Amid the continued volatility of the New York City housing market at the dawn of a new year, we checked in with a wide range of real estate experts--from a closing lawyer, to a mortgage broker to a pest control operator and more--for their best under-the-radar buying and selling tips for 2012.
We asked them what they would tell a close friend or family member looking to buy or unload of a New York City apartment this year. Here's what they said:
1. Real estate broker: Fred Peters of Warburg Realty
For buyers: If you’re willing to do your own renovation, you’re likely to have more flexibility. Be willing to renovate after you’ve bought the apartment, because the market really favors renovated apartments in terms of resale opportunities.
For sellers: It’s all about the price. You have to look at your property with an outsider’s eye. Strip yourself of your emotional attachment and analyze it as if you were a buyer, in order to price it in a way buyers will respond to.
2. Industry watcher: Sofia Song of StreetEasy
For buyers: Only buy if you think you can stay in the apartment long-term, meaning more than five years. … This is not a market for flipping. In a stagnant market like this, you’re not going to expect to make a huge profit if you flip it. You might be exposing yourself to a big loss. Even if you get the same amount that you paid for, you would still not be able to cover closing costs.
If you’re in it for the long-term, it makes sense to buy because mortgage rates are super low, historically low, and you can ride out this market.
For sellers: It's a buyer's market now. Back during the boom, properties in any condition were getting snapped up. These days, properties will need to be really compelling in terms of price and condition in order for buyers to commit.
3. Mortgage broker: Melissa Cohn of Manhattan Mortgage
For buyers: In New York City, where we have such a mixed bag of buildings — varied by their financial conditions, their pre-sale shape — don’t rely on the first lender that you talk to. You really need to do your homework. Talk to your own bank, but you should talk to mortgage brokers and shop the marketplace.
Every building has its own history … and that history will define what bank is willing to do financing in that building. Oftentimes, buyers and borrowers are surprised to find out that a building that’s been around for 50 years is not financeable in the traditional manner due to litigation, due to their reserves, due to when their underlying mortgage expires.
That's why you really need to deal with an expert who can help you navigate and decide, based on the building’s profile, what price you are willing to pay and where is the good deal.
4. Closing lawyer: Jerry Feeney
For buyers: One of the biggest issues we’re seeing involves financing, from both the sell side and the buy side. Lots of people think of financing contingencies as: ‘If I don’t get financing then I get the money back.’
Like everything in the law, it’s not quite that simple.
What if a bank goes out of business the week before a closing? The standard financing contingency doesn’t cover that. That risk is on the buyer.
The more realistic issue is: What if a week before the closing the buyer loses his job, and then the bank won’t fund the purchase? What happens then? In most deals, that risk would be on the buyer. But the buyer needs to understand that. They need to ask their lawyer: ‘Tell me exactly where this line is drawn.’
Or what if the week before the closing, the co-op gets sued, the bank finds out about it and therefore the bank isn’t comfortable with the financial condition of the co-op? They pull the financing. … These are the things you’ve got to think about as a buyer.
For sellers: Make sure that you do your due diligence with your buyer’s ability to get financing. You don’t want to just give out a contingency to anybody who wants one. I’d say, ‘Let me take a look at your ability to get financing and once I’m confident with you and your ability to get financing, then I’ll do the deal with you.’
As a seller, you want to have confidence in the buyer's banker. You want to know who it is and have a conversation with them.
5. Pest management expert: Gil Bloom of Standard Pest Management
For buyers: Check the bed bug disclosure forms for buildings. [Co-ops and landlords must disclose past infestations according to NYC law.]
It can be problematic to live adjacent to a compactor or garbage closet. It’s common sense, but people overlook it and they don’t realize it. Those closets, the compactor chutes, are often conduits for any pest situation in a building, because sometimes they’re converted and they go and put in new ductwork inside the compactor chute. In the ductwork, even when it’s new, there can be issues with flies, roaches and beetles, a whole host of things.
And secondarily, now with bed bugs, when people discard things sometimes they take it to the compactor, garbage, recycle area on the floor and it sits there. So if you’re adjacent to that, you’re the prime person that they’re going to move to.
6. Property manager: Paul Herman of Brown Harris Stevens
For buyers: If you’re purchasing you need to be careful [about] how the building is monitoring its income. Make sure that the receivables for the property are in good condition and that the managing agent is paying attention to them. Although for the last couple years things have sort of stabilized in the marketplace, there seem to be some problems for certain people — individuals who are experiencing financial hardships.