NYT: Homework for Condo Buyers – The 101’s of Buying a Condo

Concerned about the details you may not know when purchasing a condo?  Well, the New York Times recently did a fantastic article entitled Homework for Condo Buyers that provides potential purchasers with a primer (http://www.nytimes.com/2011/10/30/realestate/getting-started-homework-for-condo-buyers.html?pagewanted=print).  Take a look at a few things the New York Times discussed that you may not have thought of before purchasing a condo.

The Offering Plan

The Offering Plan is typically a complex legal document that is approved by the State and details the building’s and the apartment’s layout.  For example, it shows the appliances and finishes, the size of the apartment, the building’s manager, the monthly fee, and all the details a potential condo-owner would want to know.  The New York Times says that having a lawyer who is familiar with the new construction to go over the offering plan is very important.

Financing a Condo

Financing is not straightforward with a condo.  Although a purchaser may get approved for a loan, the New York Times says, that does not mean that the bank will approve the building.  Fannie Mae and the Federal Housing Administration set various criteria that must be met.  Considerations include whether the building is in a flood zone, the percentage of apartments in contract, and the percentage of investor-owned apartments.  What does all this mean?  Basically, just because a building is approved by Fannie Mae and the Federal Housing Administration does not mean that a bank will approve the building.

Certificate of Occupancy

Before closing, the City Buildings Department must grant a temporary certificate of occupancy.  This process, the New York Times says, may take months and delay the closing.  Fortunately, the Buildings Department allows potential purchasers to check the status of an occupancy certificate (http://www.nyc.gov/html/dob/html/bis/bis.shtml).

Closing Costs

On new construction buildings, closing costs are typically much higher.  In most real estate transactions, the seller pays the transfer tax and his own broker’s fee.  In a new unit, however, the New York Times says, the buyer pays the tax (New York is approximately 2% of the purchase price) and the seller’s attorneys’ fees, which can cost as much as $2,500.

We also have some a few considerations of our own.  Contact NY2 so we can share our insight and expertise on finding your next home.