Tips for First-Time Home Buyers
in New York City

By Beth Krietsch

Photo by Ashley Gallerani for House Method

Few real estate markets in the US are as competitive and fast-moving as New York City. For first-time home buyers, navigating the process from renter to owner can leave many frustrated and discouraged, but the good news is that this is not an insurmountable task: people do it all the time.

We spoke with Ria Browne, a licensed real estate broker with Stribling in New York City, about how first-time home buyers can navigate the NYC real estate market.

What are the most important things to keep in mind when looking to buy an apartment in New York City?

It’s always a competitive market in New York City, so it’s important to be prepared and ready to take action when you start seriously looking. A good broker should educate you about products in your price point and desired neighborhoods. That way you can manage your expectations once you get out there. But being prepared is essential because things can move really quickly here.

Do you recommend preparing any documents or paperwork prior to the search?

Yes. It’s so important to have your finances ready. For buyers this means getting pre-approved for a mortgage. No seller will accept an offer without this if you need a mortgage to purchase. Also, if you are purchasing a co-op, remember that co-op boards will meticulously analyze your finances, debt to income ratio, and credit, so make sure that all looks good. Boards will usually ask for three to six months months of bank statements, so try to keep any irregular activity that might raise some question marks out of there.

Should all potential homeowners get pre-approved for a mortgage?

Yes, definitely. It really doesn’t make sense to start seriously looking without going through the process of getting a pre-approval. The mortgage banker can help you figure out what you can truly afford, and without that piece of paper, no seller will even consider your offer to be real unless you are buying in cash.

How much do I need for a down payment?

In general, 20% cash must be put down, but in New York City there are some co-ops that don’t allow any financing at all. If the property is very hot, then it is definitely an advantage to offer more cash down in your offer. That way, you have less of a mortgage to qualify for and the seller doesn’t have to worry about a potential under-appraisal from the bank. There are some buildings that allow less than 20% down, but banks generally don’t like to give mortgages on more than 80% of the property value.

The other thing to know is that co-ops usually require that you have some liquidity post-close. It depends on the co-op, but they basically want to see that you have a bit of financial cushion after you move in. They don’t want to see that you are literally spending every penny you have to purchase.

Is it necessary to work with a real estate agent?

I firmly believe that it is of the utmost benefit to use a real estate agent. There are so many nuances to a home search and real estate transaction. Once an offer is accepted, there is still so much that needs to happen before you can close. In a co-op deal with a mortgage, a deal can take 60–90 days from contract to closing and a condo can take 45–60 days. Having an agent can help ensure that the process goes smoothly. And it doesn’t cost the buyer a penny. The commissions get paid by the seller. It’s like the difference between doing your own taxes versus using an accountant. You could possibly figure it out as you go along, but an agent deals with transactions all day long, so an expert can really manage the situation for the best possible outcome.

And agents always have access to more properties than customers. Good ones have a network of other agents they work with, can get you in to see a property early, and can help make your offer shine above the rest by making sure all factors are addressed at submission.

Photo by Ashley Gallerani for House Method

How can potential homeowners go about finding an agent to work with?

Ask friends and people you trust if they’ve had a good experience with someone. It’s all very personal. I get to know so much about my clients and I see a lot of privileged information, so I work hard to earn their trust. Check out their bio on their company’s website and read testimonials from their clients. If you are looking for an agent out of state or country, you can check with an agent in your home town who is probably part of a referral network of similar agencies around the world.

Always have a phone conversation with a potential agent. Ask about their experience, their areas of expertise, and their process. And don’t be afraid to interview multiple agents. Once you find one you like, stay loyal. In fact, I make sure that anyone I start working with uses me exclusively. It becomes very muddied if you try to use more than one buyer’s agent.

Is it necessary to line up a real estate lawyer before starting the search for a new home?

I highly recommend it. An attorney will help you figure out what your closing costs will be, based on the different potential scenarios. It’s important to have a local New York City attorney named on your offer form and a seller is going to want to see that you are ready to move ahead. An out of state real estate attorney is going to work against you in bidding. New York City real estate transactions are unique compared to anywhere else in America, so a seasoned seller will want to know they are dealing with professionals.

What are some differences between purchasing a condo, a co-op, or a single family home?

A single family home is the most straightforward because you don’t have to go through an application process to purchase. You basically find a home, get a mortgage, and then if everything is fine, you close. A condo is the next simplest, but some condos do require that you fill out an application and provide financial documents to ensure that you qualify financially to live there.

A co-op is the most involved because you aren’t buying real property, you are buying shares of a co-operative organization. But don’t be scared, roughly 75% of New York City’s housing stock is co-ops, so it may seem strange at first but, this is just how things are structured here. You need to qualify to purchase based on whatever a specific co-op requires. They’re all different, but a good agent will be able to gauge exactly what a specific co-op is looking for in a potential buyer.

How long does closing usually take, and how much money should be set aside for closing costs?

It really depends on what you buy. Co-ops take 60-90 days, but can often take longer because you are at the mercy of a co-op board. In the summer and around holidays, many board members are away, so it’s more difficult to coordinate a board meeting and interview. Condos and single family homes can take 30-60 days, in general.

For closing costs, it’s all in line with the purchase price and depends on what you’re buying and if you are financing or not. A good attorney and agent can help you figure that out.

What are some considerations to keep in mind when making an offer?

There are a lot of factors—you have to look at comparable properties to make sure the pricing is in line with the local market. Also think about timing—do the sellers want to leave soon or do they have a lot of time? Accommodating their needs might give your offer an edge. If there are a lot of other offers, consider putting more cash down. Remember, you are presenting a business proposition, so make sure you show that you’ve done your due diligence and that you are eager to move ahead. Sellers really do consider how likely a deal is to close based on certain buyers and how they present their initial offer.

Do you have any tips for managing bidding wars?

Make sure that your agent is on top of it. Your agent should be checking in on a daily basis to gauge the action. This is where a friendly agent with good relationships comes into play. A good agent can gain a lot of insight into the situation based on past experience and good communication skills.

The other thing is to really know your limit on what your maximum would be, and make sure that your finances can cover it. If a property goes for above the ask, there might be an issue with the bank appraisal coming in below what you offered. Do you have the cash to cover the difference in what the bank won’t finance?

What are some red flags to look out for when looking to buy a home in NYC?

A good agent will vet properties before you go see them, and then a good real estate attorney and sometimes an inspector should be able to find any other red flags related to a property once you start doing your due diligence. It’s important to have a good team to help you.

For both current city dwellers and those moving in from out of town, do you have advice for choosing what neighborhood to live in?

If you live in the city, spend time exploring the different neighborhoods and really check out places you’ve never been. I live in Brooklyn Heights and discovered it by accident when I came to visit a friend here almost 20 years ago and will probably never leave. You’ll often find better prices if you go off the beaten path a bit, but in New York City you’re never very far from conveniences.

If you are moving from out of town, talk to as many people as possible and find an agent who’s been living in New York City for a long time and has experience with many different areas. I work with a lot of relocation clients who sometimes don’t even see a property in person before they move here, so they rely on my data and guidance. I’ll send them articles about neighborhoods and links to local blogs that give a sense of what’s going on in the community.

Is it better to have a specific set of requirements and know exactly what you’re looking for? Or to keep an open mind?

You have to give your agent some rough guidelines about what you want, but keep an open mind. A good agent has seen hundreds and hundreds of properties over their career and has the experience to make certain judgement calls that a first-time home buyer just won’t be able to make.

Any other advice?

Your agent is fundamentally your partner in your home search, so find someone you really like and trust. This is someone who you will be spending a lot of time with and sharing private information with, so it’s has to feel natural. Understanding that this is a partnership and communication is a two-way street—respond to your agent and give feedback on properties so that every time you see a property, you feel like you are getting closer to envisioning what your ideal home is. My best experiences in real estate are when I feel like my client and I are working together as a team.


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