Buying/Selling Process

Question 1

whenis it given and what is it?

Closing Credit

Answer 1

1. ‘All cash’ sale - no limits on closing credits
2. 6% cap on the closing credit when a loan is involved.
3. More popular with Estate Sales
4. Closing costs (Fees and Taxes) are based on higher sales price.
5. Brokers commission is based on the lower price
6. Rate Buy Downs - not considered a credit to a lender. These are used to achieve a higher sales price when there’s financing involved and can be combined with a closing credit up to 6 percent.

Question 2

A condo or co-op with lower carrying costs can make buying more doable. Here’s where to find one

Answer 2

1. Tax Abatement Buildings -
   - Developers get incentives from the city to build in a particular area or incorporate more affordable housing in the building—and pass the savings on to the buyer
   - buyers should take into consideration the full cost of monthlies when buying. Determine affordability with your lender assuming a normal, fully assessed tax rate, and then pursue a purchase when you understand what you can afford.
2. Pared-back amenities - typically monthlies under $3 per square foot, which would include amenities like a full-time doorman, an on-site super, maybe a gym, pool, or common outdoor space.
3. Board management and building size - healthy reserve fund

• Standard is to have three months of maintenance or common charges in reserve to deal with unexpected events
• Occasionally you’ll find that one building has four times the tax bill of its neighbor. For example, a corner building on Fifth Avenue

4. You may be aware that a percentage of your maintenance in a co-op is tax deductible. The amount varies by building and apartment
   - High Tax Deductibility - above 70% - large underlying mortgage with a high interest rate.
   - Lower Tax Deductibility - Below 35% - No to Low underlying mortgage

Question 3

Co-op vs Condo

Answer 3

1. Co-ops are generally 10% less expensive than condos.
2. Their rules are designed to protect the value of your apartment by ensuring your neighbors are financially sound.
3. Monthlies under $3 per sqft would include amenities like a full-time doorman, an on-site super, maybe a gym, pool, or common outdoor space.

Question 4

Financial Statements of a Building - Look for Healthy Cash Reserve of a Building

Answer 4

1. standard is to have three months of maintenance or common charges in reserve to deal with unexpected events like flooding, boiler repair, or roof damage.
2. strong financials give a measure of reassurance against sudden assessments but carrying costs do inevitably go up over time.
3. advises co-op buyers specifically to review maintenance costs excluding the building’s taxes
4. Occasionally you’ll find that one building has four times the tax bill of its neighbor. For example, a corner building on Fifth Avenue will likely pay significantly higher taxes than an adjacent building along the side street.
5. If a building has lower taxes but similar maintenance, that tells you something about the efficiency of the board’s spending,” she says.
6. Often boards try to keep maintenance in line with buildings in the area, but there may be significant deviations in the services offered in each building, like the number of staff and taxes. Similarly, if a building has unusually low maintenance and hasn’t increased it in years, it’s likely that this building isn’t keeping up with capital costs for building maintenance. Maintenance must be reviewed within the context of building services, taxes, and capital investments all of which can be found in the building’s financial reports
7. Keep in mind, smaller buildings with fewer residents will typically have higher monthly costs because there are fewer residents to share the financial burden of capital improvements. What balances this out is that a smaller building will typically have fewer amenities.

Question 5

Local Law 18 - Short-Term Rental Registration Law

Answer 5

• aimed at eliminating illegal rentals.
• The rules require owners to register their place with the city; in return they are given a registration number that must be displayed on listings.
• Owners and listing sites that are not in compliance can face steep fines.

Question 6

What to expect if you’re a renter: A little more leverage with landlords

Answer 6

1. rent drop in Manhattan - Why are there more listings here than other parts of the city?

• One explanation: In the past year, soaring rents encouraged more owners to become landlords, resulting in a 15.9 percent year-over-year increase in the borough’s inventory in 2023, according to StreetEasy
• But at the same time, landlords have been aggressive about encouraging tenants to renew their leases, and with the seasonal winter slowdown upon us, inventory has piled up.
• Local Law 18, the Short-Term Rental Registration Law aimed at eliminating illegal rentals. The rules require owners to register their place with the city; in return they are given a registration number that must be displayed on listings. Owners and listing sites that are not in compliance can face steep fines.

Many of these units were bought by non-institutional investors who are now faced with the option of either converting to a standard lease with a lower return or selling. As the sales market is not exactly on fire right now, seeking new, longer-term tenants seems like the easy choice.

2. Prepare to Negotiate
   - typical winter slowdown and a willingness on behalf of landlords to make deals.
   - more concessions from landlords
   - how long an apartment has been on the market—if it has sat for more than 30 days you have a better shot at asking for a free month, amenity fee waiver, or even a rent decrease.
3. Where and when to catch a deal
   - Renters likely have until the end of March to catch a deal
   - concessions are typically a feature of the slow season, but they depend on several factors, including the location, amenities, and apartment size.
   - There are more one bedrooms and studios available than two bedrooms and three bedrooms currently, so owners will likely continue to offer concessions for these,
4. Temper Your Expectations
   - owners of luxury rentals will need to lower rents because they are having trouble filling vacant apartments.