Real estate is inherently local and every state has its own quirks. Since we're proudly based in NYC, we wanted to highlight a few things that we think every New York City homebuyer should know. The purchase process is stressful enough, so get a leg up with these tips.
Be Wary of Using the Same Agent as the Seller
A real estate agent is not a requirement in New York, but many people choose to work with one. Agents can assist by knowing the local marketplace, act as a liaison between the buyer and seller during the offer process, and help set up and attend home inspections.
If you choose to hire an agent, be wary of using the same agent as the seller. This concept is known as dual agency and it can be a problem. A buyer’s agent is supposed to work in the interest of the buyer. So, if they are working for both parties, there’s no guarantee of loyalty to your interests.
The Contract isn’t Final Until The Seller Signs
It’s easy to assume that you are officially under contract after going through the following steps:
- Putting in an offer and having it accepted
- Signing a contract prepared by the seller's attorney
- Sending the downpayment to the seller's attorney
But, even after all this leg work, both buyer and seller can technically walk away at this point. You are not officially under contract until the seller countersigns, and sends back a fully executed sales contract—which really just means a contract signed by both parties.
In light of this, it’s not uncommon for a seller to have multiple offers in the pipeline at a time. If this happens, sellers might even start a bidding war and request best and final offers from everyone who’s submitted. Having a firm grip of the offer and contract process can save a ton of headache and heartache on the road to homeownership.
Vet Your Own Home Inspector
Often, your real estate agent will recommend someone and this can be a great jumping off point. But, it’s also crucial to do your own due diligence.
Your home will most likely be the single largest investment you ever make, and you want to make sure that you’re making the best decision. It’s important to find an inspector who will do a thorough examination, allow plenty of time for you to ask questions, and provide realistic expectations.
Some Quick Tips
- Understand Costs and Timing
- A basic inspection is anywhere from 2-3 hours long and can cost between $300-$1000 based on the area you live and size of your home.
- Check Reviews: There are review sites for everything these days—including home inspectors! Here’s a list of good places to start:
- Check Credentials
Check Attorney Reviews
An attorney isn’t technically required in New York real estate transactions, but it is customary for both the buyer and seller to use one in New York City. New York makes it difficult to get around using a lawyer on either side of the transaction, because preparing deeds, mortgages, and other instruments affecting real estate constitutes “the practice of law.” Since these documents are required for every home purchase, buyers are pushed toward seeking representation.
A good place to start your research is avvo.com. Whether you’re checking out a recommendation from your real estate agent or branching out on your own, Avvo is like a yelp for attorneys. You can easily get insights from actual customers who have used their services in the past, make sure they specialize in real estate, and check how long they’ve been practicing.
If you’re looking to buy in NYC, the average cost for attorney fees hover between $1500-$4000.
Be Prepared for Closing Costs
The closing is the home stretch of the purchase process and should be a time for celebration! But, New York has some of the highest closing costs in the country, so be prepared to pay some hefty fees to finish up the sale. This is especially true if you’re buying a condo in New York City.
Condos and new developments are charged the following extra fees at closing:
- Mortgage Recording Tax (Only Condos)
- This tax requires buyers to pay 1.8% on loan amounts under $500,000 and 1.925% on mortgages over one million.
- Meaning, if you buy a $1.5 million condo, which is easy to do in NYC—even with 20% down, you’d be paying $23,100 on the $1.2 million loan amount. That’s a lot of money for the pleasure of recording your mortgage!
- NY State and NYC Transfer Taxes (Only on New Construction Condos in NYC)
- If you’re buying a new construction condo in NYC, you’ll also be hit with state and local transfer taxes. Quick caveat: depending on the market you might be able to negotiate this fee with the sponsor.
- If not, NYC will charge you an additional 1% of the purchase price if the condo is $500,000 or less or 1.425% if it’s more. Plus, the state is going to charge another .40%.
- Mansion Tax (Condos and Coops)
- If you’re purchasing a condo or a coop that costs $1 million and up, you’ll also be hit with an additional 1% tax.
Anytime you’re financing a home, be it a new condo or a single family residence, you may purchase a title insurance policy. Your lender will likely require you to buy a lender’s policy to insure your loan, but most people also go ahead and purchase an owner’s policy as well—to protect their ownership interest in the property.
Here at Spruce, we let customers pull a free, no obligation quote and are happy to do a line by line comparison of any competitor quote. We save New Yorkers about $700 on average by leveraging the best technology and not charging all the extra fees.
Have more questions about home buying in New York? Feel free to send us questions at email@example.com