is around $8000-$8500 regardless of their cost or amount financed. Condo closing costs are significantly higher, especially if you are financing (about 2% of the financed amount is due as a mortgage tax). Purchases over $1 million in both coops and condos are subject to a 1% mansion tax.
3. Reserves
Most coop boards will require buyers have some liquid funds remaining after closing, with the amount varying from 6 months to 2 years. This means that coop buyers must show that after deducting downpayment and closing costs, they have 6- to 24-months’ worth of their mortgage and maintenance remaining in their bank accounts.
4. Monthly Carrying Costs
In addition to your monthly mortgage, you will be paying maintenance for a coop (includes your share of real estate taxes and common charges) or separately common charges and real estate taxes for a condo. In Manhattan, $2/square foot is considered a reasonable monthly total for these fees, in Brooklyn, monthlies tend to be lower. While these costs can fluctuate based on amenities, some smaller buildings have surprisingly high monthly charges since basic costs are shared by a smaller number of residents.
Budget
Budget is not really a wishlist item. It is the elephant in the room affecting the feasibility of your wishlist items or how you might need to compromise among different wishlist items. he purchase price only tells part of the story and must be weighed against other factors like monthly maintenance costs and how much you might want to spend on renovations. Budget must take into account your liquidity and ongoing obligations, as well as your comfort level in making the investment.
Location versus Size
If you have a defined budget, location versus size is a hugely important consideration. Sometimes this is a sliding scale (a slightly larger one bed in one neighborhood versus a slightly smaller one in another) or it may be more drastic where the price of a studio in one neighborhood may get you a single-family house in another.
Commute
Commute is one of the biggest factors that can affect your quality of life on a daily basis, so it can be a deal breaker for some and rule out certain areas.
Amenities
By definition people like amenities, but you can’t always get what you want. For example, many of our buyers in Brooklyn want the aesthetic of a brownstone, but that usually means an elevator or doorman won’t in the cards.
Renovations
Some people are excited by the prospect of renovations while others sprint the other way. You should get on the same page about your appetite for a renovation and educate yourself about the realistic costs.
While these may seem like obvious considerations, many buyers do not think about them until they are getting deep into the search. I have had many buyers say they are “open to renovating” only to discover that the apartments they end up considering all have brand-new finishes. The wishlist will evolve, so it’s critical to have open dialogue with everyone involved throughout the process.
No man is an island, and no real estate agent can single-handedly get you to the closing table. What we can do, however, is assemble and coordinate the "dream team" of professionals you will need.
1. Real Estate Attorney: A great real estate attorney is crucial, especially in this market. As I've discussed before, in New York, an accepted offer is nothing more than a starting pistol to begin due diligence and contract negotiations.
2. Mortgage Banker: Not all mortgage bankers are created equal. Even within the same bank, different bankers have vastly different abilities. Some are better at moving along the process and getting exceptions granted.
3. Inspector: Depending on what type of property you are buying, it may make sense to bring in an inspector prior to signing the contract. The inspector can make sure there are no major defects with the apartment or building, and can also help you understand smaller repairs that you may consider bringing up during negotiations or that you would want to fix yourself upon closing.
4. Property & Casualty Insurer: Your lender and the building will likely require you to have insurance prior to closing. A capable insurance broker will guide you toward obtaining the protection you need.
5. Title Insurer: You will probably never meet your title insurer, but your attorney or the lender will retain them anytime you are buying real property (so condos and houses, but not coops).
6. Architects and General Contractors: Unless you are buying a turnkey, perfect home, you may be considering doing some work, whether it's painting or refinishing floors or a total gut. In some cases, you may want to get an estimate prior to signing the contract to allocate your resources appropriately. This may require bringing in an architect, general contractor, or both.
Once you've closed, the list of services/professionals you need may increase: Movers, floor refinishers, cleaning services, interior designers, painters, you name it. It really does take a village, and you can think of your real estate agent as the mayor or chamber of commerce who can refer you to the best fit.
Searching for Your Home
How much should I put down?
One of the questions we are asked about most often is about the size of the downpayment. In most of the country, this answer is determined by credit and income factors. Lenders offer pre-loans that require anywhere from 5-20% downpayment - so in theory many first time home buyers would be financially qualified to buy a home with as little as 5% down.
However, the New York housing market it unique, and a number of factors drive us to advise almost all buyers to consider 20% downpayment a minimum for purchasing a home in NYC.
A majority of the apartment inventory in New York City (roughly 70%), are co-ops. Co-ops are unique to New York, and most require a minimum downpayment of at least 20% down, with some requiring higher percentages, with 25% most common, and even higher amounts more rare. Condos typically allow buyer to put as little as 10%, but in reality, where demand for a particular unit is high, we find that 10% is simply not competitive, even if those prospective buyers are offering a higher purchase price.
Do I need to be all-cash to be competitive?
Even at the peak of the all-cash-buyer phase, most purchases still involved financing. So what if you are one of the majority that needs financing... well the first step is contacting a mortgage professional and getting a preapproval letter.
In order to make an offer where some part of the purchase price will be financed, a buyer will have to submit a preapproval letter. It could take a few days to gather the documents necessary to present to a bank, and the bank will have to review and verify the buyer's financial profile before issuing such a letter. Thus it is important to have started the process of obtaining a preapproval letter with a mortgage professional very early in the process.
Should I make a lowball offer?
As an agent, I’m often asked, how low can I go? Especially where buyers smell negotiability, it may be tempting to make a lowball offer and just see what happens. The truth is lowball offers have a tendency to alienate sellers and can preclude negotiations, rather than encourage a dialogue. A low (but not lowball) offer may be appropriate in some cases, depending on current market conditions, the type of property, and your relative strength as a buyer, and other factors. However, a perceived lowball will almost always be counterproductive.
In a normal market, I advise clients to stick within 7% of the asking price if we believe there is negotiability. Any lower than that and the sellers would have lowered the price themselves.
Unlike resale properties, luxury new developments may offer greater opportunity for price negotiation. Depending on the sheer number of similar new development units that hit the market at once, what percent of units are currently in contract, and and how aspirational the sponsor was in pricing those units, there may be significant (20-30%) room to negotiate below the asking price.
As always, if you’re looking to buy a property and want to know more about how much you should offer and any other steps in the process, feel free to reach out.
Buying an apartment also means buying into a building, and oftentimes the building itself will affect your quality of life much more than the appearance and comfort of your home. What are some things to consider? Monthly Costs When shopping for an apartment, keep in mind that maintenance or common charges may affect your pocket book much more directly than price. Buyers tend to be very sensitive to price, but consider that a $100,000 difference in price equates to roughly $500 each month in additional mortgage payments. By contrast, maintenance or common charges among comparable units can vary widely. When looking at monthly charges, be sure to consider the trend in the building: if the monthly charges are already on the high-side of the acceptable range, but there have been regular steep increases, it may not bode well for your monthly budget and for resale. Similarly, keep in mind what amenities you truly want or need; most buyers inquire about amenities, but few actually use the roof deck or gym. Owner Occupancy One of the best reasons to buy rather than rent is having neighbors who are likewise vested in the well-being of the building. When buying a condo, especially if you intend to live there, it is important to consider the mix of owner-occupied vs. rented apartments. Beyond losing a sense of community, a low rate of owner-occupancy may limit financing options. This is less of a concern with coops, which usually discourage -- or even outright prohibit -- sublets or pied-a-terres. Building Rules No matter your personal feelings about sublets or dogs, overly prohibitive building rules can inhibit you as your circumstances change and will limit the market for resale. I recommend making sure building policies are in-line with norms in the area -- some subletting should be permitted, alterations should be governed by a process (but a reasonable one), co-purchasing and guarantors should be permitted in certain cases ... Appearance Curb appeal is one of the most important factors in buying or selling a house, but less important for an apartment building (luckily for me and my 1960s postwar brick coop). For an apartment building, it is the interior spaces that matter -- for example, the lobby, hallways, and elevators. Again, balance is key. Over-the-top renovations, which unduly increase monthly costs for owners, are unnecessary and counterproductive, but common areas should definitely be neat, clean, bright, and maintained.
Health of the building Many buildings have issues -- some may have ongoing litigation, facade issues, low reserves, a boiler past its prime -- but I don't recommend looking at any single factor as determinative. Keep in mind the big picture and your goals and circumstances. A building that has issues that are being actively resolved by a responsible Board may provide a value proposition with upside down the line.
Many buyers are intimidated at the prospect of competing against an all-cash buyer for a hot property -- but does cash always win?
First off, the seller gets the same proceeds whether they are paid by the buyer or his lender. More importantly, all-cash buyers tend to grossly overestimate the value of their cash and their draw as an all-cash buyer, leading them to make noncompetitive offers.
But an all-cash offer does have some value. Certainly it will tip the scales with all else being equal. And in some situations it might justify a modest discount on the sale price. The value to a seller of an all-cash offer is based on the following two advantages:
1. Faster Closing: In a typical deal, eliminating the mortgage application and underwriting process can cut anywhere from 10-25 days off the duration of the transaction. Buyers who are financing typically have between 30-45 days from contract signing to apply for their loan and obtain a commitment letter from the bank.
2. Eliminating Risk: To understand why and how cash reduces risk, it’s important to consider the three things on which financing hinges -- the buyer, the building, and the unit. By the time a seller accepts a buyer’s offer, they will feel pretty comfortable with the first two of these factors, so the only question mark is whether the unit will appraise at the contract price. While low appraisals are not common, even a $1 shortfall could jeopardize a financing-contingent deal where the buyer is putting down the standard 20% of the purchase price.
It is important for all-cash buyers to be realistic about the value their all-cash status holds. Most often, the discount that it can entice is not worth tying up their capital or foregoing other benefits of cheap financing options.
Most coop boards will only schedule an interview if they have already vetted your application and determined you've meet their basic requirements. Keep in mind a few of these helpful tips to get a swift board approval:
1) Being invited to the interview is a good sign. The interview is the board’s opportunity to meet you and ask specific questions about your application. The style of the interview can range from an informal gathering of board members in an apartment to a formal interview with board members lined up at a table with you in the hot seat.
2) Dress up and be prompt.
3) Prepare for a lack of privacy. The board has great latitude in the kinds of questions it can ask, be prepared for this and do not avoid answers to personal questions, or be angered by this intrusion.
4) Don't get defensive. As a further point to number 3, do not get defensive to any intrusive questions or remarks that may seem off-putting. The board is made up of people with quirks, and some may not correctly remember details of your application and their questions may seem off.
5) Know your application. You should be able to quickly and concisely answer any questions asked regarding your application, preferably without having to look at your application.
6) Couples should decide in advance who will answer what types of questions.
7) Unlike a job interview, do not try to sell yourself. Only answer questions asked and let the board run the show. Boards rarely turn down applications for being too boring.
8) Never volunteer information or engage in unsolicited conversations except for basic cordial remarks and greetings.
9) Do not ask questions. Questions can often unintentionally convey negative information to the board.
10) A short interview is better than a long one. While there are no hard and fast rules, a short cordial interview with a few board questions and remarks is often the best co-op board interview.
11) Do not expect an answer at the end of the meeting. Most boards do not give their decision until a day or two after the meeting.
12) Do not discuss renovations. Don't volunteer information about renovation plans. If they ask if you intend to renovate, say something short and non-committal like the unit may need some updating, but you have no concrete plans at this point.
You've seen the perfect apartment, made an offer, and, eek, it's accepted! Break out the balloons and start plotting where to put your couch... or rather, not yet. Almost everywhere outside of NYC, an offer to purchase is accompanied by a "binder" -- good faith money which practically speaking binds the parties to each other if the seller accepts the offer. But NYC has no binder system, which means an accepted offer is not binding on either party. In fact, the period from accepted offer to fully-executed contract may be the most stressful part of the whole process.
So what happens when an offer is accepted in NYC? The short answer is the attorneys take over: They negotiate a contract, and the buyer's side completes due diligence. The mechanics of this may vary, but essentially, once the seller accepts an offer, the brokers put together a deal sheet which is sent to the attorneys for both sides specifying the negotiated terms and the process is triggered.
This process of due diligence and contract negotiations usually takes 3-14 days. When the contract is finalized, it is first signed by the buyer who provides a 10% deposit to be kept in escrow, then it is signed by the seller and returned to the buyer's attorney. The contract is not fully executed until it is received by the buyer's attorney.
What will banks consider in reviewing my file?
Banks will review your Credit, Income, and Assets. No one factor is determinative, rather the entire financial profile, as well as the condition of the building, is taken into account in determining whether a buyer qualifies for a mortgage and/or what type of loan program is available to him or her.
Credit: It goes without saying that bankruptcy or foreclosures will make it very difficult to obtain financing. Other credit snafus will also negatively impact financing such as carrying a high percentage of debt or having a history of delinquencies.
Income: Income is the denominator that can limit the amount of financing. Banks consider an applicant's debt-to-income ratio in determining how much debt they can take on through financing. Debt-to-income ratio is the measure of total debt obligations (the monthly carrying costs of the purchase including mortgage and monthly maintenance/common charges and taxes on the property along with any other mortgages, student loans, outstanding credit card debt) divided by verifiable income.
Assets: Most banks will want to see some post-closing reserves (mortgage + monthly carrying costs) -- this could be a year's worth, or or 2 months', or 6 months' worth.
Pros of New Development
1. Floor Plans Designed for Modern Living: New developments are designed with today’s buyer in mind: en suite master bathrooms, double vanities, walk-in closets, large open plan kitchens with high-end appliances and vented hoods. New developments tend to maximize their usable square footage by eschewing layout elements often found in their pre-war counterparts, such as long hallways, closed kitchens, and over-sized foyers.
2. Quality of Finishes: To get top-dollar, developers know they have to invest in high quality, eye catching finishes. At a certain price point, that means things like solid slab marble counters, rainfall showers, high-end appliances, solid white oak flooring, and custom cabinets and tiles.
3. Amenities: Standard amenities in new developments include central heat and air, in-unit vented washer/dryers, heated floors, “smart home” features, and premium materials and appliance suites. A larger development might also have a full-scale fitness center (perhaps with a pool), a roof-deck or other shared outdoor space, doormen and concierges, cold storage for grocery deliveries, bike and private storage, resident lounges, business centers, parking, and a host of other amenities for children and pets.
4. No Unknown Renovation Costs or Headaches: Renovating is neither cheap nor easy, and a new development represents the ultimate in a move-in ready product with the home delivered pristine condition all the way down to scuffs on the walls and dings on the floor.
5. That Feeling of Being the First. Most of my clients who have bought in a new development say that the main draw for them was being the first to live in their home. Many new development buyers are repeat offenders who will trade in their home for a brand new model when it’s time to move.
Cons of New Development
1. Higher Closing Costs: Developers almost always seek to shift to the buyer certain closing costs that would ordinarily be paid by the seller in a resale. These “asks” usually include state and local transfer taxes, which come out to 1.825% of the total purchase price for over $500,000, the sponsor’s attorney fees for closing, reimbursement fees, document preparation fees, etc.
2. Higher Monthly Carrying Charges: New development condos, especially in new construction, tend to have substantially higher monthly costs -- both common charges and taxes -- than their resale counterparts. The higher common charges can be attributed to the cost of maintaining amenities, but the taxes are also higher because they are assessed anew, unlike in resale or conversion projects.
3. Unpredictable Timeline: There is always some uncertainty about when a buyer in a new development can finally close on an apartment. And even after closing, there may be further uncertainty about when the amenities and common spaces will be completed and operational.
4. New Construction Concerns: While most new development sales come with a guarantee of quality for major systems and the soundness of construction for a certain period of time after completion, it is almost inevitable that there will be some minor issues in the first few years. The building will “settle” (which means, at the very least, cracks in the paint) and there will almost certainly be a leak somewhere.
5. Price: Finally, the most obvious con of buying in a new development is the price premium. Prices for new development tend to run at least 15% higher than older resale inventory, and can be much, much more. Developers are in the business of building to make a profit, and also have additional obligations to investors and lenders that limit how negotiable they can be on prices. Ultimately, it is a personal decision whether having a shiny new place is worth the price premium, especially as today’s new construction is tomorrow’s resale.
Buying Process
When listing your home for sale, it’s important to make design choices that are as widely appealing as possible, to ensure that prospective buyers feel comfortable and at home in the space. While a major renovation for the sake of appealing to more buyers is usually not a sensible investments, small tweaks can mean the difference between multiple offers and hoping for the buyer who can see past your personal choices.
1. Use Cool Paint Colors: Cool tones (blues, greys, greens) create a space that feels calm and quiet. Lighter shades in these family are also the best at reflecting (thus maximizing) light.
2. Furniture to Scale: Make sure your furniture is scaled to your home. This doesn't necessarily mean physically small items work better, it's all about the amount of visual space items take up relative to the amount of space.
3. Pinterest Worthy Vignettes: Use specific furniture and accent items to highlight the best features of each room – if you have a large corner window, or a particularly beautiful kitchen island, create a vignette that will to draw people’s attention to it.
4. Decluttering: Make sure there is “white space” in every room – clear surfaces, open space on shelves, etc. A room rarely looks good with every square inch filled.
5. Impactful Minimal Décor: Rather than filling every inch of wall space with random art, thing about wall decor as vignettes. Whether it is an oversized painting or a cohesive gallery wall, your art work should create an impact.
Empty apartments, no matter how visually appealing, force potential buyers to use their imagination to come to a reasoned conclusion, rather than just react with emotion at the onset. While most of us think we are logical beings, the truth is emotion plays a huge role in many of the decisions we make, especially with something as personal as buying a home. Logic can re-affirm these emotional reactions, and presenting a beautiful “home” rather than an empty space can be a powerful marketing tool in selling a home. For empty apartments, this can mean full-scale (placement of actual furniture and decor) or virtual (digitally added) staging.
Full-scale staging can be expensive and is usually reserved for larger, more expensive properties where the return on investment makes sense. For smaller apartments, even a minimal investment in staging can help prospective buyers get a better sense of scale since people tend to underestimate the size of an empty apartment.
A more cost-effective option, and one we employ for many apartments and rentals, is virtual staging. Virtual staging cuts out the cost and hassle of full-scale staging by using advanced software to place items into the space digitally.
While it is not quite the same as being in a space that is actually decorated to the nines, the first impression of the property — viewing the listing online — gives the buyer a glimpse into its potential, provides a sense of scale, and captures the imagination.
While location and square footage are obvious factors, similarly-sized apartments in the same area can sell for vastly different prices, and it often comes down to a handful of both physical and intangible factors. Take a look at the top five physical attributes that affect the value of a property:
Part 1: The Physical Space
1.) Layout
Almost as important as overall square footage is how that square footage is distributed within an apartment.
2.) Windows, Walls, & Floors
No, we’re not talking about the actual windows and floors, but rather views, exposures, light, and ceiling height which affect the overall feel and, therefore, desirability of an apartment. While there is no precise formula, again, it comes down to nuance.
3.) Condition
Renovation value is based more on overall condition than specific finishes or features — i.e. what matters most is whether a home is in mint, good, fair or poor (think estate) condition. That said, very specific finishes or style of renovation, even if costly or recently done, will not add the same value as one that appeals to a broad audience.
4.) Outdoor Space
Not all outdoor space is created equal. A balcony is worth less than a terrace, deck, or yard.
5.) Building Age & Period Details
Everyone knows that pre-war charm sells — high ceilings, original woodwork, crown mouldings, wood burning fireplaces are all at the top of many buyers lists — and, there are only so many pre-war buildings. However, not all buyers are in love with pre-war details. Some prefer floor-to-ceiling windows, brand new finishes, high-end amenities, and hi-tech offerings that are typically only available in new buildings.
Watch more here: https://www.youtube.com/watch?v=sS0UGzs_yHc
Part 2: Beyond The Physical
1.) Monthlies
There is a broad range for what is considered normal or “acceptable” for the monthly carrying cost on an apartment (common charges, taxes, and/or maintenance). A monthly that is above or below the “acceptable” range can have a massive effect on sale price.
2.) Required Down Payment Amount
A typical down payment for NYC co-ops is 20-25% of the purchase price, but it is not unheard of for some buildings to require a 40-60% down payment. A high minimum down payment will reduce the pool of potential purchasers and might negatively affect sale value, especially in areas where a higher minimum is less common.
3.) Service Level
Amenities don't just mean high-end features like a roof deck, pool, or fancy new gym -- equally important are things like doorman service, a live-in super, elevators, a laundry room, storage bins, bike storage, etc. There are certain kinds of amenities, especially elevators and laundry, that matter a great deal to most buyers, and therefore will affect price.
4.) Building Policies
Of course, every building is going to have its own policies or rules. But if a building’s policies are especially restrictive or severe, potential buyers may be deterred.
5.) Building's Financial Health
Buildings with a history of hefty assessments, or sudden large increases in monthly charges, will usually be a red flag to prospective buyers, as they can indicate disorganization or poor budgeting on the part of the management company or Board.
Whether you live in your home for 5 or 35 years, these considerations should factor into your bottom line both in terms of your monthly outlay and what to expect when it comes time for resale. Home values depend on much more than what meets the eye, so it’s important to have a complete picture before committing to such a significant investment.
Watch more here: https://www.youtube.com/watch?v=sS0UGzs_yHc
In New York City, buyers focus their property search within their price range, so if you’re overpriced you will not be in front of the right buyer pool to begin with. Sellers who are priced too high — outside of the reasonable range — may acknowledge they are priced high but wonder why they are receiving no offers, even low balls. The short answer is, those buyers do not want the property at any price. They are simply not the right audience.
Once you are within the reasonable pricing range and in front of the right audience, it is still important to be priced attractively within your market. If a buyer thinks a property is a good value, they will be looking for all the ways it is better than it’s competitors. On the other hand, if the property is priced on the higher end, buyers will be focused on its flaws.
The data backs this up. Properties priced right consistently outperform overpriced properties. They receive higher traffic — which we can track online — and close with a higher purchase price in a shorter amount of time.
Working with a professional buyer’s agent can provide a host of benefits you may not have considered. In partnership with a buyer’s agent, I can show your home in its best light to a widened pool of qualified buyers and ensure a more efficient contract-to-close process for everyone involved.
Increased Exposure for Your Listing
More eyes means more interest. A buyer’s agent can help get your listing in front of interested buyers they are currently representing, which maximizes your home’s exposure in a competitive market. By listing as a Compass Private Exclusive, you can even pre-market your home to buyers and the agents they are working with to build early demand before launching to the public.
More Qualified Buyers
Working with a buyer’s agent helps increase the likelihood that your home will be seen by qualified and vetted buyers who are educated about the market and ready to transact.
Seamless Contract-to-Close
Buyer agents provide guidance, counseling, and support to buyers throughout the contract-to-close process to troubleshoot and resolve potential issues. Having dedicated agents on both sides of the deal will ensure an objective approach and increase the likelihood of a seamless transaction.
Reduced Liability & Exposure
Having professional representation more readily ensures that the buyer completes their investigations to their satisfaction, thoroughly reviews and understands seller disclosures, and completes each required step. The result? A well-informed client without buyer’s remorse.
In the United States, real estate commissions can be paid by the seller, listing agent or the buyer. Continuing the practice of offering buyer compensation by the seller or listing agent increases the likelihood of having a professional buyer’s agent on the other side of the transaction and provides you with a number of advantages.
By paying commission or authorizing your listing broker to pay commission, you have potential to:
Increase Interest From Qualified Buyers
When you offer compensation to the buyer’s agent, the property may become more attractive to serious buyers and increase its exposure, a critical advantage in competitive markets. This also makes your home more accessible to a wider pool of buyers, some of whom might have limited cash for upfront costs.
Secure a Higher Purchase Price
If buyers don’t need to reserve funds for commission, they may be able to offer a higher purchase price.
Sell Faster
Removing the financial burden on buyers can help reduce the time your property is on the market.
Simplify Negotiations
With commission costs off the table, negotiations are less complex, allowing all parties to stay focused on the property’s price, which streamlines the negotiation.
Yes, our team has represented many estates and are well versed in navigating the legal, emotional, and physical challenges that accompany estate sales.
Learn more about our approach to working with estates here.
Sellers
Lawmakers in Albany and Governor Cuomo enacted The Housing Stability and Tenant Protection Act of 2019, which brings significant changes in New York State’s rent laws. So whether you’re a landlord or a tenant, here are some of the important changes to take note of:
Caps on application fees & security deposit. When signing a new lease, security deposits are now limited to one month’s rent. There is also a new limitation on application fees: a landlord may not collect an application fee except for background and credit checks, and even then the landlord may only collect $20 or the actual cost of the screening, whichever is less. The landlord may not request the fee from the applicant unless the landlord provides a copy of the background and credit checks, as well as the receipt or invoice for the screening. Tenants may also be able to avoid paying the fee if they provide the landlord with a copy of a background check and/or credit check conducted within the past thirty days.
Right of inspection and "cure path" for post-tenancy repairs. Before taking occupancy, the tenant now has a right to inspect the apartment to create a written document attesting to the condition of the unit. Prior to surrendering the apartment, the tenant may have another inspection where the landlord gives the tenant an itemized list of repairs or cleaning that may be the cause for deductions from the tenant’s security deposit. This "cure path" allows tenants to amend the conditions itemized before the end of their tenancy. For any outstanding issues, the landlord must provide the tenant with a final itemized statement indicating what deductions were made, if any, and the reasoning why within 14 days after the tenant vacates the premises.
Late fees and rent demands. Late fees cannot be charged until more than five days after the due date, and cannot exceed $50 or 5% of the monthly rent, whichever is less. If a tenant has fallen behind on rent, the owner may ask the tenant to pay the full amount that they owe — this is called a rent demand. Rent demands now allow the tenant 14 days to pay the owed rent, whereas previously, tenants were only given 3 days to pay.
Renewals or rent increases above 5%. If at the end of the term the landlord intends to raise the rent above 5%, or chooses to not renew the tenancy, the landlord must send notice to the tenant by process server (not mail). The law requires 60 days’ notice for leases of at least one year (but less than two years), and 90 days’ notice for leases of two years or more or where a tenant has lived in the unit for two years or more.
Roughly 70% of NYC residents are renters and about 65% of renters who will move this year will do so between June and August.
If you are among the many scrambling to decide how, when, and where to begin your search this season, here are a few tips to help you stay competitive in a the summer rental market.
1. Act Early and Make A Plan
What, when, where, why, how - make a plan that answers all of these questions while you still have time to explore your options.
2. Be Prepared to Apply BEFORE You Start Looking
Owners and landlords vary on what they will require to apply. As a base-line set of documents, most will ask to see at least:
-Proof of Employment or Verification of income
-Photo ID and Basic Application Form
-Last 1-2 Years of Most RecentTax Returns
-Last 1-2 Most Recent Bank Statements for all accounts, checking/saving/investment
-Landlord reference letter
3. Know Your Budget
Take the time to research or speak to your broker about pricing and market trends in the neighborhoods you are interested in. Unless you plan to use a guarantor, your budget will capped by your annual income which must be at least 40x the monthly rent rate of your new home. Also, don't forget about upfront fees and deposits.
As a general rule it is smart to plan that at lease signing you will need to have about 4x the monthly rent available to cover: 1 month deposit, first months rent, and application fee charged by the management of the building and a 15% broker fee.
4. Be Decisive
Don't second guess yourself when you find the one - the market moves at lightning speed during the summer months and in order to have all your hard work pay off, be prepared to put in an application as close to immediately after seeing an apartment as possible.
Renters
While New York City is recognized around the world for its 20th century skyscraper-filled skyline, it is predominantly a 19th century city, architecturally speaking. Much of New York’s architectural distinction derives from its rowhouses. Often referred to as "brownstones," NYC's rowhouses are, in fact, widely varied and include countless different styles.
There currently are more than 100 historic districts throughout New York City, all of which are as diverse as the owners and residents who live in them.
In NYC, The Landmarks Preservation Commission (LPC) is the Mayoral agency charged with designating and regulating these districts, as well as stand-alone landmarks. In order to protect these special properties, the Landmarks Law requires their owners to apply to LPC to obtain permits for certain types of exterior work before the work begins. The decision to issue a permit rests on whether the proposed work is “appropriate” to the character of a building and/or the surrounding district.
Specifically, the LPC must give advance approval to any alteration, reconstruction or demolition affecting a landmarked property. Approval by the LPC is required for any exterior work, except for routine maintenance or repairs, such as replacing a broken window pane or removing small amounts of graffiti.
An alteration agreement is a set of documents that essentially lay out the do’s and dont’s of renovating in your building. The specifics of alteration agreements may vary between buildings, but their purpose is the same whether you live in a coop, a condo, a new development, etc. Alteration agreements protect the building from any sort of change that might damage the building or negatively impact the quality of life of residents.
Often if the work you have planned doesn’t touch electrical, plumbing, or knocking down walls, a certificate of insurance from your contractor can suffice in lieu of a formal alteration agreement with full plans. I recommend that you speak to the superintendent for your building before anyone else as that person will be able to best guide you through the ins and outs of your building and potentially save you time and headache.
Alteration agreements go beyond hard and fast rules for altering your layout -- they often cover everything from what time construction can happen, the timeframe of the project, insurance coverage (for the building and the workers), as well as noise regulations. Some buildings are more strict than others, and reviewing the agreement for the property you are considering is a big part of due diligence when buying an apartment as onerous rules can increase the time and cost of renovations.
An apartment combination is the stuff of lore for many New Yorkers, but if you're one of the lucky few for whom that opportunity may present itself, there are many things to consider before making the offer on your neighbor's apartment.
Before you take the plunge, it’s important to consider the costs associated with combinations, both to make sure your budget can foot the bill, but also to make sure the value of the apartment you plan to create will be worth more than the sum of its parts in a resale.
Start with your building
Confirm your building will allow a combination, and find out as much as you can about what the process will entail. Depending on your particular circumstances, it may be desirable to purchase hallway or other common space from the building. It is also important to understand the building's rules for this type of renovation, which is usually contained in the alteration plan
Understand the costs with a team of experienced professionals
While the costs of a renovation can range from $200-$500 a square foot, this does not begin to address the question of what is a reasonable budget for a particular combination. Vertical combinations are more expensive than adjacent, but the condition of the respective units and the final vision you have for the combination (custom features are a major driver of cost) will make a huge difference. Apartment combinations almost always require an architect. Many architects will charge a percentage to provide full-scale service from design and drawings to construction management. It is important to get quotes from several contractors to get a sense of what it will cost to get the work done.
The importance of a thoughtful layout
While there are legal requirements for light and ventilation when creating or moving kitchens, bathrooms and bedrooms, other factors are important to consider when creating your new floorplan. All too often, combination apartments have odd room sizes, weird areas of “dead” or unusable space, or just seem to flow weirdly. An experienced architect or designer will be able to offer you advice on how best to configure your new space.
Moving major systems: kitchens and bathrooms
Other than in a few specific situations, New York City only permits one kitchen per apartment. A kitchen demolition can run anywhere from $5,000 to $8,000, but it’s important to consider whether your demo requires moving plumbing or waste risers. Plumbing risers are the most expensive thing to move around. Even if one apartment has a bathroom that lines up with the other apartment’s kitchen, you won’t necessarily be able to blast through the wall to create a giant kitchen or bathroom.
The devil is in the details
Combining apartments that are mismatched in quality (e.g. if one is in estate condition) poses additional design challenges. However, even if you’re combining two renovated apartments, blending finish work between the two will almost always require updating trim, moldings, doors and windows. Surprisingly, this finish work may be one of your largest expenses, as it will typically involve custom millwork, framing, and built-ins.
Look at the big picture
While much of our focus here has been on the costs, ultimately the goal is to create value. Speak to an experienced real estate agent to get a sense of a realistic offer on the neighboring apartment and what the resulting combination may be worth.
Renovating
Living
While New York City is recognized around the world for its 20th century skyscraper-filled skyline, it is predominantly a 19th century city, architecturally speaking. Much of New York’s architectural distinction derives from its rowhouses. Often referred to as "brownstones," NYC's rowhouses are, in fact, widely varied and include countless different styles.
There currently are more than 100 historic districts throughout New York City, all of which are as diverse as the owners and residents who live in them.
In NYC, The Landmarks Preservation Commission (LPC) is the Mayoral agency charged with designating and regulating these districts, as well as stand-alone landmarks. In order to protect these special properties, the Landmarks Law requires their owners to apply to LPC to obtain permits for certain types of exterior work before the work begins. The decision to issue a permit rests on whether the proposed work is “appropriate” to the character of a building and/or the surrounding district.
Specifically, the LPC must give advance approval to any alteration, reconstruction or demolition affecting a landmarked property. Approval by the LPC is required for any exterior work, except for routine maintenance or repairs, such as replacing a broken window pane or removing small amounts of graffiti.
An alteration agreement is a set of documents that essentially lay out the do’s and dont’s of renovating in your building. The specifics of alteration agreements may vary between buildings, but their purpose is the same whether you live in a coop, a condo, a new development, etc. Alteration agreements protect the building from any sort of change that might damage the building or negatively impact the quality of life of residents.
Often if the work you have planned doesn’t touch electrical, plumbing, or knocking down walls, a certificate of insurance from your contractor can suffice in lieu of a formal alteration agreement with full plans. I recommend that you speak to the superintendent for your building before anyone else as that person will be able to best guide you through the ins and outs of your building and potentially save you time and headache.
Alteration agreements go beyond hard and fast rules for altering your layout -- they often cover everything from what time construction can happen, the timeframe of the project, insurance coverage (for the building and the workers), as well as noise regulations. Some buildings are more strict than others, and reviewing the agreement for the property you are considering is a big part of due diligence when buying an apartment as onerous rules can increase the time and cost of renovations.
An apartment combination is the stuff of lore for many New Yorkers, but if you're one of the lucky few for whom that opportunity may present itself, there are many things to consider before making the offer on your neighbor's apartment.
Before you take the plunge, it’s important to consider the costs associated with combinations, both to make sure your budget can foot the bill, but also to make sure the value of the apartment you plan to create will be worth more than the sum of its parts in a resale.
Start with your building
Confirm your building will allow a combination, and find out as much as you can about what the process will entail. Depending on your particular circumstances, it may be desirable to purchase hallway or other common space from the building. It is also important to understand the building's rules for this type of renovation, which is usually contained in the alteration plan
Understand the costs with a team of experienced professionals
While the costs of a renovation can range from $200-$500 a square foot, this does not begin to address the question of what is a reasonable budget for a particular combination. Vertical combinations are more expensive than adjacent, but the condition of the respective units and the final vision you have for the combination (custom features are a major driver of cost) will make a huge difference. Apartment combinations almost always require an architect. Many architects will charge a percentage to provide full-scale service from design and drawings to construction management. It is important to get quotes from several contractors to get a sense of what it will cost to get the work done.
The importance of a thoughtful layout
While there are legal requirements for light and ventilation when creating or moving kitchens, bathrooms and bedrooms, other factors are important to consider when creating your new floorplan. All too often, combination apartments have odd room sizes, weird areas of “dead” or unusable space, or just seem to flow weirdly. An experienced architect or designer will be able to offer you advice on how best to configure your new space.
Moving major systems: kitchens and bathrooms
Other than in a few specific situations, New York City only permits one kitchen per apartment. A kitchen demolition can run anywhere from $5,000 to $8,000, but it’s important to consider whether your demo requires moving plumbing or waste risers. Plumbing risers are the most expensive thing to move around. Even if one apartment has a bathroom that lines up with the other apartment’s kitchen, you won’t necessarily be able to blast through the wall to create a giant kitchen or bathroom.
The devil is in the details
Combining apartments that are mismatched in quality (e.g. if one is in estate condition) poses additional design challenges. However, even if you’re combining two renovated apartments, blending finish work between the two will almost always require updating trim, moldings, doors and windows. Surprisingly, this finish work may be one of your largest expenses, as it will typically involve custom millwork, framing, and built-ins.
Look at the big picture
While much of our focus here has been on the costs, ultimately the goal is to create value. Speak to an experienced real estate agent to get a sense of a realistic offer on the neighboring apartment and what the resulting combination may be worth.