Archive for Buyers
Purchaser’s and Sellers Closing Costs Guide
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Closing Costs Guide-Created by Jerry Feeny
Real estate closing costs can be confusing. These PDFs created by Jerry Feeny, a well known and respected New York Metro real estate attorney, cover closing costs (coops, condos, townhouses-and other real property) for buyers and sellers in New York City , The Hamptons and Westchester & Rockland Counties.
We hope you find this guide helpful in ‘demystifying’ the age-old question of buyers, ‘what are my closing costs?’ And from sellers, ‘what costs do I have to pay at closing and what is left over from the sale price?
Reverse Mortgages at a Younger Age?
Posted by: | CommentsOnce associated with homeowners in their 70s, a new report shows reverse mortgages are now being taken out by people nearing retirement. While this may seem like a good idea to help pay off debts and remain solvent, consumer advocates warn of the consequences of exhausting their assets early.
The reverse mortgage allows homeowners 62 and older to borrow against the equity of their home and continue to live in them without having to make payments, as long as the home remains their primary residence. Interest is added to the loan balance which must be repaid after the borrower moves out or dies. The borrower must keep current with property taxes and insurance.
In a report released last month by Met Life Mature Market Institute and the National Council on Aging showed that:
- Homeowners aged 62 to 64 are far more likely to take out a reverse mortgage than they were in 1999, even though they are borrowing less.
- The average age of borrowers who took the federally required reverse mortgage counseling was 71.5, down from 76 in 2000 and nearly 77 in 1990.
- Two-thirds of homeowners seeking reverse mortgages to lower debt levels.
The majority of reverse mortgages come through the Department of Housing and Urban Development and are guaranteed by the Federal Housing Administration through a program called Home Equity Conversion Mortgages.
Some experts caution retirees against reverse mortgages especially early in their retirement because they run the risk of depleting their equity in their most important asset. Homeowners at or near retirement should work with a financial planner or estate lawyer to make sure their plan is clear for the next 20 years of living expenses.
This article is for information purposes only. It is not intended to be legal, financial or tax advice by the Real Estate Geezer. Always seek the advice of a competent legal, financial and/or tax professional.
Based on New York Times article
Lawyer’s Guide to Preparing for a Board Interview
Posted by: | CommentsCongratulations, your presence has been requested for an Interview with the Co-op Board of the building where you’ve been dreaming of living since you found the ‘perfect home’. You’ve been on the roller-coaster ride for what seems like a decade, with contract negotiations, baring your financial soul to all and sundry, and soliciting reference letters to complete the co-op board application. Now is the big day – the Board Interview.
Board interviews are near the top of the strangest and most stressful things New York City residents go through while trying to put a roof over their head. Having enough money to buy the apartment is just not enough; you must pass the interview as well. Interviews run from basic and routine to a microscopic examination of your life and very grueling.
While real estate brokers are typically involved in preparing clients for interviews, sometimes lawyers have the perspective to see the mistakes that sink their contract at the last minute in the interview process. Here are a few tips from one lawyer who has lived through board rejections:
- Don’t Lie. Tempting as it may seem to lie to avoid conflict, it is likely the truth is less damaging than the lie. Trying to cover up the youthful indiscretion that landed you in jail for the night won’t win you any brownie points with the Board. Chances are if they’re asking you about your arrest record, they already know the answer and want to see if you’ll fess up. Explain that you’re not proud of that time and it’s something that you’ve never repeated.
- Explain Renovation Plans in the Right Context: If the apartment is in desperate need of renovation, the board members interviewing you are aware of the situation and are looking forward to someone bringing that unit up to date to increase market value, and create good comps for the other units. Present the plans in the correct light: “You want to update the apartment and have carefully reviewed the alteration policies of the board and plan to follow them to the letter”.
- Be Candid About Your Plans for Using the Apartment: Some boards are not fond of absentee owners, because they typically tend to have lots of guests and generally don’t spend as much money on upkeep on the apartment as those who make the apartment their primary residence. If you plan to use the apartment as a secondary residence, be honest about it and address their concerns.
- Remember the Pets: If you have a pet, be honest about it, and stress that yours are obedient and not a trouble-maker. Explain you have read the rules and understand when and where pets are allowed on elevators and in the lobby. Reassure them that the animal will not be a danger to anyone in the building. You may even be asked to bring your pet in for an interview.
Lastly, be yourself and at ease. Rely on your Broker to prepare you for the process. If for some reason the board rejects you, remember the immortal words of Groucho Marks “I don’t care to belong to a club that accepts people like me!”
Based on article by Jerry M Feeney, Residential Real Estate Lawyer.
New York City Rents continue to Climb
Posted by: | CommentsAccording to an analysis of the rental market by Citi Habitats, the average rent in Manhattan is a mind-boggling $3418 a month, surpassing the all-time high set in 2007 during a booming economy.
Tenants are feeling resentful; already staggering from a year or more of rent increases. Many feel trapped, because it is too costly to move or stay. This could cause renters to shift their focus from renting to buying, but that may not be an option for some due to lack of down payment or credit issues.
According to Jonathan J Miller, president of the appraisal firm Miller Samuel, “When you see rents rising, it is usually reflective of a strong economy, but that is not the case now”. Prices are being driven up by a tight credit market that forces people to stay in the rental market and limits new construction.
Some renters will opt pay more for less – a smaller apartment for less or the same rent they’re paying now. Even so, moving expenses, broker fees and deposits can take even that option off the table. Others are making the decision to share, even putting up temporary walls where allowed and sacrificing a living room.
Even the outer boroughs like Queens and Brooklyn are seeing spikes in the rental prices.
Rental averages are up in every category, with one-bedrooms rising the most, by 6.5 percent over the past year, to $2,747, according to the Citi Habitats report. Studios rose 3.6 percent, to $1,953; two-bedrooms climbed by 6.1 percent, to $3,865; and three-bedrooms rose 4 percent, to $5,107.
There are some exclusions to the average rental price. Since the majority of New York’s rental apartments in Manhattan are rent-regulated in some fashion, they are not included in the average. Also, smaller landlords that do not use brokers would not be included. Renters could find that smaller landlords are more willing to negotiate because they would rather keep a happy tenant with a good payment track record, than to have a vacancy for an extended period of time.
There seem to be few options for renters until developers start to bring more new units to the market, or until another market crash to contain the out of control rents:
- Stay put and try to negotiate or suck it up
- Get a roommate or two
- Move to another rental, neighborhood or town
- Buy
Based on New York Times article.
Manhattan Residential Rental Market Report First Quarter 2012
Posted by: | CommentsThis week, we released our First Quarter report for the Manhattan Residenital Rental Market. Manhattan Residential Rentals Market Overview Q1 2012 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“Landlord concessions continue to be the exception, as rental demand and prices press higher”
- Median net effective rent was $3,064 for the first quarter, 9.1% higher than $2,808 in the prior year quarter.
- Rental price per square foot increased to $52.57, reaching its highest level since the third quarter of 2008, just as the credit crunch began.
- The listing discount, the spread between the original list price and rent, compressed in the first quarter to 2.2% from 2.7% in the prior year quarter. This was consistent with the 14.3% increase in new rental activity over the same period.
- Use of landlord concessions fell to 11.1% within all new rentals from 36.8% over the same period last year.
- New rentals of studios increased 16.1%, 1-bedrooms increased 13.5%, 2-bedrooms increased 14.5% and 3-bedrooms increased 20.7%. The 4-bedroom rental market decreased 21.5% over the same period.
Survey Says: Sellers Getting Real about Real Estate
Posted by: | CommentsA new survey of 600 Real Estate Professionals conducted by Coldwell Banker reveals that home sellers are more apt to price their home in line with market pressures. It also noted other changes in buyer preferences. The survey also showed what today’s buyers are looking for in a new home.
- 51% of sellers are more willing to price their property competitively than this time last year
- 45 % said sellers are more willing to change the appearance of their homes to entice buyers
- 94% said sellers are clearing clutter and painting or making minor repairs
- 78% said sellers are de-personalizing the home
- 59% said sellers are willing to allow staging with new decorations or furniture
Buyers are going back to the basics valuing new or updated kitchens, bathrooms and open floor plans. Motivating buyers are growing families and job relocation.
Source: “Survey Reveals Sellers More Willing to Price Competitively,” RISMedia
Need Another Room?
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You’ve found a great apartment, in the right location, a great price, in a terrific building; in fact it’s almost perfect. The problem is you need an extra room, for the baby, watching late night TV while your spouse sleeps or perhaps a home office. Now what?
The answer could be a temporary wall to carve out the extra space. But it needs to be done properly and meet certain safety standards. And you may need permission from building management or the Board.
Room Dividers NY, 1Wall 2 Rooms, and All Week Walls are a few of the many companies the city install pressurized walls. These so–called pressurized walls are made using only a tension system can accommodate most any size or shape of room, without leaving behind screws or adhesive residue when they are removed, but look and feel like ‘real’ walls. They can be attractive and functional, offering the privacy or separation needed for an office, TV room or extra bedroom. You may even be able to mount your flat-panel TV to one. When the wall is no longer needed, it can be removed.
New York City is aggressively enforcing a long-standing but largely ignored code requiring approval from the Department of Buildings for permanent walls. According to the City Building Department, those wishing to divide a space need to rely on bookshelves or partial walls that don’t reach the ceiling. Temporary walls must not block exit routes or interfere with ventilation or sprinkler systems, as well as meet minimum room size requirements.
This new enforcement stems from a fatal fire in 2005 in the Bronx and subsequent criminal prosecution of the landlords and two tenants on manslaughter charges. According to the city, the illegal partitions put up by the tenants had disoriented the firefighters and lead to their deaths.
Safety is of paramount importance. Egress routes, maximum travel distances as called out by the building code as well as sprinkler coverage, smoke and carbon monoxide detectors should be considered before attempting to place a temporary wall.
Inspired by New York Times Article by Marc Santora.
What Co-op Boards look for in your Financials
Posted by: | CommentsMany co-op boards do a cursory examination of your application: review financials, check references, interview and make a decision. But what does it mean ‘review financials’? In the old days, if the bank gave the ok for financing, that was ‘good enough’; but not anymore.
So what do they look at?
- Debt-to-income ratio
- Mortgage lenders generally want no more than 28% of a buyer’s gross monthly income to the mortgage payment (Principal, Interest, Taxes and Insurance), or a maximum of 36% for PITI and recurring debt (loans, credit card payments, child support, etc)
- Co-op Boards usually want to see something closer to 25-30% debt-to-income
- Income – liquid income
- Generally the last 3 years of tax returns are reviewed for gross income and adjusted gross income
- Earning Potential – if your earnings are less than board guidelines, or assets are too weak, but you can show potential for increased income, the board may approve with conditions such as a year’s maintenance held in escrow.
- Debts
- Boards also consider other debts, student loans, car loans, other mortgages.
- Other Factors
- Location – locations such as Brooklyn or Queens may be less likely to look for large assets and permit more financing than a building on Park Avenue in Manhattan
- Building size – larger buildings could be easier to buy into than smaller buildings because one or two arrears owners have less impact in a 200 unit building than a 20 unit building.
Boards want to protect their co-op, choosing people who are the right fit. They also need to stay within the boundaries of discrimination laws. Reviewing the financials allows the board to decide whether to move forward or not without violating the discrimination laws.
Excerpted from Habitat article
The Admission Process
Posted by: | CommentsYou like the building and apartment, you’ve agreed on the price. Now it’s up to the board. Financially and personally, the co-op board approval process is all about whether you are a good fit for the building. It can seem simple or complex, or simply perplexing. You want to know what is expected of you, either ahead of time or during the interview.
A few tips to make it through the process:
- The board can be discriminating (picky if you will) but not discriminate for reasons of race, color, religion, national origin, sex, age, family make up, disability, sexual orientation or citizenship status.
- Appropriate information for basing a decision
- Can you afford to pay maintenance charges
- How many people will live in the unit
- Income, credit, residential history and employment history
- Some boards request a preliminary application which is reviewed by a board screening committee to determine if a purchaser is eligible. If so they move forward with the full application package.
- Application package
- Residential History
- Bank history
- Employment History
- Hobbies and Interests
- Interest in board or committee service
- Anyone who will live in the apartment
- Full financial disclosures. See our post: What Co-op Boards look for in your Financials.
- Community Values
- Assess compatibility with the co-op and its character.
- Some boards allow opportunity for you to ask your own questions
- Have pets? Some boards want to ‘interview’ them as well (Read about it in our article: Co-op Board Interview for Pets!)
- Each board has their own guidelines
- After the Interview
- After review, the committee will give recommendation to the board, who votes on the purchase.
- Letter sent to seller with decision, with copy to purchaser and co-op’s attorney
- Co-op’s attorney will communicate with all attorneys involved to arrange closing.
Excerpted from Habitat article
Shopping for the Best Mortgage Rates
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Are you enticed by the mortgage interest lowest rates in decades? If so you’re not alone, but they are often out of borrowers’ reach. Lenders base their rates on perceived risk. Only if you can show you’re low-risk would you qualify for a rate that matches those seen in headlines.
If you’re looking for the lowest available rates consider these basic factors:
- Credit Score: The ideal FICO score is around 740 or higher. This will put you in the best place for pricing.
- Points: 1% of the loan amount is a point, and by paying points you can reduce your mortgage rate. Be sure to ask for a zero point quote as well to compare the two rates.
- Property Types: Such property types as duplexes, condominiums in newer buildings or with lower down payments, commercial properties or non-owner occupied properties come with higher rates.
- Down Payment: Experts say putting down at least 25% could lead to more attractive pricing. Lenders offer different breaks on rates if equity is higher.
- Loan Length: ARM and 15-year loans are often lower than those on the 30-year loan. Consider how long you plan to live in the property and weigh your options.
- Other considerations:
- Lock-in: You may receive a lower rate for a shorter lock period 30-45 days rather than the usual 60 days
- Additional ownership costs, taxes, insurance and maintenance.
Inspired by New York Times Article by Vickie Elmer published January 12, 201
Enticing Foreign Investors – Buy a home get a Visa?
Posted by: | CommentsRecnetly, U.S. Senators Charles Schumer (D-NY) and Mike Lee (R-UT) introduced a bill that would allow foreigners who spend at least $500,000 on residential property to obtain visas allowing them to live in the United States. The “Visa Improvements to Stimulate International Tourism to the United States of America Act”, or VISIT-USA Act is similar to an existing program that puts foreigners on a fast track to a green card if they invest at least $500,000 in an American business that creates at least 10 jobs.
The legislation would create a new homeowner visa that would be renewable every three years, but would not be a path to citizenship. There are a number of stipulations and restrictions, however:
- To be eligible, a person would have to buy a primary residence of at least $250,000 and spend a total of $500,000 on residential real estate. Other properties could be rented.
- The purchase would have to be in cash, no mortgage or home equity loan allowed.
- The property would have to be bought for more than its most recent appraised value
- Buyer would have to live in home for at least 180 days each year, requiring paying US Income taxes on any foreign earnings.
- Visa eligibility would be revoked if property was sold.
- Work visas still must be obtained to hold a job.
- Neither buyer nor dependents would be eligible to receive Medicaid, Medicare or Social Security benefits.
Some brokers say that a visa incentive to foreign buyers could potentially even triple sales in their markets.
“California, Florida, New York, Colorado, Hawaii, and Texas — those states will see a huge increase in demand,” Sandra Miller, a broker at Engel & Volkers in Santa Monica, told the Los Angeles Times.
