Welcome to the First Time Home Buyer Series where we help newbie NYC home buyers navigate through the most thrilling (and sometimes most headache ridden) process out there.

You’ve spent months searching for the perfect home and you’ve finally found it. Good for you! You go to submit an offer you think is pretty strong only to quickly find out you’ve been rejected, or worse, completely ignored. What gives?

It’s no secret the New York City real estate market has become an intense battleground for potential buyers trying to find their dream homes. Failed attempts of buying a home here are becoming more common given the large number of highly qualified buyers in this market, and only so much (affordable) inventory to go around.

So how do you put yourself ahead of the pack if you think you are a strong candidate to buy an apartment? Below are some tips every buyer should know before considering submitting an offer to a seller:

1. Don’t Lowball

This is the number one reason a seller will not take you seriously. Yes, we all are looking for a good deal, and I am not discouraging you from negotiating. But there is a fine line between a discount and an insult.

If you want to be taken as a serious buyer, do your homework before submitting an offer. Look at current comps (within the last 3 months) within the building and neighborhood to benchmark price per square foot valuations.

You also want to look at details like condition of the apartment, amenities, views, and upgrades to name a few in order to arrive at a fair price for the apartment. And when submitting your offer, explain your logic for the number. “I am offering X because the apartment below sold for Y and the condition is almost identical” as an example. At the very least you should get a response back, or even better, a counteroffer.

2. Have an (Affordability) Plan

Before submitting an offer, have an honest conversation with yourself about how much you can actually afford to purchase. Things to consider include:

– Closing costs

– Monthly maintenance or common charges

– Monthly mortgage payments (if financing)

– Quarterly real estate taxes

– Utility payments

– Any extra assessments that may come up in the future
You will also want to have an honest conversation with a mortgage broker about what they will lend you!  Your monthly expenses should not exceed more than 40% of your monthly income. You also want to have enough post-closing liquidity to cover up to 6 months of maintenance or common charges. Once you have an estimate of what you can afford, your search and bidding process will become that much more efficient. And in this fast-paced market, you want to make sure you can put down a number quickly in front of the seller.

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3. Show (the Seller) the Money

Whether you are financing your purchase or one of the lucky ones who can buy an apartment in cash, a seller will want to see proof you can actually pull off the purchase. This comes in the form of a pre-approval letter from an accredited bank (if financing) or statements showing your current liquid assets (if paying cash). This proves to the seller that you are serious about the purchase, and won’t have any issues coming up with the money to complete the deal.

4. Lawyer Up

Typically an afterthought for most buyers, having a lawyer lined up and ready to go with the offer letter is very important in proving you are serious about the purchase. All sellers need the contact of your real estate attorney immediately after accepting your offer so they can start on the contract paperwork. If you do not provide this with your offer letter, the seller will know they are dealing with someone who is not prepared to move quickly. Extra tip – it helps if you are using a lawyer who specializes in NYC residential real estate law, instead of Uncle Joe’s general practice firm.

5. Run Your Numbers

 

Submitting a personal financial statement of your assets and liabilities, especially if purchasing a coop, will give the seller a quick snapshot of your financial health. This is crucial for sellers to see to gauge your ability to pass a coop board or condo association approval. Without this, the seller will not be able to make an informed decision about how strong a candidate you are, and may pass on you over someone who has provided their full financial picture.

 

A strong candidate should have a low debt-to-income ratio, and enough in liquid assets (cash, stocks, bonds, money markets) to cover closing costs, the down payment or payment of the apartment, and a minimum of 6 months of maintenance or common charges. You can find these templates online or your broker should be able to provide you with one.

 

The most important thing to remember is that the seller ultimately wants as smooth a transaction as possible, and anything you can provide as the buyer to prove you will be a good counterparty will make you that much stronger a candidate. If this is all too daunting for you to handle, using a knowledgeable broker is always the best option when purchasing a home. Not only can they provide help with all of the above, but they will also act as a guide in pricing and negotiations. Best of all, the buyer never has to pay for the broker fee, so it is no cost to you to use one.

 

Good luck out there!