New York & Miami Home Buying Guide

To make the best possible home buying decision, you need to have the best possible representation, which means having your own buyer agent working on your behalf. In any real estate transaction, there will be a seller agent who represents the interests of the seller. Likewise, with a buyer’s agent, you have someone who is dedicated to your interests. It is the practice for the Seller to pay cooperating buyers brokers although this is not always the case. 

One of the most important aspects of a buyer’s agent is that he or she has no vested interest in a specific property. The listing or selling agent, on the other hand, has a vested interest in selling the specific apartment or building that they have listed for sale. The seller and the listing agent working on the seller’s behalf are only interested in obtaining the highest price at the best terms for their seller—the opposite of the buyer’s interest.

Think of it like this: If you were the defendant in a court case, you wouldn’t use the plaintiff’s attorney to represent you. Same situation here. Be smart! Use your own broker. Other tips regarding hiring an agent:

• Don’t use multiple agents, as they will be none will be fully committed to helping you. Commit to one professional agent, tell them, and they will bend over backward to find you the best property.
• A good agent will be able to get you in to see every available apartment on the market—including some that aren’t even listed yet.

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Obtaining a pre-approval letter before you start your property search is a must if you want a mortgage. Being pre-approved by the bank:

• allows you to better determine the price range of homes you can afford; and
• demonstrates to the seller and their broker that you have the financial capacity to complete the transaction

Often, sellers won’t even negotiate with a buyer who makes an offer with a mortgage contingency and no pre-approval letter. Not being pre-approved demonstrates to the seller that perhaps the buyer isn’t serious, doesn’t know what it takes to complete the transaction, and maybe doesn’t even have the financial capacity to purchase.

A mortgage pre-approval takes only one or two days to obtain, so it’s best to complete this step first. It will give you a good idea of the price points you want to target in your search.

Now it’s time to make a wish list of what you want in a property.  Do you want to be in an up-and-coming location?  Or one that is very established? Do you want to live in a glass tower or a historic pre-war co-op?  Answers to these questions will help your buyer’s agent understand which properties might be a good fit for your tastes, and which ones to skip.

It’s also important for you to understand what is just a wish and what is non-negotiable. You might hope to find a condo with a Jacuzzi tub or terrace, but would settle for something without. On the other hand, you might absolutely need three bedrooms. Being clear about your expectations will help you and your agent broaden your search and spot properties you might otherwise miss out on.

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With your wish list in hand, you can begin searching for properties online. Start with the Manhattan Miami website, which offers powerful features to help you find your ideal home. We have access to all the listings in Manhattan and Miami. If you would like to search Manhattan or Miami property listings by yourself, click here for Manhattan and here for Miami.

Most of our clients prefer us to suggest interesting properties to them. If you would like us to prepare a tailored search of properties for you, click here for Manhattan and here for Miami and we will return to you results based on your unique parameters.

Note:  When searching listings, foreign buyers should focus their property search on condos, condops and townhouses, as co-ops are for primary home owners.

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For the properties that you select, we will provide an estimate of property valuation that is based upon comparable properties. We strategize with our buyers to determine bidding strategy in light of what is going on currently in the market. We will develop negotiation tactics depending upon the property, location, and current market conditions.

We will prepare an analysis of comparable properties, similar to the comparable market analysis (CMA) used by a seller, in determining the offering price. Our analysis will focus on the most recent closed sales data for neighboring apartments in buildings with similar characteristics. We will provide all the latest data that you need to make a decision—closed sales analysis, average listing discount for the quarter, current market conditions, latest average price per square foot, trends, etc. From all of this data and market information, we will distill an opening offer price.

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In New York, offers are made orally through the buyer’s real estate agent. Oral offers are not legally binding. Only written contracts are enforceable for real estate transactions in New York. Therefore, until the contract is signed, there is no obligation on the part of the buyer or the seller. Accordingly, a buyer can place a number of offers on different apartments to try to get the best deal. In Florida, however, offers are made in writing and a 10% deposit is required to accompany the offer. Therefore, any offer made by the buyer is legally binding.

The seller will usually come back with a counteroffer. Buyer and seller will go back and forth until they agree on the final purchase price and any special terms of the deal. One special term might be a mortgage contingency, which allows the buyer to get out of the contract and receive their deposit back if the bank will not enter into a mortgage for the property. Mortgage contingencies provide for the buyer to obtain the mortgage within 45 days.
The seller might accept a 60-day term, but most sellers would prefer no mortgage contingency at all. With no contingency, the seller may go lower on the price.

Sometimes sellers will not allow a mortgage contingency for foreign buyers since it is difficult for the seller to know if the buyer was truly turned down by a bank or simply changed their mind about buying the property. This might become an issue for some foreign buyers if the seller won’t allow the contingency. Having a pre-approval letter from the bank often helps the foreign buyer clear this hurdle.

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While it is advisable to at least consult a NYC real estate attorney beforehand, oncee the seller has accepted an offer, the buyer will need to hire a real estate attorney.  In New York, it’s required of the buyer to engage an attorney. In Miami, it’s not required, but most will use attorneys to transact their purchases. The risks are too great to go it alone here, so we always suggest a buyer have their own legal representation. 

Upon acceptance of the offer, the buyer’s agent will fill out a “deal sheet” that contains the names of the purchasers, as well as all contact information, including the name and address of the buyer’s attorney. Therefore, the buyer must know which attorney they will be working with at this point. Within one day, the condo documents will be sent to the buyer’s attorney to review.

The buyer’s attorney will read the condo documents and the building’s financial statements, among other documents, to determine the health of the building and any issues that should be addressed. The buyer’s attorney will pose questions to the seller’s attorney and sponsor of the building. The contract will then be revised to address any issues noted in the review, if any.

Until the contract is signed by the buyer, the seller can show the apartment and accept higher offers, if they wish. Therefore, time is of the essence when going through the process.

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IN NEW YORK

Upon signing of the contract, which is usually no more than 10 days after the offer is accepted, the buyer must submit a deposit of 10% of the purchase price to the seller’s attorney. The deposit is held in escrow, usually by the seller’s attorney, until the closing. For New Development, the downpayment can be up to 25%, either paid at once or in a few payments, depending upon how far away occupancy will be. 

IN FLORIDA

The 10% deposit which was made alongside the initial written offer is only refundable in certain instances, such as those under a mortgage contingency clause where the buyer’s loan application has been rejected by the bank. For new development, progress payments are usually 40% to 50% over time, with the remainder due at closing. 

If the buyer is obtaining mortgage financing, he or she will work on obtaining a Mortgage Commitment Letter from the bank for the mortgage. The Mortgage Commitment Letter is issued once the buyer has secured the loan. For condos and co-ops, this letter is a requirement of the Board Package, which you’ll submit for board approval after you reach a deal with a seller.

SECURING THE LOAN

Applying for a mortgage can begin before you find a home or after you have submitted an offer. However, it is best to do this as early in the process as possible so as to eliminate any surprises. The buyer will have to fill out an application that involves a lot of paperwork. The lender will take a detailed look at the buyer’s credit history, employment record and financial assets and liabilities. 

ISSUANCE OF THE MORTGAGE COMMITMENT LETTER

A Mortgage Commitment Letter is the document an underwriter sends to the loan officer once a loan is approved. This is the real thing! The Mortgage Commitment Letter will detail every aspect of the mortgage. It will include the terms and interest rate. It will itemize the “conditions” (the items that must be provided or explained for final approval). The Mortgage Commitment Letter will be dated and it will have an expiration date. It may be signed by the underwriter.

While the pre-approval letter is a great thing to have when beginning your search, the buyer is not approved until the Mortgage Commitment Letter is issued, as the Mortgage Commitment Letter is a formal, legally-binding document.

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There is no board approval for whole townhouses or single-family homes, but buyers purchasing a condo or co-op will need to formally apply to the condo or co-op board in order to complete the purchase.

Once the contract is executed by both the buyer and the seller, the buyer must submit a Board Package to the condo or co-op board. A condo board has what’s called the “right of first refusal,” which means they have the opportunity to purchase the condo before approving an external buyer’s purchase. A co-op board has the power to approve or deny buyers. The Board Package, sometimes called a Sale Application, will include/require:

• An application and fee
• The executed contract and Mortgage Commitment Letter, if any
• Financial statements including bank statements or confirmation letters
• Personal letters of reference
• Business letters of reference
• The last three years’ tax returns
• Employment and income verification letters
• Authorization for criminal, credit and employment checks

The Board Package is submitted to the building’s management company for review.

• If a co-op, the board will request an interview of all the future residents of the unit. This interview is very serious and should be considered a business meeting.
• A condo board will not interview the prospective purchaser but will run credit and criminal checks and read the Board Package.

Once the board waives the "right of first refusal", or in other words, approves the purchaser, then a closing can be scheduled.

The closing will take place within 30/45/60 days from contract signing, depending upon what terms have been agreed. If paying cash, then a 30-day closing is more likely. If obtaining a mortgage, the buyer will likely get up to 60 days, with the average being 45 days.  In preparation for the closing:

• Set the closing date.
• Meet the conditions of the loan offer.
• Buyer’s attorney will run a title search to make sure the buyer received “clean title”, which will ensure that the seller owns the property and that there are no liens filed against the property.
• Obtain homeowners insurance to protect the owner (and the lender) from losses if ever the house is damaged or destroyed.
• Final walk-through inspection before closing.

The closing, or settlement, is the final step in a real estate transaction. On the closing date, the parties consummate the purchase contract and transfer ownership of the property from the seller to the buyer: 

• The buyer (or the buyer’s bank) delivers payment for the balance owed on the purchase, which is usually the remaining 90% of the purchase price plus closing costs of 3.5% (without a mortgage) to 5.5% (with a mortgage).
• The seller signs the deed over to the buyer and delivers the keys to the home.
• A title company will register the new deed with the local land registry.
• The seller will receive the monies due from the proceeds of the sale, less closing costs and mortgage payouts if the seller had an existing mortgage at closing.

For foreign buyers, the closing can take place without the buyer being physically present in the US. The buyer would simply assign a Power of Attorney to the buyer’s lawyer (or sign a Letter of Consent if purchasing with an LLC) to close the deal on the buyer’s behalf. This is a common practice.

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