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NYC Buyers Guide

Buying a home is a major decision and an exciting experience. Once you know owning a home is the right move for you, the first step is to seek professional assistance to navigate you through the unique New York City market.

When you choose GPS real estate to represent you, you are assured the utmost in market expertise, service excellence and industry resources to make the buying process smooth and seamless. This informative guide will help educate you on what is involved in purchasing a home, and will empower you with the knowledge you will need to make a confident decision.

At GPS real estate we are committed to guiding you through your search and transaction to make purchasing your New York City home rewarding and stress-free.

  • The Different Forms of Property Ownership
  • Get Prepared with Your Financing
  • Timeline for Buying a Home
  • Closing Costs

The Different Forms of Property Ownership

Before you start looking, it is important to understand the different types of ownership available to purchasers of Manhattan property.

Cooperative

In Manhattan, cooperatives have been the traditional way to own an upscale apartment for nearly a century, and comprise two thirds of all apartments available for purchase. Co-ops are owned by an apartment corporation. When you purchase an apartment in a co-op building, you are buying shares of the corporation that entitle you as a shareholder to a “proprietary lease.” Typically the larger your apartment, the more shares of the corporation you own.

  • Co-op shareholders also pay a monthly maintenance fee to cover building expenses like heat, hot water, insurance, staff salaries, real estate taxes and the mortgage debt of the building. Portions of the fee are tax deductible; and shareholders can deduct their portion of the building’s real estate taxes.
  • Approval to purchase shares of a co-op must be granted by a board of directors, who also have the authority to determine how much of the purchase price may be financed and minimum cash requirements. All prospective purchasers must submit a “board package” containing a purchase application, personal and professional letters of recommendation plus detailed information on income and assets. The board will also require an interview so they can meet you and ask any questions regarding the information you provided. They can approve or deny any applicant as they choose.

Purchasing a co-op can be intricate, and subletting can be difficult. Each co-op has its own rules and should be considered carefully. The specialists at GPS are experts in this area and well equipped to help you decide whether a co-op, and which one, is best for you.

Condominium

Unlike a co-op, a condominium apartment is real property, and a purchaser is given a deed as if they were buying a house. The difference between owning a condo and a house is that in addition to owning the apartment, you also own a small percentage of the common elements of the building like the halls, stairwells, basement, etc.

  • Each individual apartment in a condominium receives a separate tax bill from the city. There is still a monthly common charge similar to the maintenance charges in a co-op, which is paid to the condominium association to pay for such items as payroll, building maintenance and supplies, management fees, and building repairs. These charges do not include your real estate taxes and are not tax-deductible. They also tend to be lower than in co-ops because there is no underlying mortgage for a condominium building.

The straightforward nature of buying a condo plus the fact that in some cases you can finance up to 90% of the purchase price and sublet your apartment at will makes this form of ownership a top choice for flexibility, especially among investors, foreign buyers and parents purchasing for their children.

Cond-Op

A cond-op is a residential cooperative where the ground floor (typically commercial units) is converted into a separate condominium that’s either owned by an outside investor or the original building sponsor. So while the residential units are a co-op, the commercial units are owned as a condominium by an entity other than the co-op. The co-op does not receive the benefit of the income from these units. People often refer to cooperatives that operate under condominium rules as cond-ops, though this is inaccurate.

Townhouse

Owning a townhouse provides the owner with a “fee simple” ownership of real property. There are single-family and multi-family townhouses which can be lived in or rented out at will. In either case, the owner is responsible for payment of all real estate taxes, maintenance and repairs of the property. The sale of the property may be conveyed to any party without prior approval by anyone other than the homeowner.


Get Prepared with Your Financing

Learning about financing options and what you can afford before you start looking for a home will save time and streamline the buying process. Your Town representative will arrange a meeting with a mortgage broker who will answer your questions about the loan process and determine a comfortable price range. During this early phase of the loan process there are two levels of endorsement:

Pre-Qualified: Based on the information you provide during your initial conversation with a mortgage broker, you are potentially qualified for a stated loan amount, assuming full and accurate disclosure.

Pre-Approved: You will next provide your mortgage broker with information for a detailed background and financial check (including tax returns, credit check & income history). You’ll then get a letter from the lender stating the amount the lending institution would loan you. This commitment is valid for about 60 days. As a note, most sellers require buyers to provide a pre-approval letter with an offer letter.


Timeline for Buying a Home

Now that you’re ready to start your search, here is a general timeline of events. Obviously the first step is to preview properties and schedule appointments with a Town agent. Once you decide to make an offer on a home, in most cases it can take an average of 60 – 120 days to complete the closing process.

  • Prepare the Offer: 1 day
  • Negotiate the Offer & Acceptance: 2-5 days
  • Loan Application & Appraisal, Loan Approval and Commitment Letter, Sign Contract/Escrow Deposit: 2-4 weeks
  • Co-op Board Package & Interview/Condo Application: 4-6 weeks
  • Bank & Attorney Prep Closing: 1-2 weeks
  • Final Walk Through: day of closing
  • Transaction Closing: 3 hours

Closing Costs

Condominiums and Townhouses

For the Seller

Application/Waiver Fee: $500 – $1,000

Pick-Up Fee for Mortgage Pay-Off : $175 – $250

Real Estate Tax and Common Charge Adjustment:

Not really a “closing cost”. Seller reimburses Purchaser for the portion of maintenance and/or Real Estate Taxes that the Seller failed to pay prior to Closing

General

Brokerage Commission: 6% of Sales Price

Seller’s Attorney’s Fee: Consult your attorney

Move-Out Deposit – refundable: $500- $1,000

Move-Out Fee – non-refundable: $250- $1,000

NYC Real Property Transfer Tax:

1% of Sales Price – $500,000 or less | 1.425% of Sales Price – greater than $500,000

Commercial/Bulk Sales Rate:

If 2 or more un-attached units are sold simultaneously to the same buyer, the commercial transfer tax rate applies – 1.425% of the Sales Price if $500,000 or less or 2.625% of Sales Price if greater than $500,000

NYS Transfer Tax: 0.4% of Sales Price

NYS Estimated Capital Gains Tax:

8.97% of estimated gain – paid at closing unless (i) Seller is a NY State resident at time of sale, or (ii) property was Seller’s primary residence for 2 out of the last 5 years, or (iii) Seller has set up a 1031 Tax-Deferred Exchange (investment property only)

Transfer Tax Filing Fee: $75

Federal Withholding Tax (FIRPTA): 10% of Sale Price if Seller is a non-resident foreigner

For the Purchaser

Title Insurance – Owner’s Policy:

Approximately $4 per $1,000 of insurance (fee regulated by statute) plus various search and recording fees totaling an additional $1,000

Title Insurance – Mortgage:

Only applies if the Purchaser is obtaining financing – variable depending on loan amount

Real Estate Tax and Common Charge Adjustment:

Not really a “closing cost”. Purchaser reimburses Seller for the portion of common charges and/or Real Estate Taxes that the Seller has pre-paid

New York State Mortgage Recording Tax:

1.80% if mortgage amount is less than $500,000

1.925% if mortgage amount is greater than $500,000

Title Closer Gratuity: $250

Bank Fees (only applicable if Purchaser is obtaining a loan)

Includes items such as discount points, appraisal fee, origination fee, credit report fee, document preparation fee, courier fee, application fee Variable depending on lender and loan product

Bank Attorney fee: $700- $950

General

Move-In Deposit – refundable: $500- $1,000

Move-In Fee – non-refundable: $250- $1,000

Purchase Application Fee: $500- $1,000

Mansion Tax: 1% of Purchase Price if $1,000,000 or more

Purchaser’s Attorney Fee: Consult your attorney

New Construction  

Sponsor Attorney’s Fee: Consult your attorney

Sponsor’s NYC and NYS Transfer Taxes: Calculated and added to the Purchase Price (to arrive at the tax) and then recalculated based upon the grossed-up price (may trigger Mansion Tax)

Working Capital Fund Contribution : 1 – 2 months of Common Charges

Cooperatives

For the Seller

Flip Tax: Variable depending on the building (if applicable)

Stock Transfer Tax : $0.05 per share

Transfer Agent Fee (Coop Attorney’s Fee): $500 – $750

Maintenance Adjustment:

Not really a “closing cost”. Seller reimburses Purchaser for the portion of maintenance that the Seller failed to pay prior to Closing

Brokerage Commission: 6% of Sales Price

Seller’s Attorney’s Fee: Consult your attorney

Move-Out Deposit – refundable $500- $1,000

Move-Out Fee – non-refundable $250- $1,000

NYC Real Property Transfer Tax: 1% of Sales Price – $500,000 or less | 1.425% of Sales Price – greater than $500,000

Commercial/Bulk Sales Rate:

If 2 or more un-attached units are sold simultaneously to the same buyer, the commercial transfer tax rate applies – 1.425% of the Sales Price if $500,000 or less or 2.625% of Sales Price if greater than $500,000

NYS Transfer Tax: 0.4% of Sales Price

NYS Estimated Capital Gains Tax:

8.97% of estimated gain – paid at closing unless (i) Seller is a NY State resident at time of sale, or (ii) property was Seller’s primary residence for 2 out of the last 5 years, or (iii) Seller has set up a 1031 Tax-Deferred Exchange (investment property only)

Transfer Tax Filing Fee: $100

Federal Withholding Tax (FIRPTA): 10% of Sale Price if Seller is a non-resident foreigner

Payoff Bank Attorney Fee: $375 – $500

UCC-3 Filing Fee: $75 – $125

For the Purchaser

Cooperative Application Fee: $500 – $1,000

Judgment and Lien Search: $250 – $350

Recognition Agreement Fee: $150 – $250

Maintenance Adjustment:

Not really a “closing cost”. Purchaser reimburses Seller for the portion of maintenance that the Seller for

Bank Fees (only applicable if Purchaser is obtaining a loan)

Includes items such as discount points, appraisal fee, origination fee, credit report fee, document preparation fee, courier fee, application fee

Variable depending on lender and loan product

Bank Attorney fee: $700- $950

UCC-1 Filing fee: $75- $125

General

Move-In Deposit: – refundable $500- $1,000

Move-In Fee: – non-refundable $250- $1,000

Purchase Application Fee: $500- $1,000

Mansion Tax : 1% of Purchase Price if $1,000,000 or more

Purchaser’s Attorney Fee: Consult your attorney
New Construction

Sponsor Attorney’s Fee: Consult your attorney

Sponsor’s NYC and NYS Transfer Taxes:

Calculated and added to the Purchase Price (to arrive at the tax) and then recalculated based upon the grossed-up price (may trigger Mansion Tax)

Working Capital Fund Contribution: 1 – 2 months of Maintenance