New York Buying / Selling Guide

Buying Guide

When you have identified a property of interest, you will want to make an offer to purchase that property.

Bidding and Negotiating

This is how the bidding process typically works:

• Your agent will submit an offer on your behalf to the seller’s real estate agent, along with the presentation of your qualifications.  This may be done orally or in writing.
• Remember to inquire about the flip tax, as this is sometimes a negotiating point.
• The seller may accept or counter your offer as part of a price negotiation.
• In the case of multiple bids, your agent will work with you to structure a “best and final” offer that you are comfortable with.
• The conclusion of the process will result in agreement upon the price, terms and closing date.
• You and the seller will need to engage capable and experienced New York City-based real estate attorneys to prepare and review a contract of sale.

Going to Contract

Once your offer has been accepted, you will enter the contract stage.

• Your attorney will exercise “due diligence” by asking for certain key documents from the seller or their managing agent. These typically include:
  • Proprietary lease or offering plan
  • The building’s by-laws
  • Statements of the building’s financial condition
• Following your attorney’s review and approval, you will sign the contract of sale.  At the signing, it is typical to present a deposit of 10% of the sale price.
• The contract and deposit are forwarded to the seller’s attorney, who will obtain the seller’s signature.
• Your deposit is usually held in the seller’s attorney’s escrow account until the closing date.  Normally, any interest earned follows the principal.

Board Approval

• The seller’s real estate agent provides you with the building’s board requirements and application forms, which may include:
  • Application
  • Signed financial statements
  • Tax returns
  • Bank statements
  • Brokerage statements
  • Personal and financial letters of reference
  • Professional reference letters
  • Contract of sale
  • Bank financing documents (if financing)
• Your agent will assist you in compiling the board package and send it to the seller’s agent, who will review it prior to submission to the building’s managing agent, who will present it to the building’s board of directors.
• Upon review, the board may or may not ask for additional information.  It may also turn you down.  When all is in order, the board will arrange to interview you.  Participants should be forewarned that the time lapse between submission of the board package and scheduling of the interview varies greatly from building to building, and from season to season.  Generally, condominium buyers are not interviewed. If all goes well, official word of approval will come from the building’s managing agent, typically within days of the interview.

Closing

With the board’s approval, the final step is the closing.  The closing usually occurs in the office of the building’s managing agent. The exact date should be flexible to accommodate everyone (you, the seller, the attorneys, the banks, and the managing agent).  It is best to allow for a potential delay of up to 30 days from the closing date specified in the contract.

Your agent will schedule a final walk-through inspection of the property for you, immediately prior to the closing.

Estimated Closing Costs for Cooperative Buyers

• Buyer’s attorney (this varies): $2,500
• Bank fees (if financing; application, credit reports, appraisal, bank attorney, etc.): $2,500
• Mansion tax: 1% of entire price when the purchase price, inclusive of any transfer taxes paid by purchaser on behalf of seller, exceeds $1 million
• Lien search and UCC filing: $425
• Managing agent or co-op attorney: $750
• Maintenance adjustment: up to one month+
• Short-term interest adjustment: up to one month+
• Move-in deposit or fee: $1,000
• Flip tax (if any): generally around 2%++

+Prorated for month of closing.
++Flip taxes vary in amount and to whom they are payable (buyer or seller).

Estimated Closing Costs for Condominiums & Townhouse Buyers

• Buyer’s attorney (this varies): $2,500
• Bank fees (if financing; application, credit reports, appraisal, bank attorney building questionnaires, etc.): $2,200
• Recording fees: $200
• Mortgage tax: 1.8% of amount of mortgage on loans under $500,000 or 1.925% of entire amount of mortgage on loans over $500,000
• Mortgage title insurance: approximately $200 per $100,000 (if financing)
• Title insurance fee: approximately $450 per $100,000
• Mansion tax: 1% of entire price when price exceeds $1 million
• Miscellaneous title charges: $500
• Managing agent’s fee: $500
• Common charge adjustment: up to one month+
• Real estate tax adjustment: one to six months++

+Prorated for month of closing.
++Expect to pay eight months’ real estate taxes combined between buyer and seller as an adjustment and escrow established by lender.

NOTE: When purchasing in a new development from a sponsor, the purchaser will typically be required to pay New York City and New York State transfer taxes (1.825%) as well as the sponsor’s attorney’s fee.

Selling guide

When selling a home, please bear in mind the following:

Best Practices for Selling

• Make sure your home is clean and in top condition. Display fresh flowers to add warmth to the environment.
• Allow your agent to schedule showings at the time of day when your property looks best.
• Remove any jittery pets and arrange to be elsewhere when your home is being shown.
• If selling a co-op or condominium, obtain rules and regulations from the managing agent.
• Obtain documents (offering plan, prospectus, three years’ financials, co-op/condo guidelines, etc.) from the managing agent and have them on hand before going to market.
• Find out if your building has a “flip tax” or working capital deposit and whether the buyer or seller is responsible for paying it.
• You will need to select an experienced real estate attorney to represent your interests.

Bidding and Negotiating

This is how the bidding process typically works:

• The bid or offer from a buyer is made orally or in writing through your real estate agent or co-broker, along with the presentation of the buyer’s qualifications.
• You may accept or counter the offer as part of a price negotiation.
• In the case of multiple bids, you and your agent will execute a strategy to obtain the best price and terms from the most qualified buyer. Frequently, the strategy will involve sealed bids or a deadline for highest and best offers from various bidders.
• You will work closely with your agent to identify the offer that best satisfies your needs.
• The conclusion of the process will result in agreement upon the price, terms and closing date.
• You and the buyer will need to engage capable and experienced New York City-based real estate attorneys to prepare and review a contract of sale.

Going to Contract

Once you have accepted an offer, you will enter the contract stage.

• While your attorney prepares the contract of sale, the buyer’s attorney will exercise “due diligence” by asking for certain key papers from you or your managing agent. These typically include:
  • Statement of the building’s financial condition
  • The building’s by-laws
  • Proprietary lease or offering plan and amendments
• With the approval and agreement of the buyer’s attorney, the contract of sale is signed by the buyer. At the signing, the buyer typically presents a deposit of 10% of the sale price.
• The contract and deposit are forwarded to your attorney, who will obtain your signature.
• The buyer’s deposit is usually held in your attorney’s escrow account until the closing date. Normally, any interest earned follows the principal.

Board Approval

Your real estate agent presents the buyer with the building’s board requirements and application papers, which may include:

• Application
• Signed financial statements
• Tax returns
• Bank statements
• Brokerage statements
• Personal and financial letters of reference
• Professional reference letters
• Contract of sale
• Bank financing documents (if financing)
• The buyer’s agent will compile the board package and send it to your agent for review.  If everything is in order, the package will then be submitted to the building’s managing agent, who will distribute copies to the appropriate board members.
• Upon review, the board may or may not ask for additional information. A co-op may turn down a buyer. If not, the board will arrange to interview the buyer. Participants should be forewarned that the time lapse between submission of the board package and scheduling of the interview varies greatly from building to building, and from season to season. Generally, condominium buyers are not interviewed. If all goes well, official word of approval will come from the building’s managing agent, typically within days of the interview.

Closing

With the board’s approval, the final step is the closing. Ordinarily, the buyer will ask to perform a final inspection of the property immediately prior to the closing.  Barring any terms in the contract to the contrary, all fixtures and appliances that are scheduled to convey should be in good working order at this inspection. The closing usually occurs in the office of the building’s managing agent. The exact date should be flexible to accommodate everyone (you, the buyer, the attorneys, the banks, and the managing agent).  It is best to allow for a potential delay of up to 30 days from the closing date specified in the contract.

Estimated Closing Costs for:

Condominium & Townhouse Sellers

• Broker: Typically 6%
• Seller’s attorney (negotiated flat rate) $2,500±
• NY City Transfer Tax: 1% of sales price for sales of $500,000; or less 1.425% for sales in excess of $500,000
• NY State Transfer Tax: $2 per $500 (or 0.4% of sales price)
• Miscellaneous title company fees (if seller has a loan on the property): $450±
• Move-out deposit or fees (condo): $1,000 (varies)
• Managing agent fees (condo): $500±

These figures are presented as a general guideline only. Actual closings costs will vary for every transaction. Before signing any contract, sellers should have all closing costs explained to them by their attorney.

Co-Operative Sellers

• Broker: Typically 6%
• Seller’s attorney (negotiated flat rate): $2,500±
• NY City Transfer Tax: 1% of sales price for sales of $500,000; or less 1.425% for sales in excess of $500,000
• NY State Transfer Tax: $2 per $500 (or 0.4% of sales price)
• Flip tax (if any)*: Often 2-3%, consult managing agent
• Managing agent fee: $600±
• Stock Transfer Tax: $0.05 per share
• Move-out deposit or fees: $1,000 (varies)
• Payoff bank attorney (if seller has a loan on the property): $500±
• UCC-3 filing (if seller has a loan on the property): Up to $100 per loan

Flip taxes vary on amount and by whom they are payable (buyer or seller)

These figures are presented as a general guideline only. Actual closings costs will vary for every transaction. Before signing any contract, sellers should have all closing costs explained to them by their attorney.