SALES FAQ     (CLICK HERE FOR RENTAL FAQs)

1. What is the difference between a co-op and a condo?

2. What is the difference between monthly maintenance charged in a co-op and the monthly common charge in a condo?

3. What is the approval process for purchasing a co-op or condo?

4. Is there an advantage to buying a co-op over a condo? Condo over a co-op?

5. Can I make renovations in a co-op and/or a condo?

6. What are the closing costs for a co-op and a condo?

7. What are the financing requirements when purchasing a co-op?

8. Is there a net worth requirement necessary for passing a co-op board?

9. How does somebody make an offer?

10. What can I do to prepare myself for a bidding war?

11. What am I looking for in a building's financial statement?

12. What are tax abatements?

13. Why do I need an attorney?

14. Do I need a home inspector or engineer to look at the property before signing a contract?

15. Who pays the commission?

16. Who represents me?

1. What is the difference between a co-op and a condo? [TOP]
When you own a co-op apartment you own shares in a private corporation, unlike a house or condo where you receive a deed. Owners also receive a proprietary lease that outlines the rules, regulations and organization of the co-op. In order to sell or rent your co-op apartment, you need the approval of the co-op board.

When you own a condominium apartment you receive a deed and are assigned a block and lot for tax purposes. Real estate taxes are billed twice yearly by the City of New York. The condo board maintains a 'right of first refusal' over all sales and rentals. The board may elect to match an existing contract sale price and/or lease and all terms of a transaction. Condos tend to be in newer construction high rises built from 1985 on.

2. What is the difference between monthly maintenance charged in a co-op and the monthly common charge in a condo? [TOP]
The monthly fee charged by a co-op is called maintenance. This includes all the costs of operating the building including salaries for employees, taxes and any mortgage that might be on the building as a whole. The common charge is similar except that the condo does not have an underlying mortgage and property taxes are paid directly by the owner of the unit to the city.

The co-op maintenance has a portion that is tax deductible. The deduction is generally between 40-60% depending on how much property tax the building pays and how much interest it pays on its underlying mortgage.

3. What is the approval process for purchasing a co-op or condo? [TOP]
In New York City, over 80% of the apartments available for purchase are in co-ops. Purchasers are required to submit a co-op board package which is a detailed application including a documented asset and liability statement, personal and business reference letters, two to three years tax returns plus landlord and bank reference letters. A formal interview is required of each applicant. Condo applications, as a rule, are generally far less extensive and a formal interview is not required. Generally, both co-ops and condos require credit checks of applicants.

4. Is there an advantage to buying a co-op over a condo? Condo over a co-op? [TOP]
Prices tend to be 25-30% less for co-ops than equivalent condos, and there is a fair amount of control over building tenancy. Those are the major advantages for this type of ownership. Co-ops generally restrict subletting to one to two years and some charge a monthly fee for this privilege. Condos generally allow for unlimited subletting though leases must typically be at least one year in length.

5. Can I make renovations in a co-op and/or a condo? [TOP]
Cosmetic renovations such as painting, wallpapering, etc. generally do not need board approval. Major renovations that require plumbing, electrical or wall movement need board approval. You should use a licensed and insured contractor. Work is generally restricted to Monday through Friday, 8:30 to 4:30 PM. Buildings along Fifth Avenue and Park Avenue may only allow renovations during the summer months. Some buildings will limit the number of projects occurring simultaneously within a building. Before purchasing an apartment that requires renovation, a buyer should read the building's alteration agreement.

6. What are the closing costs for a co-op and a condo? [TOP]

ESTIMATED CLOSING COSTS

Coop - Purchaser
  • Attorney $2,500 and up
  • Bank Fees $1,600 for bank attorney, application, appraisal and credit reports.
  • 1% point for mortgage
  • Board Package application $500-$750
  • Flip tax 1-2% of the sales price depending if there is a flip tax in the building (may be paid by seller)
  • Short-term interest (1 month max.)
  • Move-in deposit ($500-$1,000)
  • Lien Search $300
  • Mortgage Document -Recognition Agreement fee $250.00
  • Mansion Tax - 1% of the entire price payable to New York State on prices exceeding $1 million.

Condo or Townhouse- Purchaser

  • Attorney $2,500 and up
  • Bank Fees $1,600 for bank attorney, application and credit reports.
  • 1% point for mortgage
  • Board Package Application $500-$750
  • Short term interest 1 month maximum
  • Real Estate Tax escrow 2-6 months
  • Recording Fees $200
  • Mortgage Recording Tax is 1.8% of amount of mortgage under $500,000 or 1.925% of entire amount on loans over $500,000
  • Fee Title Insurance $450 per $100,000
  • Mortgage Title Insurance $200 per $100,000
  • Violation Search $170
  • Some condos require several months in common charges as a flip tax paid by the buyer (not refundable).
  • Mansion Tax - 1% of the entire price payable to New York State on prices exceeding $1 million.
Please note on purchases of new construction condominiums, it is customary for the developer to charge the purchaser the seller's closing costs (see below).

CO-OP - SELLER
  • Broker: 6%
  • Attorney: $2,500 and up
  • Managing Agent: $500 and up
  • Flip Tax: 1% to 2% of sales price if building has one
  • Stock Transfer: $.05/share
  • NYC Transfer Tax: 1% of purchase price up to $500K. 1.425% of entire purchase price when price exceeds $500,000.
  • NY State Transfer Tax: $2.00 per every $500 of the purchase price.
  • Pay-off Bank Attorney: $300
  • Move-out Deposit: $500-$1,000
  • UCC-3 Filing Fee: $50

CONDO or TOWNHOUSE -SELLER

  • Broker: 6%
  • Attorney: $2,500 and up
  • Managing Agent: $500 and up
  • Flip Tax: 2 -3 months common charges if building has one
  • Title Company Fees: $200
  • NYC Transfer Tax: 1% of purchaser price up to 500K. 1.425% of entire purchase price when price exceeds $500,000.
  • NY State Transfer Tax: $2.00 per every $500 of the purchase price.
  • Pay-off Bank Attorney: $300
  • Move-out Deposit: $500-$1,000

7. What are the financing requirements when purchasing a co-op? [TOP]
Each building has its rules as to how much financing a purchaser is allowed. It is best to get this information from your broker. Most of the buildings between Lexington and Fifth Avenue and along Central Park West do not allow more than 50% financing. Some buildings on Fifth and Park Avenue do not allow financing at all. Nevertheless, there are still a good number of buildings that allow up to 80% financing.

8. Is there a net worth requirement necessary for passing a co-op board? [TOP]
Co-op boards scrutinize the asset and liability statements of applicants in order to insure that the applicant has ample cash reserves remaining after purchase. Once again, each building is different and since these are private corporations, they tend not to put their specific net worth requirements in writing. It is best to check with the managing agent of the building or consult your broker.

9. How does somebody make an offer? [TOP]
Offers are generally made orally, although it is recommended that they be put in writing and submitted to your agent. When making the offer, it is important to state the price, the terms of the sale i.e. financing, closing date and personal property included. Appliances, air conditioners and blinds are customarily included. Excluded are chandeliers, sconces and window treatments. A buyer profile should be included that states job position, salary and bonus.

10. What can I do to prepare myself for a bidding war? [TOP]
The best thing to do is to find an experienced agent. The second best thing is to give your agent a detailed asset and liability statement, a typed biography on yourself and a list of personal and business references. The references should be from well-respected individuals who have known the purchaser for a length of time and who would be willing to write a reference letter. In a competitive bidding situation, often the best offer wins but sometimes the seller considers which buyer has the best offer combined with their potential for passing the co-op board. Sometimes the best package wins and selling yourself as a solid buyer can help you get the apartment.

11. What am I looking for in a building's financial statement? [TOP]
When purchasing an apartment it is important to look at the financials of the co-op or condo. Financial statements will tell you about the building's underlying mortgage, its interest rate and when it comes due. Refinancing an existing loan can lead to higher monthly maintenance fees. Financials will inform you of any pending lawsuits from tenants or other parties. Financial statements will also tell you how much money is in the building's reserve fund. This is money set aside for future repairs. These are some of the major highlights of the statement.

12. What are tax abatements? [TOP]
Many condominiums enjoy the benefit of real estate tax abatements. 421-A is a program in which taxes are phased in over a 12-year period. Generally, taxes are not paid for the first two years and then they are due in 20% increments every two years thereafter. This type of information can be found in the prospectus or black book. You should be able to obtain the prospectus from the listing broker or managing agent for the condo.

13. Why do I need an attorney? [TOP]
In New York County, brokers are prohibited from drafting contracts of sale. Attorneys are needed for real estate transactions. The best thing to do is hire an experienced real estate attorney who is willing to charge a flat fee.

14. Do I need a home inspector or engineer to look at the property before signing a contract? [TOP]
In routine co-op and condo purchases an engineer's inspection is not necessary because structural defects are the responsibility of the building. For townhouse purchases, hiring an engineer is recommended. The same goes for purchasing a brownstone apartment in a building where there are few units and a small working capital or reserve fund. Sometimes penthouse apartments or apartments with terraces in hi-rise buildings leak and in this case, we recommend an engineer.

15. Who pays the commission? [TOP]
In sales, it is customary for the seller to pay the commission.

16. Who represents me? [TOP]
In New York County, it is customary to have two agents. In general a buyer's agent represents the buyer and the listing broker represents the seller. Dual agency is when there is only one broker representing both parties and is the fiduciary of both.

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