Holmes Team Buyer’s Guide

First things first: do I want a Coop or Condo?
Cooperatives
Cooperative apartments are more common in New York City than in any other city in North America. Over 70% of New York City apartments available for purchase are in cooperative buildings, which means less than 30% are condos. Because co-ops are more strict in terms of subletting and there is an extensive board approval process needed to purchase, they are less expensive by 20-30%. However, there are prestigious co-ops on Central Park West, Fifth Avenue and Park Avenue that command some of the highest prices of all apartments in the city. In cooperatives, the individual owners do not actually own any real property: they own shares in a corporation that owns the buildings/s that the apartments are part of. Share amounts for each owner are determined by apartment size, exposure, views and floor level, and that determines the monthly maintenance. At closing, resident owners receive a stock certificate and a long-term proprietary lease, rather than a property title or deed. Advantages of buying a coop: 1. Less cost per square foot. 2. Usually lower closing costs. 3. More property to choose from. 4. The Board of Directors has the right to “approve” or “reject” any potential buyer, to give them control over who their neighbors are. The board, elected by all of the

212-381-2280 * TheHolmesTeam@halstead.com

tenant-owners of the co-op, interviews prospective buyers. There is more sense of community in a co-op. 5. A portion of the maintenance is tax deductible. The amount accounts for an owner’s allocated portion (by share) of the real estate taxes as well as the interest portion on the building’s underlying mortgages payments. Disadvantages of buying a coop: 1. Much more thorough and rigorous board approval process for buyers, both when you buy and when you sell. When you sell, your prospective purchasers must go through the same process as you when you bought the coop. 2. Down payment amount is typically at least 20%-25%, and sometimes more. 3. Subletting may be restricted or disallowed. Keep in mind that most apartments for sale in Manhattan are Co-ops. Prior to beginning your search, you should know what financing thresholds you will be able to qualify for, including: 1) down payment you will have; 2) the portion of your monthly income that will go to your housing payments and other monthly debt service (known as your “debt to income ratio”); and the liquid assets you will have after you close on your sale. Your Holmes Team agent can provide you with more information and for the unique guideline for every co-op of your interest.

Condominiums
A condominium apartment is real property. You receive a deed and title and closing, and you truly own a piece of real estate. Owners are responsible for paying their own real estate taxes and property insurance (not payable individually in coops). In addition, there is a monthly common charge used for the upkeep of the building, including staff salaries and building maintenance, which is not tax deductible unless it is an investment property. The greater the number of amenities, the higher the common charge. Advantages of Buying a Condo: 1. Financing is flexible. There are usually no restrictions, except those imposed by your bank. You can finance up to 90% in some cases. 2. Renting your unit is generally allowed. That's why condos are the favorite choice for investors.

212-381-2280 * TheHolmesTeam@halstead.com

3. The application process for buying a condo is quicker and simpler than for a coop, with the chance of rejection minimal. If the board rejects a buyer, they have to buy the apartment themselves. This is called exercising their “right of first refusal” to buy the property. Generally, that doesn’t happen.

Disadvantages of Buying a Condo: 1. There are fewer condos to choose from. 2. They are more expensive; the extra freedom and smaller supply translates into higher cost. 3. Since condos have a greater number of investor units and higher turnover, condo owners know fewer of their neighbors. Banks can offer terms that are not as attractive to condo buyers because of lower owner occupancy. 4. Your Holmes Team agent can guide you to your condo, if that's your choice.

The Buying Process
Buying an apartment in Manhattan can be a daunting task, but with the right knowledgeable and personable broker, the experience can become fun, enlightening and rewarding. Here are the steps you should expect: 1. (Recommended): Choose one Real Estate Agent to work with. Choose the agent you feel the most comfortable with and work with that agent exclusively. Your loyalty to your agent avoids confusion and duplication of effort while securing a partnership that works on your behalf no matter how long it takes. If you choose to work with The Holmes Team, we will guide you through the entire process. You will receive a Comparative Market Analysis for any property you would like to make an offer on, to determine whether the property is priced right. 2. Talk to a Mortgage Banker or Broker - Your agent at the Holmes Team can recommend the right professional. Before looking at properties, you must know what you can afford. Based on your financial profile, s/he can quickly determine what you can spend and how much you can borrow to finance your new home. There is no cost or obligation to you for this service until you actually apply for a loan.

212-381-2280 * TheHolmesTeam@halstead.com

3. Retain an Attorney - Brokers in New York City do not prepare contracts. You must hire a real estate attorney. It is important to hire an experienced attorney whose specializes in the laws of New York City real estate (in residential coops, condos, townhouses). Your attorney will review the contract, the building’s financial condition, the board minutes and the building’s by-laws. 4. Look at Properties - Most buyers look at an average of 15-25 properties prior to making their purchase. When the inventory is low, you won’t be able to see as many properties that match your search criteria and budget. Your Holmes Team broker will schedule as many appointments as possible at places that meet your criteria. Keep in mind that some apartments have limited showing times, and that the best properties get snatched up quickly. Try to be as flexible as possible with your viewing schedule. 5. Make an Offer - Once your broker finds you the right property, get ready for the thrill of buying. Offers are made verbally in New York City and then in writing. A bid or offer will be placed through your Holmes Team agent to the seller or the listing agent. The seller may make a “counter offer” and begin a negotiation process until an agreement is reached about the price and terms. The negotiating skills of your Holmes Team agent are top in the industry. Their expertise and product knowledge will give you an edge in getting an accepted offer within your satisfaction. 6. Sign the Contract - Once your attorney concludes that the contracts and property conditions are satisfactory, you will be ready to sign the contract. At this point you will generally deposit 10% of the sales price into the sellers’ attorney escrow account. Remember that until the seller has counter-signed the contract, s/he is still free to entertain and accept other offers. 7. Gather your Financial Documents and References - For both your loan application and your board application (if applicable), you will need to supply detailed financial information. Most common are 2-3 years of tax returns, bank and investment statements, business references, and personal reference letters. The Holmes Team will help you though the process. 8. Obtain Financing - Your Holmes Team agent will help you to supply your financial information as required by your bank. Your bank will review your qualifications, appraise the property, and when the loan is approved issue you a “bank commitment letter.”

212-381-2280 * TheHolmesTeam@halstead.com

9. Submit Board Package - Once your package has been prepared, a Holmes Team agent will review it prior to submission. Only then will your package be submitted for board review. Expect review time to last 2-6 weeks. 10. Meet the Board of Directors (co-ops only) - The managing agent will schedule an interview for you to meet the board. Some boards meet only once a month, so try to make yourself available when your Holmes Team agent tells you that the time has come. This board interview is a serious matter and should be treated as such. You should arrive promptly and dress appropriately. Answer only the questions you are asked without volunteering extra information. The Holmes Team will train you and guide you through this process. Board decisions can be given immediately or take up to one week from the interview date. 11. Inspection – The day before or the morning of the closing, the property is inspected. Make sure to check all appliances, the removal of all personal property, and that the premises are broom swept. 12. Schedule a Closing - Once you receive your board approval, you are ready to “close.” Typical time from board approval to closing is 10-14 days to account for late paperwork and filings, and the need to coordinate everybody’s schedule. Make sure to get the exact check information from your attorney --and give yourself enough time to obtain certified or bank checks. When it’s over, we’ll celebrate. Don’t forget to pick up your keys!

Closing Costs
For Coops: Own Attorney: Typically start at $1500. Consult your own Attorney Points: 0%-3% of loan amount (optional, but your rate can come down) Application Fee: $300 Bank Attorney: $500 Appraisal Fee: $300+ Underwriting Fee: $350 Misc Fees: $300 Managing Agent Fee: $300 Judgment & Lien Search: $300 UCC-1 Filing Fee: $20 Move in Deposit: $500+ (sometimes refundable) Short Term Interest: up to 1 month (depending on closing date) Maintenance Adjustment: up to 1 month (depending on closing date) Mansion/Luxury Tax: 1% of purchase price if $1,000,000 or more.

212-381-2280 * TheHolmesTeam@halstead.com

For Condos/Townhouses Own Attorney: Typically start at $1500. Consult your own Attorney Points: 0%-3% of loan amount (optional, but your rate can come down) Application Fee: $300 Bank Attorney: $500 Appraisal Fee: $300+ Underwriting Fee: $350 Misc Fees: $300 Managing Agent Fee: $300 Tax Escrows: 2-6 months Mortgage Tax: 1.75% of loan amount for loans under $500,000. 1.875% of loan amount for loans exceeding $500,000. Fee Title Insurance: $450-$650 per $100,000 Mortgage Title Insurance: $250-$500 per $100,000 Move in Deposit: $500+ (sometimes refundable) Short Term Interest: up to 1 month (depending on closing date) Common Charges Adjustment: up to 1 month (depending on closing date) Real Estate Tax Adjustment: 1-3 months (depending on closing date) Mansion/Luxury Tax: 1% of purchase price if $1,000,000 or more. At closing, the seller is required to pay the New York State (.4%) and New York City (1% on sales of less than $500,000, and 1.425% when greater than $500,000, in most cases) Real Property Transfer Taxes. In newly constructed and gut renovated buildings, developers typically want the buyer to pay these taxes, plus their attorney’s fee. This is subject to negotiation, and can add to the buyer’s closing costs.

Should You Try to Buy on Your Own or Have A Professional Help You? The Advantages of Using Licensed Agents
1) YOU DON’T PAY FOR OUR VALUABLE SERVICES. You get a team of full-time real estate professionals but don’t pay for our services-our fee is paid by the seller and split with the listing agent. 2) TRAINED, LICENSED, PROFESSIONAL, DEDICATED, and EXPERT ADVOCATES - ON YOUR SIDE. Real estate transactions can be complicated and risky, that is, unless you have expert advice. When making the financial commitment to invest in real estate, most buyers find it indispensable to have an experienced advocate on their side to evaluate opportunities and negotiate the best price. Remember, when listing agents are trying to sell a specific property, they are working for the seller, trying to negotiate the

212-381-2280 * TheHolmesTeam@halstead.com

highest price. That’s why more than 90% of buyers use their own agents to represent them when they buy. 3) HELPING YOU MAKE THE MOST OF ALL THE INFORMATION THAT IS OUT THERE IN THE PUBLIC DOMAIN. There is so much information out there. What’s really relevant? What pricing information is correct? What kind of information are you going to base your buying decisions on? We help you discern the knowledge from the noise and the trends. 4) NOT JUST ACCESS TO EVERYTHING ON THE MARKET BUT A DISCERNING EYE TO INTRODUCE YOU TO PROPERTIES THAT MATCH WHAT YOU’RE LOOKING FOR. Before the advent of the internet, buyers needed real estate agents just to identify properties that were for sale. Now you can see most of what’s on the market with the click of a mouse. But licensed agents have access to more information about properties than is available to the general public, things like requirements for purchasing in specific coops, access to properties that are in contract but that haven’t closed, etc. And our team is already familiar with most buildings. You don’t want to get excited about purchasing something you like only to discover that it won’t work for you, or that you won’t get approved by the building’s coop board. We make sure that you view properties that really match what you are looking for AND that you’ll be able to purchase. 5) EXPERT FINANCIAL EVALUATION. When you decide you want to make an offer on a specific property we conduct a Comparative Market Analysis (CMA) for you to evaluate what the market says that property is worth TODAY, not what it was worth 4 or 5 months ago. As licensed real estate agents and members of the Real Estate Board of New York (REBNY), we have access not only to historical sales data but also to information for properties which are under contract but that haven’t closed yet. This data is not available to the general public, yet is crucial when evaluating what the real market value of a property is. 6) ACQUIRING HIDDEN KEY INTELLIGENCE. As agents we can uncover valuable information about the seller’s motivations from the listing agent or the seller, which can be key to getting you the best price. 7) AS PROFESIONALS WE NEGOTIATE THE LOWEST PRICE AND BEST TERMS BETTER THAN YOU CAN DO ON YOUR OWN. Using the Comparative Market Analysis and other information we learn, we craft the best strategy to help you buy the property and get you the best price. 8) MANAGING THE ENTIRE PROCESS. We carefully manage the entire buying process for you by paying attention to every detail, from helping you get pre-approved for a mortgage, to putting together a successful board package, to guiding you through the coop board or condo approval and interview processes. And remember, you don’t pay for it! For further information, or to talk directly with a member of The Holmes Team about your real estate needs, please call 212-381-2280

212-381-2280 * TheHolmesTeam@halstead.com