Andrea Collins, our VP of Communications at Policygenius, has been a renter in New York for the past eleven years and a renter in San Francisco before that. Which is to say: Andrea knows a lot about renting. So it was a pretty momentous decision when she and her husband that they should start looking for a more permanent home.
It started about two years ago because "we were tired of renting. It’s a pretty common theme." More importantly, however, buying a home seemed like a more stable financial investment than the rest of their portfolio. She and her husband have both held various freelance and consulting positions in the past, which meant that they needed to build their own benefits and investment packages to ensure stability.
"The stock market was just not all that reliable," Andrea says. "We took a decent hit in the last economic downfall and the New York housing market did not because it never takes a hit. When we started to look at equity and return-on-investment on homes, it just seemed like a much smarter investment."
Andrea and her husband had trouble getting started until they figured out how to divide up the work. Her husband took on the financial work – getting bank pre-approvals, figuring out equity rates by neighborhood – while Andrea, a natural-born PR woman, took on a communications role. "I took care of writing the brokers and finding the people we’d need to build our buying team, finding people we could easily work with… Sure, it makes it sound like he did more work, but whatever. I’m carrying his baby for him!"
After making the decision to divide up the work and start looking in earnest about eight months ago, they finally found a place in early June, six months after they started. Their offer was accepted in late June and they’re still in escrow until the developers get the Temporary Certificate of Occupancy (TCO) from the city.
Trying to find and buy a home / co-op / condo in New York City is complicated, to put it mildly, but during the eight month process, Andrea and her husband learned a lot. Here are the seven things that surprised them the most:
1. It's a full-time commitment
"Once we really started to get into it, it became a full-time commitment. My husband has had to take time off work – loan officers only work during banking hours."
The search also became complicated. Initially, Andrea and her husband were looking at fixer-upper homes ("We thought we could renovate it for cheaper, since my husband has connections to contractors.") But when those opportunities didn’t pan out the way they had hoped, they began to look more at condos and co-ops.
2. Co-ops are way more complicated.
First of all, the process to get in (and out) of a co-op is way more complicated than buying a condo. "You have to be approved by a board to get in, and if you want to sell, the people you sell to have to be approved." That’s because, with a co-op, you don’t actually own the property. Instead, you own shares in the company that collectively owns the property. There are other restrictions as well: certain days you can’t move in, heavy subletting restrictions, as well as rules and regulations on pets and renovations. In other words, "being in a co-op is like having a landlord but you still pay for everything. I think you have a lot more rights as a condo owner."
3. Brokers aren’t real estate concierges
"I thought, as long as we were specific enough with what we wanted, that the broker would basically just show us places until we found the perfect one. But that’s not how brokers in New York City work." Andrea and her husband ended up going online – usually Zillow or Streeteasy – to find and vet apartments and send them to their broker, who would set up appointments with the sellers. "New York is such a seller’s market right now – buyers aren’t really catered to." Finding a broker who will go to bat for you in negotiations and is quick to provide you with contacts and resources is the most important thing. "The broker we ended up using has our best interest at heart and is really responsive to our questions. He was a godsend during our final contract negotiations."
4. You need to understand the market
You can’t just know what you want and then go looking for it. In New York, you need to understand as much as you can about the housing market before diving in. "You need to understand the nuances of certain neighborhoods and buildings – there are income caps and restrictions, higher down payment requirements." If you don’t understand these nuances, you can waste time setting up meetings for homes you could never own.
5. You should always be the first bid
If you see it, and you like it, you need to make a bid. "There’s a lot of foreign money and all-cash offers in the NYC market right now. There’s a very good chance you could get outbid. That’s why it’s so important to be the first offer in on a place you like, even if you come in under asking. The sellers will usually come back to the first offer" in order to give them the opportunity to counter.
"It’s really important to look at the comps in the area and see what places are selling for. Most places in Manhattan and Brooklyn, they’re selling for $1000 per square foot. But some of the comps in Bed-Stuy, where we were looking, came in for $950. So we tried to bring our offer in somewhere in the middle."
6. Everything moves very fast
"Because you have to make an offer so quickly, finalizing the offer moves really fast. If you don’t have everything already set up, you’re scrambling to find the right people to help you get across the finish line." What do you need set up? A real estate lawyer (and agreed-upon rates) to review and negotiate the contracts, a mortgage broker, all your financial paperwork in order including paycheck stubs, credit reports and bank statements, an account with money set aside for estimated closing costs, plus your own building inspector. (You can use the one your broker suggests, but they can have the inspector in their back-pocket and the inspector may not be honest with you.) On top of that, "you, yourself, need to be very careful when reading the contract, which is insanely long."
Andrea estimates that it took both she and her husband about fifteen hours each spread over a week to read the seller contract and offering plan, about twenty hours to read through the loan documents and one hour to go through the forty-seven loan documents to make her one-hundred and twenty-seven required signatures.
7. Seriously, read those contracts
"We found things in those contracts" that did not make sense. In many cases, there were conversations with their broker and promises made by the seller that didn’t make it into writing. "We had to go back and forth with the seller about five or six times to include essential things in the contract. During that entire time, we were risking someone coming and putting a higher offer on our place, but to us, it was worth it."
Andrea and her husband are still waiting for the building to be finished (another layer of complication here in the city). In the meantime, they’re renting month-to-month and waiting for their first child to be born. With both the baby and the building, they’re hoping things move quickly.