Section 1 – Decide which type of ownership works best for you: Condo or Coop.

Section 2 – Most of you will probably want to work with a Real Estate Broker –                     but there is no law that says you must.

Section 3 – You need a Real Estate Lawyer lined up before you start looking.

Section 4 – You need to know what you can afford to buy, and there are lots of
                 variables: price, borrowing limits, interest rates, type of mortgage,
                 down payment, ownership costs, debt/income ratios, recurring
                 debts, closing cost and having at least 4 - 6 months of living
                 expenses to spare. We'll review it all here.

Section 5 – You need to be pre-Approved for a Mortgage, not just pre-Qualified.
                 (PS – If Self Employed, There’s hope for you too!)

Section 6 – From Lower Manhattan to the Harlem River boundary – Where do you
                 want to live?

Section 7 – What do you need? What can you afford? The Agony of Prioritizing.

Section 8 – Know whether it is a Buyer’s or Seller’s Market.

Section 9 – When you find a place you Love and you separate needs and
                 wants....make an offer without delay.

Section 10 – Crucial considerations in a market where most contracts have no
                   mortgage contingencies.

Section 11 – You make an offer and the seller accepts….what now? Time to call                     your Lawyer.

Section 12 – Make sure your mortgage broker has everything needed and your                      loan is being processed.

Section 13 – Most contracts have two or three contingencies that can
                   potentially stop a purchase…..we’ll describe them briefly, but make
                   sure to ask your attorney about the specifics as they exist in
                   your purchase agreement.

Section 14 – Submit promptly a board package for board approval, usually with                      your agents help.

Section 15 – Decide if you want to review the apartment floor plan of record                        with the city.

Section 16 – Do you want an independent apartment inspection?

Section 17 – Determine your lender’s insurance requirements, if any. Make sure                      you have adequate personal property coverage before moving.

Section 18 – Upon board approval, your loan can be released, and you can have                    your Lawyer schedule the closing.

Section 1 – Decide which type of ownership works best for you – Condo or Coop.

Condos give you a deed to real property, allow small down payments (as little as 5 or 10%), have a fairly easy board approval process and allow you the option of renting your apartment with few restrictions. And, down the road, selling your apartment is straightforward and generally hassle free. Condo's usually cost about 20% – 30% more than a similar coop in the same neighborhood. And closing costs are often on the order of 3 to 4 times higher. Approximately 20% of the apartments for sale in New York City are Condos. The rest are coops. Details

Coops typically cost less than condos. They convey ownership by selling you shares in a private corporation, and issuing a lease that allows you the right to occupy your particular apartment. Coops generally have stringent requirements for board approval, require more money down (usually 25%), and greatly restrict your rental options. You get to feel, though, what it’s like to be part of a very exclusive club with all members hand selected. And, because an underlying building mortgage is common, many Coop owners get an additional tax deduction beyond what is generally available to condo owners. Also, because of restrictions on renting, most homeowners actually live in their apartments – and this is usually a positive aspect when sharing walls with your neighbors. When you do want to sell, the Coop board has to approve your buyer. Details

Section 2 – Most of you will probably want to work with a Real Estate Broker – but there is no law that says you must.

The entrepreneurial or independent minded among you that enjoys a challenge and doing your own research may be fine without one. When you're done reading our site, there won't be much a broker will tell you that will be new or unfamiliar.

A tip for the more aggressive readers: if you happen to be familiar with a neighborhood and like the looks of a particular coop or condo building, strike up a conversation with the doorman. He can usually tell you if any units are available, and sometimes he has some advanced indication that a unit might be coming on the market. You might have to be creative, hand out a few $20's, but a little sleuthing and street smarts can get you some valuable information ahead of the pack if you’re willing to engage in this kind of research.

What can a good broker offer? In a nutshell, near immediate access to almost all listings in Manhattan. Most brokers subscribe to the RLS (Real Estate Board of New York Listing Service). This is not exactly the same as the MLS found everywhere else in the country, but it’s pretty close. Only a fraction of the available properties are going to be listed in the NY Times, at Realtor.com or other web sites, so a broker or agent has a real advantage when searching for properties.

Knowing the price that was actually paid (not the listed price) on other units in a particular building is, of course, crucial in determining what to offer on the one you are trying to buy. Brokers have experience in obtaining such data quickly, many times while a deal is waiting to close. Condo sales prices eventually become part of the public record through the City Register. Coop sales information is private and does not get recorded at city hall.

So, what do you do if you're one of the independent spirits out there determined to go it alone: try calling the managing agent for a condo or coop building. If you're lucky, she may give you the most recent sales data – or at least a fairly close or "ballpark" figure.

For condo sales, you can access public real estate transactions through records kept in the Office of the City Register using the ACRIS system.

In summary, the true professionals in the business have a lot of integrity, knowledge and expertise. If they have integrity, in our experience, it's a result of their inherent character. Their expertise, however, can only come as a result of working in real estate fulltime for a number of years. They know the various neighborhoods, and many of the more desirable coops and condos in them. They work with other agents, lawyers, lenders and property managers daily. They can recommend the services of professionals if you need such advice.

They usually are skilled at coordinating and advocating on your behalf. They’ll do extensive research and pre-screen possibilities, save you time and footwork, have a good idea of fair market value, and most have negotiating skills and other professional insights that may make the difference in getting an offer accepted, board approval (coops especially), and ultimately owning the place you want.

As it is with professionals in any field, a competent, honest broker that you are comfortable with can be hard to find. If you don’t have one, we can help point you toward some worth interviewing for the job.

Additional Details and Selected Broker Links for Property Searches

Section 3 – You need a Real Estate Lawyer lined up before you start looking.

In Manhattan, when you want to make an offer on an apartment it is first conveyed on an informal offer sheet – typically sent by your agent to the seller's. But to turn it into a binding purchase contract, you've got to have a lawyer available to act immediately on your behalf, engage in due diligence, adjust the seller's contract language to protect your interests and facilitate getting a fair contract signed by all parties.

Desirable apartments don't sit around long. And sellers usually want a buyer to get paperwork signed quickly so the deal is set and moving forward as soon as possible. For these reasons, among others, having a competent lawyer that can respond rapidly to pressing time lines is just as crucial as making an immediate offer on a desired property. Deals can be lost if anyone drags their feet. Again, for those of you that don't have an attorney, we can give you the names of several to interview that specialize in NYC Real Estate transactions. Details

Section 4 – You need to know what you can afford to buy, and there are lots of variables: price, borrowing limits, interest rates, type of mortgage, down payment, ownership costs, debt/income ratios, recurring debts, closing costs and having at least 4 - 6 months of living expenses to spare. We’ll review it all here.
(Need a Mortgage Calculator right off ? – Click Here)

First off, let's acknowledge that a precise answer to the question of what you can afford requires that you speak with a Mortgage Broker or Banker. And for some of you that’s about all you may want to do. Let the banker figure everything out for you.

And if you wish to be pointed toward one, we’ll offer several mortgage broker and bankers for your consideration.

Some of you, however, may be interested in determining for yourself approximately how much you can borrow and what price range you can realistically reach for. If you fall in this second category, the rest of this section is for you.

A few basics for the novice:

• The loan amount depends on the size of your down payment and the apartment's price.

• The monthly principal and interest charges are determined by the interest rate and the amount of the loan.

• The interest rate you get depends primarily on national economic conditions and your credit score.

We'll start with two overview examples that put things immediately into perspective, and then discuss further below each factor in greater depth. Please remember, all examples in this section are only approximations.

Overview of a Condo Purchase – Example 1

Overview of a Coop Purchase – Example 2

Borrowing Limits, Rates and Types of Loans

Down Payment

Ownership Costs Overview

Debt/Income Ratios – Ownership Costs as a Percent of Income

Adjustments for Debts

Insurance Considerations

Closing Costs

Reserves

Section 5 – You need to be pre-Approved for a Mortgage, not just pre-Qualified.

When you find an apartment you want to make an offer on, everything depends on an ability to move quickly. Generally speaking, Manhattan is full of savvy buyers. If you find a property you think is desirable, chances are high that at least a few others will too.

Any desirable property may well receive multiple offers. Sometimes several offers come in to a seller on the same day. Sometimes they come in over a several week period. In any case, if you love the apartment, don't dally; get an offer in right away.

Now, let's say a seller tells your agent over the phone that she is going to accept your offer. This is great and a necessary first step, but until you have a contract signed by the seller, which usually takes a week or two to get in your hands, the seller can dump you if a better offer comes along…..even at the last second. So, the better shape you are in financially, the more likely the seller will stick with you. If you are going to require a mortgage to purchase, your odds of getting the apartment improve significantly if you are pre-approved for a loan.

This process is a little confusing for many buyers because they hear some agents say you should be pre-Qualified before home hunting. Other’s say you should be pre-Approved. They do mean different things. We want to make sure you are clear on the difference.

A mortgage broker or banker can give you a pre-Qualification letter just based on a phone conversation. You tell the banker what your assets are, how much money you have saved for a down payment, what your salary is, what you owe on credit cards and other loans, what your current rent or mortgage payment is. This can all be done using approximate numbers as long as they are fairly close to the exact ones. Some brokers may also check, at no cost to you, your credit report as part of this process.

The banker or broker then issues a letter stating that based on information provided and standard underwriting criteria, you should be able to qualify for a particular sized loan. You are now pre-Qualified and have a letter stating so. This is a "quick and dirty" process, perfectly valid, and may be ok for some buyers that have no real concerns about getting a loan. For many of you, however, there is a better way to go. It is called loan pre-Approval.

To get a true pre-Approval, fill out a loan application provided by your mortgage broker or banker, pay an application fee, and let him submit the application with a credit report to an actual lender. If all goes well, you will get a loan approval from an underwriter with any contingencies that must be satisfied (an underwriter works for a lender, evaluates all the risks a bank is assuming when it lends money, and is generally the only person who can actually authorize a loan).

At this point, then, you are formally pre-Approved. You'll get a copy of a letter saying so. And when you find a property you want to buy, your agent will fax a copy of the pre-Approval to the buyer's attorney. Your bargaining position and credibility are greatly enhanced. Most sellers really like to see that you are this kind of qualified buyer.

Make sure you are honest on your application. Don’t inflate income, hide debt or disavow gifts that will go toward your down payment. If you are self-employed and going for a "stated income loan", the "rules" are a little different, but honesty is the best policy in all cases. Our recommendation is be straight with your banker about all aspects of your financial life, and follow his or her advice.

As long as you know that you can satisfy the loan contingencies – which might include, for example, providing the lender copies of your two most recent pay stubs, three months of bank, money market and brokerage statements, cancelled rent checks for a year, the last two years’ tax returns with W-2's, and possibly a letter from your accountant stating your income or net worth – you will get the loan. This is a true pre-Approval by a lender, not just a statement from a broker that you should get a loan based on normal lending criteria. There is a big difference, and it can mean the difference between having a seller accept your offer versus someone else's.

Section 6 – From Lower Manhattan to the Harlem River boundary – Where do you want to live?

The diversity of neighborhoods in the city is incredible. There generally is something special about living in any part of Manhattan. The fact is, however, you can pay 30% more for an apartment in Greenwich Village or SoHo, than you would for something similar in size and features in the Yorkville section of the Upper East Side.

Some neighborhoods have a relatively calm residential feel to them – Such as along Riverside Drive in the Upper West Side, or along East End Avenue in the Upper East Side. Or even in Battery Park City at the southern tip of the island.

Some are hip, trendy, energetic and artsy – such as SoHo, Greenwich Village, Chelsea, the West Village and the Upper West Side. Others neighborhoods are conservative, rich and often have interesting ego energy – such as sections of Park or 5th Avenue.

To decide where you'd like to end up – you’ll have to get out and stroll the communities to really feel their energy. To experience first hand the mix of shops, architecture, inhabitants and overall vibe.

And then through your own property research or an agents help, decide what you can afford in the section of the city that draws you.

As part of your research we offer several links to help you sort out what section of the city may have that right mix of culture, magic and amenities you need to be happy.

For a map of Manhattan and a description of its neighborhoods try the NY City Official Tourism Website.

Also explore the NYC government site. Note, at this site, after you click on a neighborhood, remember to click on the Community District Profiles available at the bottom of each neighborhood map – this is where great demographic data resides – including schools, parks and public amenities in each community.

Click here for some additional useful links.

Section 7 – What do you need? What can you afford? The Agony of Prioritizing.

Unless your stock options are plentiful and vested, most of you will have to make some hard decisions about what you really must have in an apartment. We might sum up the situation this way: in Manhattan, location is certainly important, but square footage is everything. Translation: if you need floor space, a large living/dining area and several bedrooms, you will generally pay through the nose for it.

As mentioned in the neighborhood section above, for a given price point you'll get larger apartments in some parts of the city than you will in others. But everything is relative, of course. Roughly speaking and regardless of neighborhood, a 750 sq ft one bedroom is a fairly decent size by NYC standards, and can easily run you $500k to 600$k for a Coop, and $600 to $800 for a Condo. There are exceptions, of course, but this gives you a sense of it. And if you need a 2 bedroom, be prepared to really get knocked senseless. A 1000 sq ft unit typically starts in the $800k to $1 million range. And prices just go up from there.

You will have to decide on what you can’t live without, and on everything else you will need to do some pruning or compromising. The key factors for most people: floor plan, enough bedrooms, a sense of spaciousness in the unit, views, sunlight, building aesthetics and services, pet policy and location.

Your job, of course, is to determine the relative importance of each, what is critical and what is of little consequence. Where can you be flexible? We’ll help you sort it out. Details.

Section 8 – Know whether it is a Buyer's or Seller's Market.

It would seem that anyone alive in this country for the past 4-5 years would be aware that nationwide the real estate market has been super heated with prices typically rising 20% to 30% or more per year. Year after year. In Manhattan, the rate of increase in prices has been at the higher end of the spectrum. This obviously has made for a Seller’s market and has meant that once you were seriously ready to buy, you would want to look at appropriate properties quickly. And bidding wars have been extremely common.

Well, the market is still strong, though there is some evidence that apartments in certain price ranges are not rising as fast. Everything is relative, of course, and there is no place on earth where that is more apparent than New York City.

Many people quite knowledgeable in the machinations of New York real estate believe that market forces in Manhattan are a bit different than essentially anywhere else. The key factors that support a vibrant market: average yearly household income of over $185,000 (which tends to rise more rapidly than inflation), plus limited housing supply relative to demand. The average is skewed, of course, by the wealthier residents, but that's Manhattan.

No place is immune to market forces, however, and common sense would seem to say that the rate of increase over the last 5 years can’t go on forever. Exactly what will happen is anyone’s guess. But it appears to be unlikely there will be a bursting of a bubble any time soon, if ever. Most apartments are going to continue to rise in price, but the rate of increase will flatten a bit. If you want to check out hard numbers, the appraisal firm Miller-Samuels provides quarterly summaries of condo and coop sales in Manhattan. At there website click on the Reports section.

The key point: since no one has a crystal ball, make your best guess about Manhattan real estate and proceed from there. In our view, prices will continue to rise, especially among "desirable" apartments. Some combination of location, size, floor plan, architectural details, views, and building prestige or amenities usually make a particular apartment "desirable" or "special". We think that if you perceive a unit to be special, the odds are pretty good that at least a few others will too. And that special apartment will likely command a good price. You could easily still get in a bidding war. So listen to your agent’s advice, be prepared to pay a fair price, and make your best offer quickly. Details.

Section 9 – When you find a place you Love and you separate needs and wants….make an offer without delay.

That word "love" is very important here. You have, by now, a set of "objective" criteria for buying. You've sorted out from a big wish list those features that you can't live without. When you find a place that meets your objective needs and budget, we have a caution to offer: don't buy solely on the basis of being able to put a check mark by each item on your list of desired features.

There is also something intangible to consider, and we believe it is very important. We strongly encourage you to engage your intuition as part of this process. In any transaction, especially one as important as buying an apartment, your instincts will have a message for you, and what ever that message is, it's worth listening to.

If you sense you won't feel some measure of comfort and happiness going home each night, the apartment, no matter how good on paper, probably won't be worth buying. At least not as your home. Something important isn't quite right. If the purchase is purely an investment, perhaps to be flipped in a year or two, or rented out in the near future, then that's another matter.

In summary, before purchasing, remember to listen to those two big voices within, heart and mind. When each gives its blessing, call your agent straight away and make an offer. Details.

Section 10 – Crucial considerations in a market where most contracts have no mortgage contingencies.

Any first time buyer in New York City is going to be in for a shock when they learn about this aspect of the typical purchase contract. And those of you who have bought property elsewhere are going to be totally dumbfounded. You see, in the rest of the civilized world, virtually all real estate purchase contracts have what is known as a mortgage contingency clause.

This means that normally, for the 75% of buyers that do need to obtain financing, a clause is inserted in the purchase agreement that states the contract is contingent on the buyer obtaining a mortgage (or share loan), usually within 45-60 days.

And if for any reason, after making a good faith attempt to obtain financing, the buyer is denied a loan by a bank or other lending institution, she can cancel the deal and receive her deposit back. The typical deposit required for a binding real estate contract in New York State is 10% of the purchase price (though technically this is negotiable). This amount is paid by the buyer to the seller’s attorney at the time the contract is signed. The deposit is held in an escrow account until dispensed to the seller at closing – the day the property actually changes hands.

For the past 3-4 years, purchase contracts typically have had no financing contingencies. This has become the norm in Manhattan real estate. Contingent offers are not seriously considered by many sellers. Why? Demand for apartments has been so strong, that sellers can insist on guaranteed performance of the contract, whether you need a mortgage or not. With this type of contract, if you can't show up at closing with all of the money required, the seller can keep your deposit as "liquidated damages".

The theory, here, is that by signing a contract and taking his property off the market (typically for a couple months at the minimum), the seller has in good faith forgone other potential opportunities to sell free of contingencies. And if you can’t come through with a mortgage within an agreed upon time frame, the law says you violated a binding agreement, implicitly costing him time and money. And thus he has sustained damages and is entitled to collect your deposit as compensation.

As we've said, this isn't the view anywhere else, including most of the other Borough's and Long Island for example, but it’s now the way it’s typically done in "the City". Are there exceptions? Yes, but they are still relatively rare. There are always a few apartments that don’t interest most buyers. Owners of these may allow a mortgage contingency. You can always try, but be prepared for rejection. Especially for units that remain in demand.

So what does it all mean? Unfortunately it's simple: if you have to borrow money to fund your purchase, you probably won't be able to buy unless you are willing to risk losing your 10% deposit. We’ll see how you can reduce this risk to a very low number, but a risk that is "next to nothing" is still not zero. For many borrowers, it will take some guts to buy in this town. Let’s see what steps you can take to calm the butterflies and give you as easy a ride as possible.

Your strategy is fairly straightforward. Obtain loan pre-Approval. Look at the contingencies. Satisfy yourself that you can meet them. At this point you should be 99.9% certain that the bank will lend you the money. Then have the courage to take the 00.1% risk that something could come up that blocks funding of your loan, and make a no-contingency offer anyway. Otherwise, the simple reality is you probably won’t have a chance to buy the apartment you really want in today's market.

Section 11 – You make an offer and the seller accepts….what now? Time to call your Lawyer.

Remember, your real estate agent usually is the one to fax an initial written offer to the seller's agent that states what you are willing to pay for the apartment, the size of your down payment, and typically includes some basic information about you (and your spouse or co-purchasers if applicable), your place of employment, your income, assets and liabilities……and a copy of your mortgage pre-Approval if you are getting a loan.

Note, usually the pre-Approval you are sending at this point is one tailored to the specific property you are buying. Call your mortgage broker, and have her fax an updated version to your real estate agent, with the specific sales price and address information added.

Anyone else making an initial offer is sending the seller the same basic information. We're assuming that after looking over the various offers, the seller chooses yours.

To move forward, now is the time to call your attorney. He or she will immediately get in touch with your agent to confirm the details of the offer, request some information about the apartment building pertinent to the transaction, and contact the seller's attorney.

The seller's attorney draws up the first draft of the contract and sends it to your attorney for an initial review. Even before that first draft arrives, however, your lawyer starts the process of obtaining information needed to protect you and evaluate the basic wisdom of moving ahead with the purchase. She wants to make sure you are not buying into a building with major financial, structural or legal problems……with the probability that you will then inherit your share of the costs required to fix them. Or, we might add, if you do decide to go ahead and buy anyway, at least you were forewarned.

To get the needed information, she requests the following from the management agent for the building: copies of the legal documents that gave birth to the Coop or Condo at its inception (the Offering Plan), the building financial statements, and a couple of years worth of board minutes. This process includes interviewing the building manager to find out if there are any pending lawsuits, environmental code violations, if major maintenance is required in the near future and if special assessments are on the horizon.

All of the above are part of the "due diligence" any competent lawyer must perform quickly and efficiently on your behalf, before you actually sign the contract that binds you to the agreed upon price and terms of the sale. Generally, if you have buyer’s remorse and want to back out after signing, and assuming the seller hasn’t violated the terms of the contract, it will cost you your 10% deposit – maybe more in some cases.

By convention, your lawyer is normally allowed a minimum of 3-4 days to perform the due diligence, and often a seller will allow a week or two for the process to be completed. It is to your advantage, however, to have a lawyer that can complete the needed evaluations quickly, so you can confidently sign the contract without undue delay. Because until it's signed by both parties, the seller can accept another deal and leave you twisting in the wind. And that is a fairly common experience as most Manhattan buyer’s can attest to. Competent counsel without foot dragging is essential in today's market.

A footnote:
Your lawyer will also insure that the contract has language that explicitly states what furnishings – appliances, fixtures, chandeliers, window treatments, cabinets, built-ins, etc – you are purchasing, and that you expect to be left in the apartment when the deal closes and you take possession. Make sure you find the relevant language in the contract and double check it yourself.

Section 12 – Make sure your mortgage broker has everything needed and your loan is being processed.

If you followed our recommendation and have loan pre-approval, then this step is fairly easy and straightforward. You already talked to your lender at the time your agent faxed an offer to the seller, so he should already know the basics of the transaction. In most cases, your lawyer will also have contacted him verifying the purchase terms as they relate to getting a mortgage.

It's worth noting that when you first notified your lender of an impending deal, he immediately entered the property address in a lender database and verified that you can, in fact, get a loan for a unit in that particular building. Some properties, for example, have a rental/owner ratio that exceeds limits as set by many lending institutions. Getting a loan in such a case becomes more challenging. Your lender, of course, will advise you of options if special challenges do exist.

At this stage, then, you are just making sure that the process of getting your loan is on track, and that your broker or banker has everything needed to fulfill the loan contingencies. Much of what he needs, you may already have provided. But you still may be gathering up and faxing copies of some financial, accounting, tax or employment documents required to satisfy all contingencies. Remember, too, you will generally need to follow up by mailing originals. You will also want to verify, at some point, that he received a signed copy of the contract from your attorney. He forwards a copy to the lender, which satisfies one of the loan contingencies.

In our experience, this not a time to dally. Get everything to him within a week or two of signing the contract, if possible. In some cases, such as when you and the seller have agreed on a closing date 3-4 months out, it may seem like there's no need to rush the process of satisfying all of the loan requirements, but we still recommend getting all paperwork done efficiently to avoid last minute surprises, or in case you and the owner decide to move the closing date up.

Section 13 – Most contracts have two or three contingencies that can potentially stop a purchase…..we’ll describe them briefly, but make sure to ask your attorney about the specifics as they exist in your purchase agreement.

The "Board Approval" Contingency

For Coop buyers, your purchase is usually contingent on receiving board approval to buy. And if you don't receive it, for any reason, the deal is cancelled. You get your 10% deposit back, and the seller starts looking for a new buyer.

For Condo buyers, you still need what is generally referred to as board "approval", but it's not the same as with coops – the rules are different. And, interestingly, whether you get "approval" or not, the seller is going to sell. Theoretically to either you or the board. Though practically speaking, it will be to you.

Here is how it works. There is a contingency that must be waived before you can move ahead and take title to an apartment. A clause in the condo declaration or by-laws gives the Board of Managers the legal option to step in and buy the apartment ahead of you, at the price and terms you have agreed on with the seller.

Theoretically they can do this for any reason. It is called in legal terms the "right of first refusal". However, Condo boards rarely have the money or inclination to exercise this right. This happens at most in one out of 50 purchases. Our general advice is don't sweat it. Even though the probability of this happening is virtually nil, if it did, you would get your deposit back.

The Appraisal Contingency

If you need a mortgage to buy, a lender is going to require that your apartment "appraise". This means that a licensed appraiser, hired by the lender, reviews the features of your unit and sales of comparable apartments in your building and neighborhood, and makes a determination that your unit indeed has a market value equal to the sales price you and the seller agreed on. This determination is a judgment based partly on facts and partly on opinion, but in any case it is quite important to all concerned.

The appraisal is primarily for the bank's benefit. Its purpose is to help prevent a bank from lending money on property whose value has, perhaps, been inflated by emotion or other irrational forces. The bank wants the value of its collateral independently verified. If the apartment does not appraise, often your real estate agent can help the appraiser find additional data that supports raising the value. Or, you can, if you have the additional funds in savings, make the bank happy by increasing your down payment by the difference in appraised value and sales price. Though not common today, the seller is always free to offer a price reduction.

If, at the end of the day, your apartment doesn’t appraise and you can't increase your down payment to cover a shortfall, what are your options? Well, they aren’t good if your lawyer didn’t insert a clause in the contract that protects you in such a case.

If you need a mortgage, you probably will have to make a "no mortgage contingency" offer, as we discussed above. But there still should be a provision in the contract that makes the purchase contingent on a satisfactory appraisal. If such a contingency were in the contract, you would get your deposit back under the worst-case scenario.

The Closing Date Contingency

A third contingency to be aware of is the closing date specified in the contract. It is the date on which money and ownership change hands. You and the seller mutually set it, based on advice from your lawyers. It typically takes place 60 to 90 days after signing the contract, but it varies from deal to deal depending on circumstances unique to each transaction.

Your attorney will try and insist on a date that gives you a reasonable amount of time to secure board approval, allow loan contingencies to be cleared, and all contract commitments to be met within the allotted time.

Technically, you are required to meet the terms of the contract on or about the closing date. What this means in practice is that either buyer or seller can normally extend the closing up to 30 days – without invalidating the contract or incurring penalty. So you have a fair amount of flexibility as to exactly when you close. Your lawyer will normally be very vigilant and on top of any issues here.

For informational purposes, we want to state that problems can develop if you have to extend beyond 30 days. You run the risk of the seller canceling the deal – claiming you are not in compliance with the contract and keeping your deposit as damages. Negotiations usually handle this situation. In all cases, of course, follow your lawyer's advice.

Let us add, here, on a more general note that when one party is in full compliance with all contractual terms, and the other, for whatever reason, is not – the party in compliance is in the drivers seat. They can choose to ignore the breach and move ahead with the sale/purchase, or they can create some havoc and possibly stop the sale. As the old saying goes, generally most problems can be solved through additional negotiations. As always, seek your lawyer's advice.

In summary, verify the nature of all the above contingencies (board approval, financing, closing) with your lawyer. And ask your lender or mortgage broker if an appraisal has been ordered.

Note: if you are on a tight closing schedule and need a loan, you want to know as soon as possible that the appraisal won't be an issue. In an inflationary period such as the present, price points often rise quickly and sometimes appraisals don’t seem to keep up. Most of the time, however, they do and appraisals come in at the price you are willing to pay. An appraisal can usually be obtained within one to three weeks of signing a contract. The sooner the better to avoid surprises.

Section 14 – Submit promptly a board package for board approval, usually with your agents help.

Your agent will get you a "board approval package" from the building's managing agent within a few days of signing a contract. Technically the package for a condo board is really a "purchase application", but it is often referred to as an approval package.

Whether it is for a coop or condo, it often looks intimidating. Sometimes it is. Imagine a bundle of 50 to 100 pages (or more) of forms, requirements and information. What does it mostly boil down to?

For condos: "Tell us the basics of your financial condition, especially the details of the past 2-3 months".

For coops: "Tell us everything about yourself, but especially the details of your financial life over the past two or three years…..and don’t spare a thing".

Yes, you have already provided much of this information to your bank to get mortgage approval. Get ready to repeat the process, and expect that for coops, even more information will be required. Relatively speaking, the condo process is usually much simpler than the coop process.

Here's what a condo board typically asks for:

A) Completed Application Form (basic personal information)

B) Copy of the executed Contract of Sale

C) Copy of Loan Commitment if financing is involved

D) Credit Report

E) Employment verification letter stating income and position

F) Copies of two months bank and investment statements

G) Two personal references.

The key to getting condo board approval: provide them everything they ask for. Be honest. Sit back and wait because approval won't be denied. Yes, a rare exception is possible, but your attitude should be that approval is inevitable.

What you are waiting for, officially, is the board to sign a waiver of their right of first refusal. Typically this occurs at their regular monthly meeting. Within 30 days of signing the contract, you should have the waiver in hand.

Here is the typical list for a coop:

A) Completed Application Form (basic personal information)

B) Copy of the executed Contract of Sale

C) Copy of Loan Commitment if financing is involved

D) Credit Report

E) Letter from your bank stating what funds are in your account and how long you’ve banked with them

F) Copies of 3-4 months of bank and investment statements

G) A letter from your accountant stating assets, liabilities and net worth

H) Employment verification letter stating income, position, years employed

I) Two or three years tax returns

J) 3 letters from people you work with

K) Three personal references

L) Supportive letter from a previous landlord

When you buy a coop, you share directly the responsibility of paying the building mortgage and real estate taxes with your fellow shareholders. If you don’t pay your share (by staying current on your maintenance payments) your fellow tenants have to make it up. There really is no other choice. There could be a judgment or even foreclosure issued against the entire building as a worst-case scenario.

If you buy a condo, you and you alone are responsible for any mortgage and taxes owed. If you don't make a payment, the bank or city goes after you, they don't go after the building or your fellow condo owners. So coops are more conservative than condos in terms of setting the financial requirements for a potential buyer. They really want to check you out and view all of the supporting documentation. And they clearly want to know something about your character through numerous references.

The main reasons people are turned down by coop boards are:

They don't meet the income or net worth requirements.

Too much debt.

Inadequate liquid reserves.

They indicate they will not abide by the pet policy.

Present themselves at the board interview in an abusive, offensive or dishonest manner. Details.

Section 15 – Decide if you want to review the apartment floor plan of record with the city.

If you know or suspect that the floor plan has been significantly altered from the original, you may want to go to the Department of Buildings, Records Division, 280 Broadway, 3rd Floor in Manhattan, and look at the recorded floor plan on file with the city. All you need is the property address. Unfortunately, at present you have to go in person to view the floor plan records.

If major changes were made to the unit, alteration plans should have been submitted to a plan examiner for approval, or drawn up and approved by a licensed architect. In either case, they would have been filed with the city. A record of permits approving alterations to an apartment can be found on line through the Department of Buildings website (note, once at the site, enter the Borough and apartment address to retrieve the information – at present this site shows permits only, not floor plans).

If work was done without approval or permit, and it is not in compliance with building codes and zoning laws, it may have to be redone or even removed and the original footprint restored. As a practical matter, none of this is probably going to be an issue unless you decide to remodel extensively, and need to get building permits today to proceed.

But it may become an issue down the road when you decide to sell, and the new buyer wants to remodel and discovers a problem. One, that you as the seller, may have to rectify before closing, or worst case, deal with after closing as an issue that hangs around haunting you until finally resolved legally. We don’t think this is a critical issue most of the time, but if you have any concerns, check it out. Ask to speak with a plan examiner about a real or "hypothetical" situation if you want the Department of Building's take on a situation. And talk to your attorney, as required, for relevant legal advice.

Department of Buildings

Section 16 – Do you want an independent apartment inspection?

You're making a major purchase. Of course you wonder about the physical condition of the apartment you're considering. It seems only reasonable to have a professional inspector determine potential problems and defects before you commit?

Well, however logical or reasonable the notion, here's the reality in Manhattan: most people buy an apartment without a professional inspection. Our advice in general is, forego the inspection.

Or if you choose to have one, consider it as advisory only. It can make you aware of defects before purchasing, but in our experience if you re-write the purchase contract to make it contingent on certain repairs to the unit, you are - in nine out of ten cases - going to kill the deal. The seller won't sign, or the board won't approve the sale, and the deal will die.

This may defy common sense to many of you but, if interested, here's the story.

Section 17 – Determine your lender's insurance requirements, if any. Make sure you have adequate personal property coverage before moving.

We discussed insurance considerations in our section on mortgages and loan requirements. Here we want to briefly review a couple of important points.

Normally your lender will be happy with a building's Master Insurance Policy as protection of its collateral in case of fire or other risks. You as an owner should also review the declarations page of the master policy to know exactly what it covers and that it will pay to rebuild your floor plan if a worst-case scenario occurred.

Occasionally, a lender may want additional coverage – though this is not common. Review your loan contingencies to find out.

Our real emphasis here is: make sure you have adequate personal property coverage to protect your furnishings before you move in.

And decide if you need an additional umbrella liability policy. Individual condo owners – as well as the building itself – can now be sued if someone walking by on the sidewalk is hit by a brick from above. Coop owners are tenants and would generally be immune to liability stemming from common area hazards. Consult your lawyer and insurance agent for advice.

Section 18 – Upon board approval, your loan can be released, and you can have your Lawyer schedule the closing.

Usually the last thing you are waiting for is the approval of the coop board, or the waiver of the right of first refusal by the condo board. Once your lawyer calls with the good news and your lender receives a signed copy of the relevant form, funds can be released. At this point, baring something unforeseen, go ahead and schedule the actual closing date.

Do finger and wrist exercises in preparation for signing lots of papers.

A few days before the closing, do a final inspection of the apartment.

Check that all items included in the sales contract are still there.

Turn on the utilities in your name.

On the big day, allot 2 hours for the process. Your lawyer will tell you exactly what to bring. So you have an idea ahead of time, the following are typical:

Your Lawyer will tell you the amount of various checks. Most will be certified or bank teller checks drawn on funds at a New York State bank. You will also bring half dozen personal checks for last minute adjustments.

Photo identification – usually drivers license.

Original cancelled down payment/deposit check.

When all papers are signed and checks issued, you get the keys to your new home.

Congratulations, you did it! You’ve not only survived, you’ve got a new home of your own! If you also want to do some renovations, proceed to our next section: The Remodeling Process

Return To: The Purchasing Process – The Menu for Buying

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