Step 1 in selling a Loft or Apartment or Home
Before any advertising is started, you should conduct a “comparable sales” price research survey with similar types of residential units within and surrounding your area. Also, you should start researching certain websites (i.e. TLC.com, Hgtv.com) or any of the multiple cable networking channels for advice on how to create a visually pleasing space for the buyer’s eye.
For Houses or townhouses:
You should have an inspector come to your home or townhouse to do a complete inspection to see if there are any areas that need fixing because the buyer will be performing their own inspection upon an accepted offer.
Step 2 in Selling a Loft or Apartment or Home
Upon review, the seller has three options:
a) accept the buyer’s offer,
b) reject the buyer’s offer or
c) make a counter-offer.
If the seller or buyer makes a counter-offer, a negotiation process will ensue concerning price, terms and closing date that will eventually lead to an agreement from both respected parties.
Contract Basics:
Contingent contracts: A contract in which the buyer will be able to receive his or her 10% earnest money deposit or contract deposit back, if he or she fails to obtain the appropriate mortgage financing after the contract is signed. Note: The buyer has usually within 30 to 45 days to obtain a mortgage commitment.
Non-contingent contracts: A contract in which the buyer will forfeit his or her earnest money deposit or contract deposit, if he or she fails to obtain a mortgage after the contract is signed. Note: As with contingent contracts, the buyer has usually within 30 to 45 days to obtain the appropriate mortgage commitment.
FACT: A Real Estate attorney is mandatory in all property transactions in New York. It’s advisable that a buyer research and interview with several attorneys before a selection is made. The buyer’s attorney should be well qualified in the residential area of the buyer’s purchase and fully understand the complexity of his or her transaction.
Accepted offer to Contract Signing (1 - 3 weeks)
Once the seller accepts the buyer’s offer, the seller’s attorney proceeds in preparing a contract of sale. At that point, the buyer’s attorney will begin to examine the buildings financials, the offering plan, the meeting minutes and “contract of sale”. A “Due diligence” investigation is conducted.
Once the buyer’s attorney concludes his or her “Due diligence”, the buyer signs the “contract of sale”. The buyer is then obligated upon signature, to pay a 10% contract deposit of the purchase price – this deposit can be as low as 5% in some instances. The contract and deposit is then forwarded to the seller to be counter signed. The deposit is to be held in the seller’s attorneys escrow account until the official closing of the sale.
Note: Until both respective parties sign the “contract of sale”, there’s no official deal and the seller can still accept other prospective buyer’s offers. Speed is of the essence.
Mortgage Financing (4 - 6 weeks)
Before financing is involved, the buyer needs to make an important decision by either choosing to locate a financial institution on his or her own or to research and hire a mortgage broker. Mortgage brokers are independent of financial institutions and typically will take the buyers credit report and loan application and shop it around to multiple financial institutions to find the buyer the best loan based on his or her needs.
Note: If the buyer chooses to locate a financial institution on his or her own, each financial institution requires its own loan application and processing fees.
The buyer should be aware that the loan application approval or refusal is generally the slowest part of the deal. Most financial institutions require several documents regarding loan applications such as tax returns, pay stubs, bank statements and other documents that show your income history and your ability to pay your bills. While reviewing the buyer’s credentials, the financial institution will schedule an appraisal for the property. This appraisal will show their opinion of the market value of the property in which the prospective buyer wants to purchase. The seller must provide the appraiser the property floor plan, comparables of like property sold and a copy of the first two (2) pages of the “contract of sale”.
Note: Before agreeing on a specific loan, the buyer should ask the financial institution to put forth in writing a cost estimate of fees in order to close on his or her loan.
Tip: To avoid the potential heartache in having your mortgage loan application denied after several weeks, buyers should get pre-approved for a mortgage.
Complete a Board Package (Co-op/Condo) Application (3 - 5 weeks)
The seller will provide the purchaser/buyer the cooperative or condominium “Board Package” paperwork and discuss the property requirements and regulations.
Note: Cooperatives and condominiums differ in their approval process – reference section, cooperative and condominiums basics. (see Co-op/Condo info)
Potential purchasers/buyers need to prepare and complete a detailed “Board Package” containing:
a) thorough application,
b) specific financial information with statements as back-up’s (i.e. bank statements, tax returns, W-2’s),
c) personal and professional letters of recommendation,
d) a letter of employment stating job function/title, salary and length of employment and
e) mortgage information (i.e. loan application, commitment letter and *Aztec Recognition Agreement*) – if financing is involved.
Note: An *Aztec Recognition Agreement* is only required in cooperative closings. The cooperative acknowledges the financial institution’s interest by allowing the financial institution to be first in line if the buyer fails to uphold their agreement by defaulting on payments.
Submitting the Package (Co-op/Condo) (2 - 4 weeks)
Once the purchaser/buyer fully completes the Board Package application it should be forwarded to the Managing Agent of the respective property. The Managing Agent then reviews the Board Package application to make sure all information is complete and all relative documents are submitted. The Managing Agent will also perform all necessary background credit checks. The Board Package application should be very easy to read by providing a table of contents and section dividers.
Note: If all the relative documents and statements aren’t provided, the Board Package application will be sent back to the purchaser/buyer delaying its approval.
Cooperatives: After the purchaser’s/buyer’s Board Package application is approved by the Managing Agent, the buyer then needs to be interviewed by the Board of Directors. If the buyer is approved, he or she is then allowed to set up a closing date with the respective seller. The closing usually takes place at the Managing Agent’s office. As a reference, the minimum time to close with financing can take up to 90 or more days.
Condominiums: After the purchaser’s/buyer’s Board Package application is reviewed by the managing agent, it will be forwarded to the condominium board for approval. Generally, there’s no formal interview – few minor exceptions. If the buyer is approved, he or she is then allowed to set up a closing date with the respective seller. The closing usually takes place at the seller’s attorney’s office. As a reference, the minimum time to close with financing can take up to 60 or more days.
Note: The condominium board has the first right of refusal on the sale, where they would purchase the respective residential unit in question – this rarely happens.
Closing
Before the closing you will perform a walk through of the apartment or home to ensure that everything is pursuant to the deal.
All parties will agree to meet
a) for a co-op at the management agent's office
b) condo or house at the seller's attorney's office.
At the closing the seller's attorney, the buyer's attorney, payoff bank for the seller's mortgage, mortgage bank for the buyer and in the case of a co-op there will also be a closing agent from the management company.
Buyers will bring certified checks for the payoffs that their attorney will provide to them in order to close the deal. Also a buyer will need to bring their check book and photo id.