If you can’t afford to buy an apartment in cash these days, are you ... “screwed”? Such was the legitimate concern of one audience member at the buyer’s workshop hosted by BrickUnderground and Suitey, a real estate brokerage, at WeWork NoMad last night. And she seemed to echo the sentiment of her fellow audience members, about 75 New Yorkers, many of them first-time buyers struggling with the high cost (and cutthroat competition) of today’s market.
Hence, the reason for the straight-talking seminar itself, where Suitey brokers dived into the difference between condos and co-ops, a method to determine your budget, the timeline of a sale, and the utility of a buyer’s broker. (If you missed out on the event, stay tuned for the next one, and sign up for updates.) Below, a few key insights:
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An interview, not an interrogation: The torturous board approval process is one of the main drawbacks of buying a co-op, not only because of the time and hassle involved, but also because of the uncertainty of winning the board approval. But only about 10 percent of board interviews include the kind of CIA-style grilling you might expect, while the remainder are more like a “meet-and-greet,” said Tyler Whitman, head of sales at Suitey. “A lot of times you go and the board president just got back from the gym, and he’s sitting there in a wife beater and shaking your hand and saying, ‘Welcome to the building.’”
Estimate your monthlies: Maintenance fees and common charges in co-ops and condos, respectively, vary based on a multitude of factors, from the level of amenities in the building to the number of staff and the cost of major repairs or capital improvements. But when you’re on the hunt, a good way to ballpark what you’ll pay each month is to assume they’ll run $1.50 to $2.00 per square foot of the apartment, or about $1,500 to $2,000 a month for the average 1,000-square-foot one-bedroom. If you’re seeing something that’s wildly off, it’s worth asking why (and, typically, higher monthlies mean a lower sale price).
Appreciate this: In general, condos have appreciated in value by 20 percent since the real estate crash in late 2008 and 2009, compared to 5 to 10 percent for co-ops, said Jennifer Lee, an agent at Suitey who previously worked in finance. But co-ops are generally about 20 to 30 percent cheaper to purchase than condos, so if you don’t have an unlimited budget and plan to live in the apartment full-time, a co-op might be your best bet.
The power of stale listings: As for the best way to compete against all cash buyers, look at apartments that have been on the market for 45 days or longer, Whitman suggests, since you'll avoid a lot of the competition you'd find for new listings, and there may be a good reason the place hasn't sold yet. For example, Whitman says he listed one apartment that garnered a few offers immediately, but the seller chose a buyer who ultimately couldn’t close the deal. Suddenly, the once-hot property looked stale, opening up an opportunity for a buyer seeing the place for the first time.