4 years ago

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/

So do you want to buy a co-op in New York City? We'll help you answer this topic in the following video. My name is Nick at Hauseit, the largest For Sale By Owner and Buyer Agent Commission Rebate company here in New York City, established in 2014. So, let's get started.

So, the question of do you want to buy a co-op in New York City is a rather complex topic but we'll simplify it into a couple of considerations for you to digest. The main consideration when buying a co-op is whether or not you're on board with the idea of restrictions on subletting so if you intend to buy a property with the idea of keeping it forever and eventually when you upsize keeping that original property as an investment home.

Well a co-op is not really the best fit for you, as most co-ops expect you to live there or if you do sublet it it's for a limited period of time and in certain cases if you sublet too much the building may even require that you leave the unit empty or you sell it, so in summary you really only want to buy a co-op if you understand that you're going to be living there and you accept the fact that you'll eventually have to sell it whenever you want to buy a new home or a larger place to live.

The second thing to consider is whether or not you want to go through the ordeal of what is a co-op purchase application in New York City. Now before we launch into a tirade about why the co-op board process is difficult, keep in mind that even condominiums in New York do have some sort of application although they don't have an interview in most cases the list of requirements that you need to submit for a condo are going to be substantially similar to what you'll have to present for a co-op.

So really the main question for you is not about transparency. The truth is you will have to disclose financial information and other sensitive documents regardless of whether you're buying a condo or a co-op. If you're looking for transparency, you really do need to buy a house. So the question to ask as to whether or not you want to buy a co-op is whether you want to take the risk of going through the ordeal and negotiating the contract submitting an application only to possibly be rejected. On a similar note when you buy a co-op, are you okay in practice with the idea that your neighbors could one day reject your purchaser and possibly cost you additional time and money through an extended period on the market.

The third consideration as to whether or not you want to buy a co-op is whether you're open to just putting up with additional rules and restrictions on your daily life. Now again as is the case with the application process both condos and co-ops have rules so if you buy a condo, you're not allowed to just bring in a handyman and get renovate your apartment without going through the appropriate procedures. But in general, it is fair to conclude and assume that coops have a little bit more red tape and more rules more restrictions possibly more fees associated with doing things in your home such as certainly renovating it and of course renting it out. There may also be a more strict interpretation of the house rules in a co-op versus a condo. Although keep in mind it's tough to generalize here because there are co-ops that act like condos and unfortunately there are condo buildings that think they are coops. So really it does depend on the particular building that you're looking at, but as a generalization you can really assume that a co-op, you'll be expected to play by the rules a bit more frequently than you would with a condo.

The final question as to whether or not you want to buy a co-op is whether you're okay with perhaps paying a flip tax when the time comes. Now most coops in the city have an additional seller closing cost called a flip tax and it does vary by building, but the flip tax can be a few percent of your sale price or it can be a percentage of your profits. There are a number of ways to calculate it but the vast majority of coops have a flip tax whereas the vast majority of condos do not. Now the flip side of this is actually that coops have lower buyer closing costs. So, there is a benefit to you initially buying a co-op: the buyer closing costs are lower. So, in theory you need to essentially spend less cash upfront in terms of getting the deal done but keep in mind that coops do have a higher down payment requirement and of course they have buyer financial requirements.

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Buyer Closing Cost Calculator: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
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Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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