Wondering what’s been on New York City home buyers’ minds recently? Here are a few of the top questions buyers asked our Triplemint agents in February:
What are land leases?
Agent – Matt Israel:
Answer: A land lease refers to a building, usually a co-op, that doesn’t own the land underneath it. The lease on the land is set to expire on some future date, and therefore these tend to be on the riskier side as investments. Also because the building is paying for use of the land, in addition to its normal operating expenses, the monthly maintenance fees on these units can be significantly higher than average.
What is post-closing liquidity?
Agent – Charlie Panoff:
Answer: Post-closing liquidity is essentially the amount of money a buyer has in the bank after they close on their new property. Most buildings, especially co-ops require a buyer to have money left over to ensure their monthly bills can be covered in the event something happens with their income stream. Also, this money will need to be available for things like moving costs, renovations or upgrades to the apartment. This means if you are buying an apartment and putting down 20%, you need to have between 25% and 30% of the purchase price in the bank, at a bare minimum, before making an offer. With that said, a decent amount of buildings require at least two to three years of mortgage and maintenance (or common charges and taxes for a condo) payments in the bank after closing. I typically suggest a buyer have at least 30% to 35% of their budget in the bank, as liquid funds, before looking, keeping in mind IRAs and 401Ks do not count as liquid funds.
Am I overpaying? I want a deal!
Agent – Lucas Callejas:
Answer: I always bring this to the data. I use the trend of the neighborhood/property type combined with recent in-contract and closed sales and I back it up with an anecdotal story/case study that I’ve done recently. For example, a couple wants a 2 bed condo in BPC. They don’t want to spend the $4k in CC+taxes to own when their rent is $3k (stabilized). BUT when you look at the appreciation over the last 10 years in 2 beds in BPC, the equity a buyer who bought in 2010 would cover monthly carrying for the entire 10 years. In other words, should they sell right now (2020) that buyers/sellers would have lived for free for the last 10 years and made some money to boot? Not really a 1-3 sentence answer, this is more of my process which varies client to client.
What is the largest discount I can make an offer without offending the seller?
Agent – Tami Kurtz:
When my clients ask me this I always respond by telling them what the trending discount is in that specific neighborhood. For example:
We know that the current median listing discount for 2 bedroom coops on the Upper West Side is 7%.
The majority of sellers won’t consider a discount of over 10%, but this is completely dependent on an individual listing and how appropriately it is priced for today’s market.
I will run comp reports for the specific homes you are considering to determine the market value of each of them. Some may be priced to sell, some may have aspirational pricing and we will take all that into consideration before making an offer.
The big question: Is the market going down in 2020?
Agent – Julianne Bond:
Answer: “After a bumpy couple of years of downward price adjustments, Manhattan real estate prices seem to have leveled off and are now pretty stable.
We are in a period of “new normal” in NYC real estate: new prices, an abundance of inventory, historically low mortgage interest rates, and increased neighborhood options. This altered landscape presents particular challenges for buyers and sellers. Sellers who are serious about selling in 2020 face adjusting their mindset about the value of their property. For buyers in 2020, the noise around the upcoming Presidential election has created uncertainty about the future.
At times like these, it is good to remember that as with everything else in life nothing lasts forever. Now is a time of great opportunity for savvy and independent-minded buyers and sellers. As Warren Buffett says, “Be fearful when others are greedy, and be greedy when others are fearful.”
He also cautions that “Risk comes from not knowing what you are doing.” Successfully buying and selling NYC real estate requires true knowledge and expertise. Knowledge is power and buyers and sellers should do everything they can to educate themselves about the market and to work with a trusted and knowledgeable advisor to help them successfully navigate the waters.”