People who live in Manhattan have three main choices if they decide they’re ready to buy a new home. They could buy a Manhattan townhouse, if they’re ready to spend double-digit millions of dollars. Naturally, this cost is prohibitive for most people. The next option is to buy a co-op (short for “cooperative apartment”). For this one, you’ll be required to disclose your life history and personal finances to a group of strangers, and live according to building rules that might not quite fit with your lifestyle. Similar to a co-op is a condominium (or condo). Many people find this the smart choice, because the only thing which truly matters is if you are able to get a mortgage to buy the place. There are no strangers to ask how much money you have or “lay down the law” for you, and there are no co-op board packages to fill out. Condos simply give you a lot more privacy.
Let’s go over some of the technical differences between condos and co-ops. A condo owner has legal title — is in ownership rights — to land (what New York and Manhattan call “real property”). Legally, it’s considered a piece of land that you own, regardless of whether it’s on the fourth floor, or all the way in the penthouse. On the other hand, a co-op owner does not own land. Rather, he shares a portion of stock which the co-op corporation allocates to his unit. When you buy a co-op, not only are your finances scrutinized, but so too is your personal background. Today, most apartment buildings being built in the Manhattan area are for condominiums because real estate brokers understand how appreciated they are by potential buyers.
Condos are good, not just for the buyer, though, but for Manhattan as well. Manhattan is at the very heart of New York City. . . yet in many ways, it’s grown as much as it can. That is, until you consider the potential that condominiums offer. About two million people reside on the island of Manhattan, which measures a mere 23 square miles. This small size had led to a very competitive real estate market. Manhattan’s condos, though, give the city room to expand.
This is not to say that getting a condo here is cheap. A typical apartment with two bedrooms goes for about five hundred grand; a 4-bedroom unit might run more than $1.5 million. Therefore, we’ve compiled this short guide to help you understand the ins and outs of buying a condo in the Manhattan area. We’ll help you find your way through the maze and hopefully find the best possible condominium at the most affordable price.
Taking the Traditional Route: Real Estate Brokers
Historically, there have been slim to no options available in the Manhattan real-estate market for sellers and buyers. Using a broker was once considered the best way to locate, view and buy new condos — that is, until the advent of the World Wide Web. Contrary to what some have believed, there is no state lat that requires a broker to be involved in any real estate transaction; it’s simply been the way that things have always been done. Nevertheless, it’s not always the best way to go.
For one thing, competition among brokers sometimes puts the buyer at a disadvantage. In most of the country’s bigger cities, real estate brokers actually pool their condominium remodeling sale listings in what’s called an MLS (or “multiple listing service”). However, this is not true in the Manhattan area. In this city, brokers maintain separate, competing, independent listings of apartments; they share these listings only selectively. Because of this, the buyer is at a disadvantage since he or she must evaluate all the Manhattan condos in tiny fragments…in essence, going broker-to-broker, looking at each of their listings. There are fewer options, and therefore, this makes searching for all of the available condos in Manhattan difficult, if not impossible.
Under Manhattan’s current brokerage system, the recreational or casual buyer (“browsers,” as some call them) put serious potential buyers at a definite disadvantage. These browsers overburden the city’s limited pool of real estate broker resources. A large number of these browsers go “window shopping” with the brokers at no cost…which means the brokers then must increase their fees to cover their lost time with these people. These fees are ultimately paid for by the serious shoppers.
Let’s take a look at how the condo / real estate broker works.
Until recent times, there have been four main methods of locating a condo in Manhattan: A person could go it alone (via door-to-door research), he could find something via word-of-mouth, he can search through classified ads that are placed by the condo owners, or he can go through real-estate brokers. The most common method has historically been the real estate broker. If you decide to go this route, remember these two guidelines:
1. Remember that the broker does not represent you; he represents the seller. One of the biggest mistakes you can make is to assume that you are the broker’s client, since after all, he helps you clarify your likes and dislikes and helps match you with something that fits those likes. But you are not his client; the seller is. This means his main obligation is to satisfy the seller, not you. It’s the seller who pays the real estate broker’s commission. Bottom line: To make sure that you get the maximum benefit from going through brokers, make sure you work with several of them, each of whom offers a different database of available condos.
2. Beware of misleading ads. Many times, a buyer, responding to an ad that’s been placed by a broker, will end up looking at a condo which is quite different from the one which was advertised. This can be extremely frustrating. Often, a condo will be advertised, but then it’s sold by the time that the ad appears online or in the newspaper. In other instances, the broker might have placed the ad as something of a generic sample of what he has for sale; it was never available in the first place.
Having considered the traditional method of going through a real estate broker, let’s now talk about the newest method of finding a condo in Manhattan. Namely, the growth of the Internet has given rise to online real estate listings. This includes listings for Manhattan-area condos. There are several benefits of going through online listings:
1. There are more listings to examine. Plus the listings are constantly updated, seven days a week. And you don’t have to wait for an appointment; they are available whenever you’re ready, easily accessible by anyone with Internet access.
2. There tends to be better service available. After all, when you shop online, you become very much the client of the site hosting the listings. Therefore, service tends to be better.
3. Your search can be better customized and tailored to your own needs. Most of the best online listings will show only those listings which match your needs and wants. Plus, they tend not to show any misleading ads. A good listing service will arm you with the information you need to ensure you find the condo that you’re looking for.
4. Online listings make you more competitive as the buyer. They will save you time by organizing all of your possibilities… and they’ll save you some bucks by not requiring you to pay broker commissions or inflated condo costs.
5. Searching online makes it easier for you to investigate the neighborhood where your potential condo will be located. You can pull up maps of the area, you can even find out the crime rate for that area, and what real estate values are in the area, all with just a few minutes searching on Google or Yahoo.
So once you’ve decided to buy your new Manhattan condo, you’ve searched online, and found one you like, what are the next steps? Here are some guidelines to make things go smoothly:
1. Be ready for a credit check. If you have a good credit history, especially in today’s economy, you will have a definite competitive edge over someone else who has even an adequate credit history.
2. Get an independent appraisal of the place. A seller most often contacts an independent appraiser when deciding the price to put on their condo for sale. Also, a bank which intends to finance a purchase on your behalf will frequently require a third-party appraiser.
3. Consider having an attorney review the sale. The buyer and seller will often contract a lawyer together, to review all documents pertaining to the condo purchase, such as deeds, financial statements, and so on. It’s also a good idea to contract a lawyer for drafting your closing papers.
4. Get advice from an accountant. Both the buyer and seller might want to have their own accountant give their honest opinion of the sale, and to interpret for them all relevant financial documents.
Even in today’s down economy, there are condos available for you in the Manhattan area and condominium remodeling in New York has been done to many of them. The important thing is to search, search, search, until you find the best deal for yourself—and then be diligent about consulting the right authorities to protect yourself. GET a Manhattan condominium inspection perfromed on that unit also!!!
Once you have that Manhattan condo narrowed down to the one you want, please feel free to give us (Olympian) a call to talk about your property and to consider ordering your Manhattan condo inspection from us.
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