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?

 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

 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:

1. 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.
2. 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”. 
3. 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.
4. 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. 

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.

Buying a home is the single biggest purchase most of us will ever make. For many, it is a transaction full of fear, worry, and stress. Here are a few secrets to help the stress melt away.

1. Education. Since most of us fear what we don’t understand, educate yourself. Ask questions, and own up to not understanding something. The only ‘stupid’ question is the one that is not asked. Keep asking until you understand the answer.
2. Surround yourself with experts. Finding the right people to help you through the transaction can make all the difference. They will help you manage expectations. Board approvals and financial statements are fraught with pitfalls that your Real Estate Agent and accountant can help you navigate.
3. Be Prepared. Like a Swiss watch, real estate transactions have a lot of moving parts. Any one delay could send the whole timeline into a tizzy. Make sure you plan for delays like attorney reviews and board approval, and add in some breathing room to reduce the stress. 
4. Expect the unexpected. Even when you think you’ve covered all the bases, there can be challenges that will try your patience. The board application can be long and tedious, seemingly prying into every aspect of your life. Requests for clarification give you a chance to fill in the blanks that could mean the difference between approval and denial. 
5. Control what you can. Focus your energy on the parts of the transaction you can control; working on your credit, saving, and finding trusted professionals who will guide you through the process. Having a clear vision of your daily life and personal finances in your new home will help you see past the obstacles to the goal. “An obstacle is what we see when we take our eyes off the goal.” Focus on the goal, and let your trusted professionals guide you through the obstacle course.
6. Let go of the rest. There’s a big difference between knowing what can happen and planning for the possibility, or dwelling on every possible disaster. If fate throws up a roadblock, take a deep breath, consult your experts, and make the best decision you can.

Inspired by Trulia article by Tara-Nicholle Nelson

“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.

If you:

• Need quick access to funds
• Want to avoid traditional mortgage fees
• Are finding it challenging to obtain a traditional mortgage for new construction or investment property
• Are required to verify you have sufficient liquid assets to support the purchase
• Want to use a bridge loan as a short term strategy
• Are purchasing a second home and wanted to use equity in primary residence as down payment value of primary home has decreased significantly

Securities Based Lending using the Portfolio Loan Account may be for you.

• Allows borrowers to use eligible securities in their brokerage account as collateral.
• No  origination, maintenance or facility fees
• Access to available credit without having to reapply for each new loan
• Quick application process, with access to credit in approximately five business days.

This post is based on a document provided by Amit Michael Kapil at Morgan Stanley Smith Barney and is to be used for informational purposes only, not to be considered legal, tax or financial advice by The Real Estate Geezer

• 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

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.

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