Buying a New Home this New Year?

This is not one of our usual travels to foreign destinations. This was our trip to find a new home! Of course, as always, don't make the mistakes we made.

Floor plans by Streeteasy

With news of mortgage rates going down in 2024 many people are thinking of buying a property for the first time. There are a few things you’ll need to know before you start the process.

First, you’ll need a buyer’s agent, especially if you’re looking to buy in New York City. Keep in mind that you don’t pay your agent’s fee if you purchase a property. The seller’s agent and the buyer’s agent share the commission paid by the seller. Also remember that normally you don’t sign a contract for your agent’s services, so you don’t need to keep working with the same agent if you don’t want to.

Your agent will be guiding you through the whole process of purchasing your new home. That includes:

 

·      During the search, the buyer's agent keeps an open communication with the seller’s agent.

That is, getting in touch with the seller’s agent if you are interested in seeing a property or letting the seller’s agent know you’ll be visiting the property during an open house event. This is mostly out of courtesy but, also, if you are interested in placing an offer on that property the seller’s agent will already know who you are and who to get in touch with.

 

·      At the time of placing an offer, they help you figure out the right price.

This is important because some properties may not be worth the price that the seller is asking, or the owner is asking too little, creating too much competition among buyers for one property.

 

A good agent will know when a property is overvalued or undervalued and will guide you as to what’s the right price.

A good agent should also be able to have a talk with the seller’s agent and get a sense of the situation from the seller’s point of view. Are they receiving a lot of offers? Is any of those offers in cash? Are there any other offers over the asking price?

Sometimes when there are many offers on the table, the seller’s agent will call for a “best and highest”, that means that they are asking those interested in the property to send their best and highest offer before a specific deadline.  

Lovely Christmas lights in South Slope. Photo by OhDear!

 

·      Your agent reviews your offer before you send it to the seller.

Let’s say you found a lovely apartment and you want to make an offer. Your agent will send you the paperwork you need to send to the seller. This is not so easy as it seems. The paperwork already requests information about your finances. You want the seller to know that you are a solid candidate and can get a mortgage or that you have the funds enough to pay for the place in cash. Your offer should include a mortgage pre-approval letter from the bank or bank statements to prove that you have those funds to pay in cash.

You may feel tempted to include other information that may not be important at this stage, so your agent will make sure that you send all the information and letters you need at this point and leave out all the information you really don’t need to include.

She or he will also let you know when it is a good idea to send a short message to the seller to let them know why you love the place so much and “soften their hearts” and pick your offer if it comes down to a close call with other buyers.

 

·      Once the offer is accepted, your agent helps you find a lawyer and an inspector.

Hurray! Your offer was accepted. If you are a first-time buyer, most likely you usually don't hang out with real estate lawyers and property inspectors. You will need a whole team during the process of buying your property, especially if you are financing your purchase with a mortgage.

Your agent will send you one or two options of lawyers and inspectors to pick from. These are people they work with all the time, so they have been knowing each other for a long time. That’s great for you!

 

·      Your agent helps coordinate the purchase agreement.

After your offer has been accepted, you have one or two weeks to sign a purchase contract in which the seller and the buyer agree to sell and purchase this property from each other and no one else.

During these two weeks before the contract is signed anyone with a better offer can come by and scoop up the property from under your feet. It’s a nerve-wracking time. This time is called “due diligence”, because the buyer should push forward to get some things done on time, and your agent should be on top of this process.

1.     Your lawyer will have to make sure that the finances of the building are in order.

He will need to get in touch with the managing company—if there’s one— to make sure the building is taken care of properly.

He will be sending you drafts of the contract for you to look at and make any questions you might have.

2.     Your inspector will have to come to the property and make sure the apartment is in good condition and send you a full report.

We love walking around Prospect Park. Photo by OhDear!

 

·      If you are buying a property in a coop building, your agent should help you navigate the Coop Board.

If you get to sign the purchase contract, your purchase is practically saved. Now all the work falls on your lawyer and if you are getting a mortgage, your bank agents.

That is, of course, if you are buying a family home or a property in a condo building. Not so much if you are buying a property in a coop building.

After you sign the purchase contract, you have to send the Coop Board an application with detailed information about your financial situation. You even pay a fee to get a background and credit check done. Then they may invite you an interview to get to know you and make their decision of accepting or rejecting your application.

You already spent money on a lawyer and an inspector to sign the purchase contract. You already paid them a fee for a credit report, but still they can easily say they don’t accept your application and that’s it. Once they have made their mind, you have no recourse against their decision, and they don’t need to explain to you the reasons why they rejected you.

It can be that they don’t like your accent or the color of your skin. Who knows!

Your agent should be able to prepare you on what to expect at the interview.

 

·      Before signing the final contract, your agent will coordinate a visit to the property.

You have a right to take a last look at the property before you sign the last contract. If your inspector said that smoke detectors were missing in the property, this is the time to make sure the smoke detectors are there, for example.

Your agent should coordinate this visit with the seller’s agent.

Our BIG Mistake: We Picked the Wrong Agent

When we started our journey in the real estate world of Brooklyn, we were as lost as anyone. We downloaded Streeteasy as everybody does and started visiting open house events. On our first open house event we met a real estate agent, and we thought this person was honest, charming, and very helpful. He helped us figure out how to start the process. He had twenty years of experience in the neighborhood. We felt he was a good person, but then, what went wrong?

 

Round 1: The Wrong Offer

First, we found a lovely apartment in a great neighborhood, walking distance to our old neighborhood, with a second room listed as a “den.” It was not too big, but it had a lot of storage space and a deck with a lovely view on the roof. “Perfect for my plants!” I thought.

We told our new agent we wanted to make an offer. We went to see the place again with him. He didn’t seem too enthusiastic about the place, but we didn’t care.

Our agent told us to place an offer under the asking price. We did. The seller’s agent quickly called for best and highest. We raised our offer, but our agent was not able to give us a clear idea of what should we offer. We received a message from the seller’s agent saying, “Think how much this apartment means to you.” I asked our agent, who happened to be out of town on vacation, if we should raise our offer and for how much. He didn’t think it was necessary. We had the right offer according to him.

Of course, we didn’t get the apartment and we mourned our loss for several weeks. We really loved that place!

We kept working with our agent. He kept sending us suggestions to go see apartments that were way over our budget. Over coffee we tried to explain to him that we needed a smaller place that we could pay for without going bankrupt. He accepted “the challenge”, and we decided to give him another chance.

 

Round 2: The Wrong Dream

Let’s face it. Properties in Brooklyn are expensive. You take a calculator, put down all your numbers and you realize you can only afford a one-bedroom apartment in the neighborhood you want to live, or a two-bedroom apartment four or five subway stops away.

We wanted to stay in the neighborhood. Could we squeeze three people in a one-bedroom with a den or an office? It sounded like a good plan, but here’s the catch.

Properties in coop buildings are cheaper than those in condo buildings, but you can’t just go and buy the property you want. Coop buildings have a Board that can reject your application as they please.  

Our second attempt was at a coop building. It was a loft, big enough to have a one bedroom on the mezzanine and a Murphy bed in the living room, a small kitchen, a foyer, and a surprisingly big bathroom. We could buy this property in cash with some money inherited from a relative.

Happily, our offer was accepted by the owner. We hired an inspector and a lawyer for the due diligence, and we even signed the purchase agreement. Then we sent our application to the Coop Board, and they granted us an interview.

Our agent, who was, once again, on his way to a long weekend out of town, told us it was just protocol. They would just ask us some questions and be very nice and welcoming to us. He would not be available to us until after the interview, but there was nothing to worry about.

Nothing farther from the truth!

The Coop Board had in mind that we were just speculators trying to make a profit from the apartment. They were so confused that we were buying something in cash, instead of getting a mortgage like everybody else! They asked us in detail about inconsistencies in the background report they had, which was not complete. They even ask us if we were really married!

Needless to say, our application was rejected.

But we pushed forward. By now, we were wondering if our agent was not the right one. He was a nice guy, but we were getting nowhere. Still, we were now too deep in the process to start all over again with another agent, and we didn’t know any other agent!

Photo by OhDear!

 

Round 3: The Wrong Agent

Our third attempt was on a fourth floor, no elevator building. It was a one-bedroom apartment with a big living room and an office space big enough to transform it in a kid’s bedroom. It had a lovely floor plan and was very well taken care of. We really didn’t like the idea of walking four stories up every day, but, since it was a coop, it was the right price for us.

We brought our agent to a second visit and, as it happens, our agent knew the seller’s agent and they started chatting in the living room. We pulled our agent away for a moment and asked him if there was a subtle way to find out how strict was the Coop Board of the building. Would they care that we were trying to buy a one-bedroom when we are a family of three?

The “subtle” part escaped our agent, who then openly told the seller’s agent how we had been rejected by the Coop Board in our previous attempt to purchase a property. We were shocked that he brought up that incident now and tried to do some damage control during the conversation, but it was useless.

We placed our offer at asking price and to our surprise it was accepted. It was a Friday right before a long weekend. Our agent was going out of town once again the next day. I remember telling him this was the perfect time for the seller’s agent to turn on us and find a better offer while he was away on vacation, but he didn’t think there was anything to worry about.

On Saturday afternoon, our agent called me. The seller’s agent had been calling buyers that had placed offers before and had been rejected by the owner and was now calling for a best and highest.

We didn’t make an offer then and decided to move on and find a better agent.

 

What We Learned

We finally were able to buy a property in Brooklyn, in the neighborhood we wanted, a lovely two-bedroom apartment on a second floor. It was thanks to a different agent, one we met during an open house visit a month earlier and he struck my husband as a very assertive and professional guy.

He was not as charming and talkative as our first agent, he never invited us to coffee to try to understand what we wanted, but he got our idea of not wanting to be “apartment poor” right away and went along with us, until we found a smaller two-bedroom perfect for us.

What shocked me was that he knew all the seller’s agents we met in open house events, he had worked with everybody!

When we found the perfect apartment for us and told him that we wanted to make an offer, he was able to give us a much more realistic ballpark figure. He didn’t tell us what the magic amount was, but when we gave him a number, he told us to raise it a bit more to make sure we got the place.

He had a team, so when he was away on vacation, we could talk to either of his two other partners. They guided us through all the due diligence process without a flaw and we couldn’t be more grateful.

Looking for an apartment with our first agent took us three months without results.

The whole process, from looking for the right place to signing the final purchase contract and getting the keys to our new home took us three months with our second agent.

 

My advice to you: Take your time finding that agent that will help you get what you want. Look at agents as hard as you look at properties. Find someone with a team that can be available to you at any time, and start soon, before the interests go down, the prices go up, and the competition to purchase a place becomes impossible for you to handle!