According to the most recent survey by the National Association of Realtors, 41 percent of all
new homes are purchased by first-time buyers. Whether you're shopping for a co-op or condo for the first time, or you've already been through the apartment purchasing process in the past, it pays to know how to choose the right real estate agent, mortgage broker, attorney and title company. With the right team of qualified professionals on your side, you'll remember the experience as a pleasant one rather than a complex and time-consuming ordeal.
Now is the time to choose a professional real estate agentone who knows the market and will work with you closely to help you achieve your goals. Get referrals from friends who have had a good experience with buying and selling in the past and can give you the names of their agents. If you are new to the area, look at ads and select a firm you may have used in the past.
When shopping for a new apartment, one question that many buyers ask is, How much home can I actually afford? This is very easy to determine. In New York City, the basic formula is that your monthly carrying costs, including mortgage, maintenance and, in the case of a condo, real estate taxes, should equal no more than half your monthly income. Your real estate agent will provide you with the name of a mortgage broker who can prequalify you for a mortgage and advise you of a dollar range that will be comfortable for you.
Once you have a figure in mind, don't waste time shopping for a home that is not affordableyou will only get discouraged. Many people say they never felt poor until they went to buy an apartment and kept seeing things that were above their price range. So, sit down with the agent and look at affordable homes in the locations you choose. They're out there. You can be sure that you'll find one.
Once the decision is made to purchase the property of your choice, have your real estate agent handle the offer and the negotiations. Remember, the agent can be more objective. Although home buying can be an emotional experience, you want to keep emotions out of negotiations.
Selecting an Attorney
Once your bid has been accepted by the seller, you'll be asked for the name of your attorney. If a buyer or seller doesn't understand all of the terms and conditions of a real estate agreement, an experienced attorney should be consulted before the documents are signed. Ask friends for recommendations, then call the attorneys and conduct a telephone interview. Ascertain what percent of their practice is devoted to counseling buyers and sellers of residential real estate. It is usually not a good idea to use a lawyer who is a close relative or family friend, unless a substantial portion of his or her practice involves residential real estate law.
In addition, you should inquire about the attorney's fee. In Manhattan, you can expect to pay between $700 and $1,500 to have your lawyer handle the transaction. Some attorneys charge on a percentage basis, usually one to three percent of the purchase price of the home.
If you're confident that you've properly selected an attorney to represent your interests, listen carefully to the lawyer's recommendations and give him or her the latitude to perform the services you're paying for. Don't forget: The attorney is there to protect your legal interests ffb , but it's up to you to take responsibility for where, and how, you wish to live. The final business and personal decision to buyor not to buyis all yours!
The Title Search
After you've signed the contract and returned it to the seller with the requisite down payment (commonly ten percent of the purchase price of the home), your attorney will institute a title search.
Just as when you purchase an automobile, and it's paid in full, you're presented with a certificate of title to indicate that you own the vehicle, when you purchase real estate (or real property) title is also transferred. But what happens if the seller doesn't have a clear title to convey? Perhaps there was an irregularity in one of the past transactions involving the property. Suddenly, the buyers may find themselves out thousands of dollarsand not owning any property.
This can't happen if a title company is involved. A title company's job is to search out every past transaction involving the property to ensure that clear title is passed from owner to owner and that the current seller does hold clear title to the property. In the past, this was done manually; however, today computerized records make the task easier, and the result much more reliable.
Besides uncovering title defects (called clouds) relating to a property's ownership, title searches also detect liens. For instance, suppose a contractor did work in an apartment and was not fully paid for his work. If he filed a lien against the property, it would be on record with the county recorderand should be discovered by the title examiner during the search. The title company would then notify the escrow company of the problem, and the seller would have to solve the lien or risk losing the buyer.
Title insurance is the best way to fully protect against possible title defects. Lenders who provide financing require that buyers purchase title insurance. This fully protects the lender up to the amount of the loan balance in the event title problems surface in the future. Some buyers assume that this policy protects them, toobut this is not the case.
Buyers must also buy a homeowner's title insurance policy, and smart buyers will do so, to protect their own investment in the property. That way, if a problem with title is discovered at a later date, it becomes the problem of the insurer, not the owner. Title insurance is a one-time, low-cost expense that provides full protection for the buyer against future title claims for as long as he or she owns the property.
Home Sweet Home
Now that you've found the apartment of your dreams, agreed to buy it, had your lawyer work out the contract, gotten your mortgage and your title insurance, been approved by the board of directors and closed on the property, there's only one thing left to doenjoy your new home.
Ms. Gifford is a licensed real estate broker and senior vice president of The Prudential MLBKaye International Realty.