In order to secure a home in New York, you need to look into every possible option. A co-op is not the traditional way to buy a property, but it can very well be what you’re looking for! As such, here’s all you need to know about buying a co-op apartment in New York.
What is a co-op apartment purchase?
Unlike a more traditional home purchase, when you are buying a co-op apartment in New York, you are not actually buying the apartment itself. Instead, you are buying shares or an “interest” in a corporation that owns the building. By doing so, you gain the right to a proprietary lease of a portion of the building. The end result is similar, but this does mean you don’t technically own the home you are living in. In addition to this, everyone who owns shares in the building, or in other words, lives there, is part of the building’s “board.” This functions much like a board of directors in a company and allows everyone to vote on decisions that concern the building. The board also has the right to approve or deny the applications to buy shares in the building. This means you’ll have some control over who gets to live there.
Qualifying for a buying a co-op apartment in New York
The process of qualifying for a co-op purchase is somewhat arduous. This is what makes people hesitate when thinking about whether they should buy a traditional condo or opt for a co-op. First, you need to actually be able to afford the down payment, which is at least twenty percent of the total price. Some boards even ask for a fifty percent down payment. Then, you need to prove that you can afford your mortgage and maintenance costs for at least two years following the purchase. Your provable debt-to-income ratio is also very important and needs to be vetted by the board. So, trying to avoid mistakes when applying for a mortgage is definitely not the only thing to worry about when buying a co-op apartment in New York. The co-op apartments are, however, typically cheaper than condos.
Work with an experienced broker
A real estate broker is one of the two professionals whose services you will definitely require when buying a co-op apartment in New York. They are invaluable when looking for co-ops. This is because a lot of the more exclusive options are not even publicly placed on the market. In order to get the best home possible at the best price, not to mention navigate some of the legal proceedings at the start of the buying process, you’ll need a broker. Just like when moving in NYC and looking for movers, going through reviews, etc., it is better to get pros to handle this instead of risking making mistakes.
Hire a competent lawyer
You need to understand that buying a co-op is legally trickier than buying a condo normally. You need a lawyer you can rely on to ensure that your interests are protected when negotiating your terms. And then there’s reviewing your contracts, dealing with the closing process’s legalities, and even preparing for the board interview! On your own, you can only get the best results and avoid buyer’s regret if you have extensive legal knowledge.
Insist on a home inspection
Whether you are renting or buying in NYC, one fact remains the same: you want to be absolutely sure the home is in good condition. The same very much applies when buying a co-op apartment in New York. Now, admittedly, most co-ops are in relatively good condition. However, they are also predominantly older buildings since condos are more popular as new builds. This means that the apartment comes with all the drawbacks and potential pitfalls you’d encounter when buying an old condo. A home inspection could spare you a lot of grief later.
Be aware of the risks of buying a co-op apartment in New York
There are a few potential drawbacks of co-op apartments that are completely unique to them. First, some boards have extensive and rather restrictive rules and regulations for their building. Second, the building management might be outright incompetent or actively working against you by pushing for expensive maintenance contracts. Finally, since the board decides on a lot of aspects of running the building, dealing with incompetent board members is a nightmare. Think carefully about whether you can deal with these things before committing to a co-op apartment purchase.
Offer, contract, and board application
The process of purchase itself is the following: you must make an offer, negotiate the contract, and make a board application. Each step can completely stonewall your attempts to buy a co-op apartment. Even the board application, which comes after your offer is accepted and the contract is signed, can result in a failed purchase. The most important part of the process, however, is contract negotiations. That’s when you can dispute rules and regulations that don’t work for you and state some of your own terms.
The board interview
The final step of buying a co-op apartment before the closing itself is the board interview. In order for your board application to actually be accepted, you need to pass the interview as well. Some exceptions do exist since some boards are willing to immediately pass exceptionally solvent applicants, but that’s rare. New York boards have a reputation for being very thorough and even a little invasive during interviews, so you need to take as much control as possible. Instead of waiting to be prompted repeatedly, simply open up by introducing yourself and your situation. You can head off a lot of questions by providing a few details yourself, so take advantage of the fact! The good news is that once this is over, you will be able to get your New York home officially at long last!
Is a co-op for you?
Now that you’ve gone over everything you need to know about buying a co-op apartment in New York, you can decide whether it’s the best option. Although it comes with some unique challenges, owning a co-op is still a rather enticing option due to relatively guaranteed apartment quality.
Learn all you need to know about buying a co-op apartment in New York so you can decide whether this type of real estate investment is the best option for you!