Home Buyers Guide SAMPLE
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8/10/2019 Home Buyers Guide SAMPLE http://slidepdf.com/reader/full/home-buyers-guide-sample 1/20 elika associates Home Buyers Handbook THE NEW YORK GUIDE TO BUYING THE HOME YOU WANT Written by Gea Elika
Transcript of Home Buyers Guide SAMPLE
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elika associates
Home Buyers
HandbookTHE NEW YORK GUIDE TO
BUYING THE HOME
YOU
WANT
Written by Gea Elika
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ELIKA REAL ESTATE: HOME BUYERS HANDBOOK
iAll Rights Reserved, Copyright 2014, Elika Associates
Table of Contents
An Introduction to Home Buying in NYC .......................................... 1 + The Co-Op Advantage ............................................................................................... 2
+ Elika is Here to Help...................................................................................................2
+ Timing is Everything ................................................................................................ 3
+ Compromise: An Essential Buying Skill ..................................................................4
+ A Premier Market on a Global Scale ....................................................................... 6
+ Getting Started ..........................................................................................................7
CHAPTER 1:Is it Time to Buy Your First Home? .................................................... 9
+ Rent or Buy: Which is Cheaper? .............................................................................10
+ A Look at the New York Housing Market .............................................................11 + What to Expect in the Future ..................................................................................12
+ Additional Costs of Homeownership .....................................................................12
+ Your Home as an Investment ............................................................................... 13
+ Planning for the Future when You Purchase a Home .........................................15
+ Considering Opportunity Costs ............................................................................ 16
+ New or Resale: Which is Right for You? .............................................................. 16
+ Are You Ready to Buy Your First Home? ............................................................. 18
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CHAPTER 2:Preparing to Buy Your Home ......................................................... 19
+ Tips for First-Time Home Buyers ..........................................................................20 + Avoiding Rookie Homebuyer Mistakes .................................................................23
+ Choosing a Tech-Friendly Property........................................................................23
+ Getting Your Finances in Order ..............................................................................24
+ Budget Worksheet Example ...................................................................................26
+ Real Estate Board of New York Financial Worksheet .........................................27
+ What Affects Your Credit Score? ............................................................................29
+ How to Improve Your Credit Before You Buy ........................................................30
+ Finding the Ideal Neighborhood ............................................................................ 34
+ Mentally Preparing Yourself for NYC’s Tight Market ..........................................35
+ Before You Start Shopping for a Home: Your Checklist ......................................37
CHAPTER 3:Understanding New York City Real Estate .................................. 39
+ Condo vs. Co-op: What’s the Difference? ..............................................................40
+ The Basics of NYC Co-Ops ......................................................................................45
+ What You Need to Get Into a Co-Op .................................................................... 46
+ The Advantages and Disadvantages of Owning a Co-Op ...................................46
+ Co-Op Board Interview Tips ...................................................................................47
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+ The Basics of NYC Condominiums .......................................................................50
+ How NYC Condos Operate .................................................................................... 51
+ Understanding the Pros and Cons of Condos .................................................... 52
+ Questions for the Condo Board ............................................................................ 54
+ The Process of Buying an NYC Home ..................................................................56
+ Buying a Home Checklist .......................................................................................58
CHAPTER 4:
Working with a Buyer’s agent ........................................................62 + Why Should You Work with a Buyer’s agent? .......................................................63
+ Questions to Ask your Buyer’s agent .....................................................................64
+ Understanding the Different Types of Agency ................................................... 67
+ The Importance of a Qualied Buyer’s Agent ...................................................... 68
CHAPTER 5:Mortgage and Financing for Your Home ...................................... 71
+ How Much Mortgage Can I Afford? ...................................................................... 72
+ Mortgage Variables ................................................................................................72
+ Home Finance Processing Checklist ....................................................................73
+ Questions for Your Lender .....................................................................................81 + Documents Your Lender Will Need ........................................................................82
+ Alternatives to Traditional Financing Requirements ...........................................83
+ Pick a Mortgage Checklist .....................................................................................84
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CHAPTER 6:A Step-By-Step Timeline for Home Purchasing ............................. 87
CHAPTER 7:Open Houses, Negotiating, Closing & Moving ................................90
+ Open Houses ............................................................................................................91
+ Negotiating ............................................................................................................. 92
+ Winning a Bidding War ...........................................................................................93
+ Home Inspection Checklist .....................................................................................95
+ The Final Walk-Through .........................................................................................96
+ Your Guide to What Happens At Closing ..............................................................96
+ Understanding the Buyer’s Closing Costs ............................................................98
+ Condominium Closing Costs ................................................................................ 99
+ Co-Operative Closing Costs ................................................................................ 101 + Your Closing Documents .................................................................................... 102
+ Moving Like a Pro ................................................................................................. 102
+ The Most Crucial Step: Submitting Your Offer .................................................. 104
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CHAPTER 8:Warranty and Insurance Considerations ..................................106
+ Check Your Home Warranty ................................................................................ 107 + Understanding Homeowner’s Insurance ............................................................ 107
+ Tips to Lower Your Homeowner’s Insurance Premium .................................... 108
+ Understanding Title Insurance ........................................................................... 109
+ Home Insurance Inventory Checklist ................................................................ 110
AFTERWORD:Your New York City Real Estate Advocate .................................112
APPENDIX A:Important NYC Phone Numbers ....................................................113
APPENDIX B:Useful NYC websites ......................................................................114
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Buying a home in New York City is a pipedream for many and a reality for a lucky
few. Not surprisingly, making the Americandream of homeownership come true in theBig Apple is a bit more challenging than inother cities. New York City has the highestcost of living in the United States, whichmeans qualied homebuyers will need jobsecurity, nancial stability, and tremendousscal discipline. Additionally, the city’s realestate market is notoriously exorbitant,with limited inventory and competition fromhomebuyers and investors worldwide.
An Introductionto Home Buyingin NYC
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TABLE OF CONTEntS2All Rights Reserved, Copyright 2014, Elika Associates
The Co-Op Advantage
Although still competitive, co-ops
remain the most affordable andaccessible option due to barriersprecluding international buyers. Gearedtoward primary home buyers, co-opsrequire an extensive application processas well as an interview. The processcan be quite grueling and not necessaryfruitful; imagine presenting two to three
years’ worth of income tax returns andschedules, a complete snapshot of yournancials (assets, liabilities, income, andexpenses), and up to a dozen referenceletters only to have your applicationdenied. By contrast, a condo boardcan only deny an application undervery specic circumstances (e.g. thepresence of a criminal background).Co-ops, however, have the right to rejectapplications without reason.
Elika Is Here to Help
In New York City — particularly in
Manhattan — home buyers face anelevated (and often unexpected) level
of competition with many applicantsvying for any given property in today’s
low-interest-rate market. After reviewingour home buyers’ handbook, though,you’ll be better equipped to enter themarket fully knowing the challengesthat lie ahead. Whether you’re in themarket for a house, condo, or co-op, itwill help you prepare for and understandthe entire home-buying process frommortgage pre-approval to closing thedeal. You’ll also nd valuable advice onhow to compromise in the quest for your
dream home, which, in a location likeNew York City, is a must-have skill.
An exclusive buyers’ brokerage, ElikaAssociates represented thousands ofclients over a decade and helped buyerssuccessfully navigate the intricaciesof Manhattan real estate. Through our
work with buyers of disparate economicstatuses from all over the world, wehave managed to compile this handbookbased on the questions our buyers askedus over the years. Our goal is to not onlyto help you understand what it takes tosucceed as a buyer, but also to instill thecondence requisite to come out on topin the most competitive housing marketin the United States.
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TABLE OF CONTEntS3All Rights Reserved, Copyright 2014, Elika Associates
security that most lack during economicdownturns, thus forcing many to sellinstead of buy.
The catch-22 with Manhattan real estateis that people are often forced to buy asmaller condo or co-op than they wouldlike or need to grow. One of the biggestreasons buyers end up losing moneyon real estate is that they outgrow anapartment due to a life event, such as a
marriage or birth, and end up having tosell prematurely.
To avoid this predicament, make sureyou buy with the prospects of thefuture in mind. Ideally, you will want tostay in your new home for at least veyears, so try to choose a place that canaccommodate the life changes youanticipate within that period. Of course,you might still make a prot even if yououtgrow your place, but you can avoidthat gamble by leaving yourself room forgrowth when you buy.
To draw an analogy, Manhattanreal estate is much like a poorlystocked supermarket where shoppersnevertheless continue to pour throughthe doors. To an extent, it’s almost likethe Manhattan market is immune to thevagaries that ravage the markets of less-desirable areas. For example, lookingback at the years following 1990, theUnited States experienced the savingsand loan debacle, the tech bubble, 9/11,
and the 2008-2012 global nancial crisis.Through all these ascos, the real estatemarket in New York City stayed robust,with buyers clamoring at every turn.
Timing Is Everything
While timing is important whenbuying a home, it is generallyill-advised to delay buying in
an effort to time the market exactly.Historical data show that holding on toreal estate in New York City for the longrun is always protable so long as youare not forced to sell. Similarly, statistics
also show that the best time to buy ahome is often when the economy is atits worst. Of course, to do so, you musthave the nancial wherewithal and job
MAKE SURE YOU BUY WITHTHE PROSPECTS OF THE
FUTURE IN MIND
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TABLE OF CONTEntS5All Rights Reserved, Copyright 2014, Elika Associates
Sample Pros, Cons, and Compromises Comparison
Table Worksheet
Neighborhood
Area Schools
Transportation Options
Style of Home
Condition of Home
Home Features
Parking
Yard/Garden
Patio/Deck
Privacy Level
Proximity to Work
Proximity to
Entertainment /
Culture
Wish List Pros Cons Compromises
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TABLE OF CONTEntS6All Rights Reserved, Copyright 2014, Elika Associates
A Premier Market on a
Global Scale
You have probably heard realestate gurus chant the refrainof “Location, location, location!”
in describing what matters most ina property, and that is good news forpotential New York homebuyers. Notonly is New York City a premier location
within the United States, but also one ofthe best worldwide. Foreign buyers enterthe New York market in droves becauseof its neighborhood safety, nancialstability, and political transparency.When compared to other global citieslike London, Hong Kong, Moscow, Paris,and more, the city is also remarkable for
its affordability.
Of all the areas in New York City,Manhattan is particularly appealingand sought-after. It’s an island withlimited land mass with little to novacant properties. Air rights can berestricted and if available expensive
as well. Combined with soaring landprices, it’s becoming more and moredifcult for developers to build enoughhousing (affordable or otherwise) to
help facilitate demand. It addition to lowinventory and global demand, Manhattancontinues to grow in population andprestige.
Indeed, one of the attributes of theNew York City real estate market thathas allowed it to remain consistentlyprotable is its attractiveness to foreignbuyers and investors. When recessionsand other nancial hardships strike the
United States, those who have madetheir wealth abroad seize the opportunityand bring their money to a market theyknow is stable and lucrative.
American homebuyers have a tendencyto underestimate the appeal of politicalstability and nancial security to foreigninvestors. These investors know they cancount on the U.S. government to protecttheir property rights, and they know theyare likely to come out on top if they stayfor the long-term.
NOT ONLY IS NEW YORK CITY APREMIER LOCATION WITHIN THE
UNITED STATES, BUT ALSO ONEOF THE BEST WORLDWIDE
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+ Preview properties, sort throughundesirable listings, and providesuccinct lists of the best availableoptions
+ Perform a comprehensivecomparable market analysis toestimate fair market value
+ Provide unbiased, expert knowledge
+ Negotiate on your behalf
+ Connect you with reputable attorneys,lenders, engineers, architects andexpeditors
+ Assembling, preparing, and reviewingyour Condo and Co-op boardapplications before submission
+ Offer post-closing services to help
you with your move
If you would like to hear more abouthow Elika can help meet your housingneeds, please contact us today. If youare looking for a home in the Bronx,Queens, and Long Island areas, we highlyrecommend seeking the services of an
exclusive buyer agent. Of course, whilean exclusive buyer agent is ideal, ourservices are not available in all locations.
Getting Started
So are you ready to start looking
for your ideal New York Cityhome? Our handbook will walk youthrough every step of the process. Ourmission in writing the handbook was tocreate an authoritative yet accessibleguide that buyers can take along as aquick reference while hunting for theperfect home.
While this book is an excellent resource,
it is not intended as a substitute for anexclusive buyer agent. Elika Real Estateis the only Manhattan-based exclusivebuyers brokerage that is a member ofthe National Association of ExclusiveBuyer Agents (NAEBA) and that adheresto a no-listing policy and the bylaws of
the NAEBA. We service many areas ofNew York City and would love to assistyou in nding your next home. Here are just a few things a buyer’s agent can dofor you:
ELIKA REAL ESTATE IS THE ONLYMANHATTAN-BASED EXCLUSIVE BUYERSBROKERAGE THAT IS A MEMBER OF THENATIONAL ASSOCIATION OF EXCLUSIVE
BUYER AGENTS
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If one is not available in your market,you might instead seek a buyeragent that has serviced the area forat least three years. Additionally,dedicated buyer agents should alsohave completed the ABR, AccreditedBuyer Representation course, CBRCertied Buyer Representative as wellas the CNE, Certied Negotiation Expertaccreditation. Agents with numerousaccreditations demonstrate their
commitment to excellence and customerservice, as well as being members oflocal real estate boards like the RealEstate Board of New York (REBNY). Happy
hunting!
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FOR SALE
For most people growing up, the idea of owning yourown home someday was a given. It was a symbol ofthe American dream. In fact, federal housing policywas designed to encourage homeownership foreveryone. Tax laws were written to give tax breaks tohomeowners. The Federal Housing Administrationunderwrote riskier loans with low down paymentsso more people could qualify for mortgages. TheCommunity Reinvestment Act of 1977 encouraged
lenders to extend credit to lower-income individualsto further expand homeownership. These policiesworked, and homeownership rates were at near-record highs by 2006.
Is It Timeto Buy YourFirst Home?
CHAPTER 1
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In no time, the housing bubble burstin a catastrophic way, leaving the U.S.housing market in shambles. Potentialhomebuyers—quite reasonably—werereluctant to jump into a market indecline. From 2006 to 2012, apartmentand home values plunged by nearlya third, and nearly a quarter of allhomeowners found themselvesunderwater on their mortgages.
Fortunately, since 2012, apartment and
home prices have risen steadily andeconomists project that the marketmay nally stabilize. Home buildersand developers are responding to themarket improvements by building newapartments and homes, and morehomeowners have recovered theirproperty values, making it possible tosell existing apartments and homesagain, and some for record prices.
While credit is still tighter than it wasin 2006, well-qualied buyers have notrouble securing mortgages at favorableterms. With that said, is it time to buyyour rst apartment or home?
Rent or Buy:
Which is Cheaper?
The answer to this question hinges
greatly on geographical location;although, certain variables likeinterest rates and inflation are calculatedat a national level. A 2014 reportindicates that on average, buying is 38percent cheaper than renting. In theNew York City area, purchase costs arehigher than average, but buying is still 22
percent cheaper than renting.
In fact, New York City rents haveskyrocketed in the past decade; between2000 and 2012, median rents rose over75 percent while real median incomedropped about ve percent. Currently,median rents for a one-bedroom
apartment range from $1,950 in LongIsland City to $3,200 in Midtown – andthat goes all the way up to $4,300in Tribeca.
NEW YORK CITY RENTSHAVE SKYROCKETED IN
THE PAST DECADE;BETWEEN 2000 AND 2012
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city, condo prices climbed ve percent in2013, and they’re expected to rise another7.4 percent in 2014. Co-op prices, bycomparison, were down by ve percentduring this time, and the average price ofa 1-3 family dwelling rose by ve percent.While gains in Manhattan were modest,prices in the outer boroughs like Queensand Brooklyn grew by double digits.
What does this mean for a rst-time
homebuyer? Historically, the New Yorkreal estate market has been more resilientthan other parts of the country; for themost part, it has completely recoveredfrom the effects of the crash. As a homebuyer, it’s always more advantageous toget in at the lower end of a rising market,and it appears that New York’s gradual
rise is a trend that’ll continue well intothe future.
The combination of historically lowinterest rates and steadily risingapartment and home prices are a goodindication this may be the right time forrst-time homebuyers to enter the market.
Is it possible that rental costs willbecome cheaper than buying? In citieslike Honolulu and San Francisco, wherehome prices are rising rapidly, the tippingpoint could come sooner. The calculusrests on mortgage interest rates, whichare historically low and—of course—willeventually rise. Experts say that forregions where buying is 10 percentless expensive than renting, the tippingpoint will come when interest rates hit
5 percent.
In the New York City market, interestrates would have to rise to approximately6.5 percent before renting will be lessexpensive than buying, according toindustry estimates.
Given these encouraging economicfactors, it may be time to buy your rstapartment or home.
A Look at the New York
Housing Market
According to CoreLogic Case-Schiller’s 2014 forecast, the NewYork metro area is the hottest
housing market nationwide. Across the
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Your Home as an
Investment
In the literal sense of the word,the home you live in isn’t a true“investment.” That runs contrary to
conventional wisdom, but here’s whyit’s true:
+ Apartment and home prices havegrown only slightly more than
inflation for more than a century.What this means is that if you boughtan apartment or house in 1980, paidoff the mortgage, and sold it in 2010,you’d have about the same buyingpower as you did at the start.
+ The real estate market is a lot like
the stock market. As a general rule,it tends to increase over time, buttrying to gauge the perfect time tobuy and sell is an imprecise science.When you want to sell your homesometime in the future, if you’re lucky,it won’t stay on the market longerthan a year. No one can guarantee
that’ll happen, though, leaving youunable to access your capital. It isdifcult to predict what will happen toyour neighborhood, development, or
you purchase your home with less than a20 percent down payment, most lendersrequire private mortgage insurance(PMI), which further adds to yourmonthly payment.
If your new apartment or home isa condominium or co-op, you’ll paycommon charges or maintenance feesthat often are quite substantial to coverthe services your building provides.
You may also be subject to occasionalassessments for unexpected expensesassociated with building maintenanceand repair. In a single-family home,owners need to have an emergencyfund to pay for maintenance, repairs,landscaping, and any renovations thehome may require.
Many new homebuyers make themistake of assuming that if a monthlyrent payment is about the same astheir principal and interest payment ona mortgage, they can afford to buy ahome. It’s important to remember thatthese monthly costs are just a small partof the price of homeownership.
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surveyed millionaires saying theyplanned to buy within the next12 months.
Owning your own apartment or homecan be a wonderful thing. It’s a shelterand a source of pride for you and yourfamily. It often provides a cheaper overallhousing alternative to renting. But it isn’ta guaranteed investment.
Don’t think of the apartment or home
you and your family live in as aninvestment; it could cloud your thinkingand lead you to make buying decisionsthat aren’t optimal for you. Buy anapartment or house because you andyour family love living in it, it meets theneeds of your family, the schools aregreat, and you enjoy being part of thecommunity—not because you think it’llbe a great investment.
market in ve or ten years down the road.
+ Just like stocks, you have to sell your
apartment or house when you wantto use the prot your investmentgenerated. However, unlike stocks,when you sell your apartment orhouse, you’re selling the roof overyour head.
Some of the wealthiest people in the USA
build their wealth by owning homes andreal estate. Even if you aren’t generatinga high rental yield, buying the rightproperty nonetheless can be an excellentinvestment. Owning a home is buildingwealth; it gives savvy buyers years tocompound that wealth and accumulate
more property. For example, if someonehad bought a home in NYC 30 yearsago, that person’s net worth would haveinflated by approximately 1000%.
More than three quarters of investorsworth $1 million+ own real estate,according to a study conducted by
Morgan Stanley. Directly owning privateand commercial real estate was citedas being the number 1 alternativeinvestment choice, with 33% of the
MORE THAN THREE QUARTERSOF INVESTORS WORTH $1
MILLION+ OWN REAL ESTATE
