First-time homebuyers often look for easy ways to alleviate the sticker shock of buying an apartment or townhouse, especially in New York City.
Manhattan and the surrounding boroughs are notorious for their expensive real estate, leading first-time buyers to slash costs whenever possible.
A common misconception is that buyers will save money by making an offer directly to the seller’s agent rather than being represented by a buyer’s agent.
In many cases, this belief will actually end up costing a potential buyer time and money. In the case of housing cooperative transactions, in which are members are granted the right to occupy a single housing unit, the process can be particularly complex.
The buyer’s agent: On your side
Without the help of a professional to navigate the complicated maze of buying a home in New York City, buyers’ offers are often rejected outright.
The role of the buyer’s agent — particularly in a hot market — is to help answer buyers’ questions and make targeted tweaks to their offers to secure their desired real estate.
With housing cooperative (co-op) boards, the transaction can be especially convoluted.
Potential buyers may need to submit a lengthy board package, which can be hundreds of pages long, detailing their financial and employment history, debt-to-income ratio, post-closing liquidity as well as a variety of personal information and a bio.
Putting together a board package and corresponding with a buyer, management company, mortgage professional and attorney in a co-op purchase can take months.
Debt-to-income ratio and post-closing liquidity
A clear explanation of the buyer’s debt-to-income ratio and post-closing liquidity are crucial components to include in the financial component of the offer, a fact that is sometimes unknown to potential buyers who may mistakenly leave them out when they attempt to apply for an apartment.
These vital numbers are reviewed by the seller, the listing agent and the co-op board to determine whether they are dealing with a serious buyer.
Also, co-op board standards for debt-to-income ratio are much stricter than those of a bank, so even if a buyer is already pre-approved by their preferred financial institution, this by no means assures their approval for the apartment.
More than money
Monetary value is typically not the most important criterion a co-op board or owner considers in determining whether an offer will be accepted.
Each co-op board has its own financial criteria that they use to determine which buyers they accept.
To prepare a strong offer, it is essential to show that the buyer continues to possess ample liquid assets and a strong income post-closing, as well as general stable assets before, during and after the sale.
Furthermore, it is imperative to consider the full financial picture, submit an offer that is professionally composed and shows a complete profile of the buyer.
In addition to being financially qualified, the offer must be “humanized” to present the client as a friendly person who will be a good neighbor and positive member of the community.
A quality real estate agent will, with the help of the buyers, write a brief bio about them that may include where they went to school, how long they lived in the neighborhood, or — if they are a couple — how they met.
Any personal details that speak positively to a person’s character, and portray a buyer as a three-dimensional, make an offer more than just a number on a page.
An agent would aim to present their buyers as people who will reflect well on the entire co-op building.
A good agent is also a skilled negotiator.
When purchasing a home, it is wise to have someone in the buyer’s corner who can negotiate strategically.
There is a real science and art to negotiating, and as a buyer it can be very difficult to negotiate over such an emotionally charged subject as a new home.
Buying a home first and foremost is a business decision. A savvy buyer understands the best way to ensure their offer will be accepted is to collaborate with an agent who can help them get the deal done the first time around.