Purchasing a home in the city that never sleeps differs from buying a home anywhere else. It’s a unique housing market with unique considerations.
For many people, home buying in New York City means you’ll be looking at either a cooperative (co-op) or condominium (condo) unit. A few things to keep in mind when looking at either a co-op or condo:
• With co-ops, a board of directors must approve all purchasers. They will look at finances, employment and run a background check.
• Monthly maintenance fees are typically higher for co-ops.
• It’s easier to sublet your condo if you need to.
• Co-ops are normally less expensive in general.
• Co-ops generally require a larger down payment.
When you’re purchasing a home in New York City, there are additional taxes you may be responsible for beyond the usual property taxes. They include:
• New York State and New York City transfer fees that are paid upon the sale of real estate.
• Mansion tax – Tax imposed on sales of residential property of $1 million or more and it is equal to 1% of the purchase price. This is typically the responsibility of the buyer.
New York City is a highly competitive market. When buying in New York City, it’s important to have paperwork prepared and ready. Dan, a real estate agent in New York City, explains it this way: “A lot of people get very overwhelmed by the fact that—especially here in Manhattan—they have to provide a lot of paperwork on their personal financials, tax returns, bank statements, just about everything.”
STEFAN: In New York, it’s a very specific market. In a condo or a coop, you have to pay a maintenance fee, which is the amount of money it costs to keep the building running, if you have doormen—to keep them on staff. If the building needs repairs, there’s a bunch of money for it to pull from.
MICHELLE: I didn’t know there was a difference between a co-op and a condo so I learned all of this trial by fire, so to speak. Because I was buying into a co-op I was buying shares of a larger entity rather than a condo where you own your unit outright. Because I was buying shares, I also had to be approved by a board to say that I was satisfactory to live here and that I had the assets to maintain the unit.
JULIE: There are a lot of taxes that come along with purchasing a home that might not be obvious to someone who’s buying for a first time. For example, if you buy a piece of property in New York City there is city transfer taxes and state transfer taxes, and a lot of times people are unaware of these.
BRUCE: Very often a real estate attorney is introduced to a purchaser or a seller by their real estate broker or mortgage professional when he or she has just made an offer on a co-op, condo or a home or has had an accepted offer on a property that they want to purchase and you must at that point assemble your closing team — the attorney, the broker and the mortgage
DAN: They’re most surprise isn’t necessarily the amount of work looking but more about once they find the apartment, not only the amount of competition on getting the right place but the amount of work involved in securing the deal.