Real Estate Closing in New York
/So you found that dream office, home, or Condo, or Co-op or you found that buyer for any of them, now what…
Well, it all depends as to which side of the closing table you’ll be sitting on.
I have found that most buyers and sellers don’t adequately familiarize themselves with the process before either looking to buy or placing their property on the market for sale. As a result, many issues can develop, usually out of shock to either side, and also, because in many instances the lawyer is the last person either side speaks to before the process really begins. Meaning, no one has adequately informed the parties as to what they need to know, most notably closing costs and as we know, money matters.
The closing process, for better or worse, worse really, is arduous and quite mundane and in New York it takes too long in comparison to most states. Now, with mortgages being tougher to get, it takes even longer than it used to and that can present issues for buyers contractually, and for sellers, because, most sellers don’t want to wait long to get paid. Some adequate information that a buyer can learn beforehand can really expedite the process and can make for a much easier closing and process.
Before we get to the process, let’s start with a few things that a prudent buyer should do before making that offer on a property:
- If financing, check your credit
- Do a simple tax search to know what exactly are the property taxes on the home you are interested in buying
- Consult a lawyer, and this is key, before you make an offer to best know what all your closing costs are going to be. These include the cost of a home inspection and most expensive, title insurance.
I cannot tell you the number of clients I have had who come to be after I have their contract for their signature and down payment who have never heard of nor know what title insurance is. No one tells them, not the loan officer, and certainly not the real estate agent (cough cough 6%). This cost, and it’s a one time for a purchase, can be as much as $7-8k in some instances and upwards of tens of thousands if an expensive NYC Condo.
When ready to make an offer: Know exactly what you’re willing to spend and that you can spend that, based on what your expected monthly mortgage will be and based on what you will need out of pocket to close.
Once your offer is accepted: Hire an experienced and licensed inspector to do an inspection of the property, this way you know if it’s a sound investment. As a seller, it behooves you to make sure the property is in good condition so you don’t have to either repair an issue or actually accept less.
Once the inspection is performed: If all is well, its time for the sellers attorney to draft the Contract of Sale to get to your, me, attorney, for review.
The Contract
Now, its time to sign, write the deposit (usually 10% but negotiable). It's customary for the sellers attorney to draft the contract, based on all: Purchase price, agreed deposit amount, and specific requests, repairs, and the contract “on or about” date as well as the language of any mortgage contingency, if exists.
Once prepared, it gets sent to the buyers attorney for their review. Usually each buyers attorney will ask to make changes, minor, with sellers attorney approval, and then the buyers sign.
After the seller then signs, the deposit is endorsed and deposited into the sellers attorney escrow account where it sits until the closing.
Congrats, you’re fully in contract. Now, you wait…
To be continued…