Read reviews of New Condominium Developments here.

A WORD ABOUT NEW DEVELOPMENT
After obtaining approval from the Attorney General’s office, Sponsors offer selected representative units generally at a discount off market price to encourage purchases of units that cannot actually be viewed since the building is pre-construction. As time goes on, the stronger opening sales are, the Sponsor issues new Price Amendments increasing the unit prices of the condominium. In the last 12 2 months, we have see increase of 30% from initial pricing to more mature pricing after six months.

PREPARATION FOR BUYING
You’ll want to move quickly when you find your new dream home, so take note of these preparatory steps:

• Determine your purchase power by working with a Mortgage Lender/Broker to get pre-approved for a loan. It is important to convey to Sellers that you are qualified to make your purchase. Most Sellers will require a Buyer to be pre-approved before negotiating and final price..

• Unlike some states, New York requires a lawyer to handle the home closing, so identify a Manhattan Attorney who is experienced in residential real state transactions and will be readily available.

• Have on hand liquid funds for the usual 10% required to execute the Contract of sale. This amount will be credited to the balance of the downpayment – generally 25 – 50% of the purchase price for Cooperatives and 10% for Condominiums.

• Other financial considerations may apply. For instance, for Coop purchases, offers are evaluated on price, no mortgage contingency clause, and the financial strength of the potential Buyer. Be prepared to produce Net Worth statements with documentation including bank and brokerage statements, tax returns, employment letters. It is usual for a credit check to be performed., so be sure to clear up any disputed claims. A Buyer’s total annual housing costs (mortgage interest, coop maintenance, secondary residences and any other mortgages) should not exceed 25-30% of household gross reported income, and total debt, generally, should not exceed 35-40%.

FINDING YOUR HOME
Define your search parameters for your ideal home: neighborhood, building ownership (cooperative, condominium or townhouse) type and amenities (doorman, gym, laundry, etc), number of bedrooms and baths, square footage, maximum price,

OWNERSHIP TYPES IN MANHATTAN
The most common ownership types in Manhattan are Cooperative, Condominium, Cond-op, and Townhouse (either single and multi-family).

Cooperative
Cooperatives comprise nearly 85% of the owned apartment dwellings in Manhattan. In a Cooperative, the Owner is granted a pro-rata ownership of shares of stock in a Corporation that owns the building. Each Owner is issued a Proprietary Lease that grants the Shareholder the right to occupy his/her specific apartment. Like other stock, Coop shares are considered “personal property,” not real property. Mortgage interest incurred by an Owner is considered tax deductible.

An elected Board of Directors is responsible for enforcing the corporation’s by-laws, dealing with the managing agent (small buildings may be self managed) ensuring the building operates in an efficient manner. Each month, Owners pay to the Coop a Maintenance fee which covers expenses including the building’s Real Estate Taxes, mortgage, payroll, operating expenses and management fees. Coop buildings set aside a Reserve Fund for capital or other expenses. Each Owner’s pro-rata share of Real Estate Taxes and mortgage expense are tax deductible on Federal and State income tax returns.

Coop purchases entail approval by a Coop Board – which can withhold approval without giving any reason.

Advantages to Buying a Coop

• All purchasers must be approved by Board of Directors, so coops have an “exclusive” aura of being able to approve your neighbors and the security associated with that.
• Prices are less than condos because of higher supply, lower demand, so you get larger apartments for the same budget.
• A portion of your monthly maintenance (building mortgage and real estate taxes) is tax deductible.

Disadvantages to Buying a Coop

• When buying, you must be approved by the Coop Board.
• Minimum cash downpayment is usually at least 20% and often may be higher.
• Coop policies are often require that purchasers be full time occupants. Pied a terre and parents purchasing for children can be more difficult. Investors who intend to sublet may encounter strict sublet policies..
• When selling, Board of Directors must approve the new buyer.

Condominium
Condominiums comprise approximately 15% of the owned apartment market. This percentage has been growing slightly in the past few years since most new development is constructed as Condominiums, not Cooperatives. Similar to homeowners, Condominium owners own “Real Property.” However, Condo owners also own a pro-rata share of the Condo common space (lobby, corridor, etc).

Like Coops, Condominiums have a similar elected Board of Managers who oversee the operations of the building and enforce building rules. Condo owners pay a monthly Common Charge for pro-rata operating expenses and pay separate Real Estate Tax bills to city for their units. Taxes paid are separately tax deductible by owners on Federal and State income tax returns. As with Coops, Condos maintain a Reserve Fund.

Many Condo Boards operate with a “right of first refusal” which means that Condo can purchase a unit from an Owner instead of processing the sale to a Buyer. There is different from Coop Board approval which can deny a sale without the Cop buying the unit.

Condominiums are generally more flexible in their sublet policies and are often favored by foreign investors and parents purchasing for children.

Advantages to Buying a Condo

• Many Condos are in new developments so the apartment is new or near new.
• The downpayment is only 10%.
• The buying process is less onerous and there is no Board interview. As with a Coop purchase.
• Sublets generally require Board of Managers approval but are more flexible than with Coops.

Disadvantages to Buying a Condo

• Prices are higher because there are fewer Condos and more demand for Condos.
• The monthly Real Estate Taxes paid by individual Unit Owners tend to be higher than the pro-rata cost paid by Coop Owners.
• Closing costs are higher.

Cond-Op
The term “Condop” has been used in two different ways: 1) A Coop with Condo like rules, or 2) a Cooperative building that has one or more commercial units on the ground floor. These commercial units can be owned by the coop building, the original sponsor of the building, or outside investors.

Townhouse
A Townhouse may be single family (occupied by one family) or multi-family (rented out to other individuals or families).

An Owner of a townhouse has a “fee simple” ownership of Real Property and is responsible for his property’s operating and repair expenses, and Real Estate Taxes. There are no Boards involved, so a sale is the decision of the property Owner.

VIEWING AND EVALUATING PROPERTIES
After you’ve seen a few apartments, you’ll know when you find the “right “ apartment. With high prices for such small places, buying a coop, condo or townhouse is a compromise. Here is a quick checklist of the most important qualities many Buyers consider:

• Location and neighborhood

- Proximity to transportation
- School districts

• Building Amenities and Policies:

- Doorman or concierge
- Laundry in building
- Gym, pool
- Individual storage
- Bike storage
- Pet policy
- Sublet policy

• Apartment Features:

- Number of bedrooms, or is there a convertible Dining Area?
- Number of bathrooms
- Closet space
- Light
- Noise
- Corner apartment?
- Ceiling height
- Washer/Dryer in unit?
- Disposal in unit?

At MLX, we help you view a wide selection of properties, then evaluate the right price for the property.

THE OFFER PROCESS
When you’ve found the property and determined your Offer Price, your agent will submit a verbal Offer to the Seller or Seller’s Agent, then follow up with a Written Offer. In addition to the Offer Price, the Offer will include related facts such as the downpayment amount, whether and the amount you will be financing (taking a mortgage) on the property, items that might be included in the purchase such as window treatments or lighting fixtures, your preferred closing date, your financial details including current household income, employment positions, and Net Worth.

In most purchases, there may be back and forth negotiation to arrive at a final price and terms. During negotiations, the Seller may be negotiating other contemporaneous Offers.

When your offer is verbally “accepted” by the Seller, your Agent will coordinate the notification of Seller and Buyer’s Attorneys. The Seller’s Attorney will draw up and send an initial Contract to your Attorney. (Please note that even after your Offer has been verbally accepted and a Contract pending with your Attorney, the Sellers may entertain other Offers. The Contract must be signed an executed by both parties before the Offer is actually finalized. )

Your Attorney will review the Contract with you and perform “Due Diligence” by reading the Coop or Condo Board’s meeting over the past several years. When you and the Seller have agreed to all terms, your signed Contract must be accompanied by a 10% deposit that will be held in escrow until Closing. The Seller will sign and execute the Contract. In the case of a Coop purchase, the Buyer must be approved by the Coop Board.

If you are applying for a mortgage, your mortgage broker/bank will want to appraise the property. The loan process can take 7 to 45 days to complete.

To assist your Agent in the assembly of the Board package for a Coop or Condo sales, you should promptly complete the Application Form and provide all requested documents, including:

• Personal and Business Reference Letters
• Employment Verification Letters and/or Pay Stubs
• Bank Verification and Brokerage Statements
• Net Worth Statement
• Tax returns for the most recent past two years
• Mortgage loan application and commitment.

The Coop Board will review your Board package, then decide whether to invite you for an interview. Coops vary as to whether they are conducted by the Coop Board or by a special interview committee. The Seller’s Agent will inform your Agent about the Board’s decision. Upon passing a Board interview, a Closing Date will be set, reflecting the terms of the Contract.

PRIOR TO CLOSING – THE INSPECTION
Either the day before or the morning of the Closing, usually after the Seller has vacated the property, you and your Agent will make a Walk Through Inspection to ensure the property conforms with the terms of the Contract. The property should be empty of personal belongings and “broom clean.”

THE CLOSING
Bring with you to the Closing identification such as a passport or driver’s license, all certified checks in the amount indicated by your Attorney, and your checkbook in case there are last minute adjustments.

Cooperatives and Condops
The Closing may be held at the office of the Management company for the building, or at one of the Attorney’s offices, and is attended by you, your Attorney, the Seller, the Seller’s Attorney, the lender’s Attorney, and a representative from the Management company’s Transfer Department and the Agent(s) involved in the transaction. The first documents to be signed are those related to the loan transaction — Security Agreement, Promissory Note, Stock Power, and an Assignment of Lease. Other documents to be signed for a Coop sale convey the apartment and secure interest in the apartment with a Stock Certificate, Proprietary Lease. You may be asked to write out checks for small adjustment amounts. The Seller will turn over the apartment keys to your new home!

Condominiums and Townhouses
The Closing is usually held at the office of the Seller or Lender’s Attorney and is attended by you, your Attorney, the Seller, the Seller’s Attorney, the lender’s Attorney, the title company closer and the Agent(s) involved in the transaction. As with a coop sale, lending documents (mortgage and promissory note) are executed first. Then documents (Deed, Title Report, and Unit Power of Attorney) conveying the Condo apartment to you are executed. Adjusting checks may be required, and the Seller will turn over the keys to the apartment and mailbox.

MOVING IN
All buildings have different rules concerning acceptable Move In dates. So find out and book your Move In date in advance.

SHOULD YOU WORK WITH AN AGENT AND HOW DO YOU CHOOSE AN AGENT?
A good Agent should have access to all properties, be knowledgeable about the properties and the buying process, able to assist the Buyer with an evaluation of the value of his/her short list of desired properties, readily available at all times, and represent the interests of his/her Buyer.

Since Manhattan Agents all have access to nearly the same pool of properties for sale, the differentiating points relate more to market knowledge and service style. At MLX, we are committed to represent the interest of our clients and are always available. Feel free to contact us at 212.220.4663 or 917.603.6224 or lala@mlx.com.

To avoid duplicate efforts in research and scheduling appointments, we recommend that you chose one Agent with whom to work. If you don’t hit it off with your Agent, by all means, switch to another Agent (or ask us for assistance in matching you to the right Agent).

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