From Offer to Close in 10 Easy Steps

May 16th, 2012

When talking about the process of buying and selling real estate, the conversation often revolves around listing your home, finding the perfect place, or negotiating an offer. A less glamorous, more stressful, but equally important part of the real estate process is what happens to get the deal done. Here’s the process, from offer to close for a NYC co-op, in ten easy steps.

Step 1: The Offer
Buyer and seller, either on their own if unrepresented, or via their brokers, negotiate an offer. This process includes disclosure of financials including loan pre-qualification if financing is involved and discussion of contingencies if any.

Step 2: Contract
If both parties can come to an agreement on price and contingencies, a contract will be drawn up by the seller’s attorney. This contract is based on a deal sheet written up by the seller’s broker (if there is a broker). The deal sheet contains information such as the property location, price, terms of sale, contingencies, and names of all parties involved in the transaction.

Step 3: Due Diligence
While the contract is being drawn up and negotiated by both parties’ attorneys, the buyer’s attorney will conduct due diligence on the standing of the building. This includes looking into the building’s financials, completing a title search, and reviewing board minutes and the offering plan. This is also the time for buyers to conduct a home inspection if they wish.

Step 4: In Contract
Up to this point, though there is an accepted offer, the buyer and seller are not technically “in contract.” This means that the seller can continue to show the home and entertain other offers. Often, these offers are accepted only as back-ups in the event that the initial contract falls through. Once the attorneys finish negotiations, both the buyer and seller sign the final contract. At this point, the buyer will pay a deposit to be held in escrow by the seller’s attorney until closing. Once the contract is signed by both parties and a deposit is made, the listing is considered to be “in contract,” and no longer available to the market at large.

Step 5: Financials
Once the listing is in contract, the seller’s attorney will order the payoff file from the homeowner’s existing lender. During this time, if the buyer is using financing, they will move forward with the process of obtaining a mortgage. Contracts will generally allow 30 days or more for the buyer to obtain a mortgage commitment. The bank offering the mortgage commitment will complete an appraisal on the property to ensure that they are making a secure investment.

Step 6: The Board Package
Concurrent to the buyer securing financing, the buyer and seller (with their brokers, where applicable) will work on assembling the board package. Required documents vary from building to building, but generally consist of the sales application and contract, verification of employment, two years of tax returns, bank and financial holdings statements, references, commitment letter for financing, and personal financing . Once the buyer receives a commitment letter from their lender, the buyer will submit the board package to the building’s board for review.

Step 7: The Board Interview
Though the process varies widely from building to building, the board interview generally occurs at the building, either in a shareholder’s apartment or a common space. The meeting can be similar to a job interview from appropriate attire to the questions that are asked. The buyer should be prepared to answer any and all questions asked and to bring their pet if requested.

Step 8: The Closing is Set
At this time, buyers have received the “clear to close” from their lender and are able to complete the transaction with financing in place. If possession is to occur at close, sellers will vacate the premises if they haven’t already. 24 hours before the closing, the buyer will conduct a walk-through of the property to confirm that it is in acceptable condition and any mandated repairs have been completed.

Step 9: Closing
Generally the parties in the closing room include the seller, the buyer, their brokers, their attorneys and a closing agent. All paperwork is signed by both parties, funds are distributed, keys are turned over, and the transaction is completed.

Step 10: Post-Close
While the buyer and seller have completed their responsibilities and the property has been transferred, their attorneys still have a few more steps to make everything official. The attorneys record the sale, transfer the deed or stock certificates, and send out final paperwork to both parties.

Posted in Buying & Selling, Home Selling, Tips for Home Buyers | No Comments »

Running Comps in Park Slope

May 11th, 2012

I sat down with a new client in Park Slope yesterday to talk about listing his townhouse for sale. When we meet our clients in person, we do a thorough walk through of the home, and then sit down and discuss pricing with an ipad, looking in real time at comparable properties (comps) – sold, in contract, and what is currently on the market. We don’t leave our clients a stack of fancy brochures – I never thought it made sense when everything we discuss is on online and on our web site. However, most brokers do leave packages, and in this case, our competition had left a package of what they considered to be comps. And the conclusion they reached based on the comps, was that the home should be priced about 20% higher than we said it should.

We warn sellers not to go with the broker that simply suggest the highest price. Instead, we recommend they spend the time to really understand the comps they are looking at, and price their home accordingly. However, brokers know that sellers often consider a high listing price to be an important factor for choosing who to list with, so the temptation is often too great for brokers to resist comp inflation.

In this case, the brokers that came before us put a comp set in front of the seller that did not include sale price. They merely had a single photo of the front of each house, the addresses, and the price per foot. They failed to explain that larger homes carry higher cost per foot than smaller, narrower homes like this seller. They also ignored condition, and how that impacts price. And they didn’t take into account the block – a park block in Park Slope typically sells for more than a townhouse near 5th Avenue. Finally, they failed to take into consideration whether the house was a 1 or 2 family home. Buyers will often pay a premium for a renovated 1 family home when compared to a multi-family dwelling that has had or currently has tenants in place.

After we walked through each of the homes that were listed as “comps”, it became very clear that nearly all of the comps that were in the shiny packet were not, in fact, comparable to the seller’s home, and that the price was completely unrealistic (although very attractive). We were able to produce several good comps – even one on the same block in a nearly identical house, that was left out of the other report. When we took some time to go through them in detail, I believe the owner had a much better view of the market and where his home should be priced. It will be interesting to see where he prices it, and who gets the listing…

Posted in Home Selling, Working With Real Estate Brokers | No Comments »

The Best Manhattans in Manhattan

May 10th, 2012

“Around Town” is a new series of posts written by RealDirect Neighborhood Guides who wish to share the best places, sights, flavors and experiences NYC has to offer.

You’re thirsty. Not the kind of thirst you feel after jogging five miles, and certainly not the thirst you have after a hot summer day on the porch, rocking on grandpa’s chair. After all, you can’t live by hydration alone. You have other needs.

Booze.

Not cosmopolitans. Not screwdrivers. Not spritzers. Why mask it? Hell no—embrace it! And if there was one cocktail in the world that thumps on its chest and says, “I am booze—hear me roar!” it has to be the Manhattan who, like a good friend, is readily available, always dependable, and let’s face it: makes you feel good about yourself. Read the rest of this entry »

Posted in Around Town, Leia Furer, Neighborhoods | 1 Comment »

RealDirect Property Search

May 8th, 2012

Ever since I was a little boy, I’ve been dreaming of building a better real estate search engine. Okay, so maybe that’s a bit of an exaggeration, but I have, for years, been thinking about the real estate industry, and how we can use technology to improve it. Our first entry into this space was our seller platform, which gives sellers of residential real estate the tools, technology and expertise to sell a home like a pro, but without a typical listing commission. To date, we have saved sellers over $1M in commissions. But selling is only half of the story when it comes to a real estate transaction.

Today, we are proud to unveil (in beta) our new property finder, featuring a maps-based user interface, as well as a number of new interactive features including first-ever listing compatibility rankings based on search criteria, a unique lasso tool for tailored neighborhood definitions and enhanced graphing for market research and analysis.

Real estate is all about compromise and shifting the list of wants, needs and dealbreakers as one’s search evolves. For this reason, we built RealDirect.com’s new interface to provide users with a streamlined and simple hub for researching and ranking listings. As a tech-focused firm, our goal is to continually stay ahead of the market and provide clients with the most advanced tools for a more in-depth, intuitive approach to real estate.

We hope you’ll check out our state-of-the-art features below and click through to take our real estate search engine for a spin.

Maps-Based Interface
RealDirect.com’s enhanced search function centers around an elegant map-based interface that is clear and user-friendly. Users are able to set their own personal neighborhood boundaries, lassoing specific areas across New York City and searching specifically within these customized borders.

In a city of neighborhoods with fluctuating borders and micro-neighborhoods that can vary greatly within a matter of a few blocks, the pre-defined neighborhood options don’t mirror how people outline their ideal location when searching for homes. We created the lasso tool to let clients define their own neighborhoods, thus returning more targeted results and cutting through the real estate clutter.

Compatibility Rankings
Upon entering their criteria, RealDirect.com users will receive a wider variety of matches from REBNY’s comprehensive listing database that may have previously been overlooked by traditional searches – all ranked by percentages according to how closely they meet search requirements. RealDirect.com’s cutting-edge interface was designed to enhance the traditional method of search, which only returns exact matches, to create a more thorough way to analyze results.

The tool not only provides users with their perfect matches, which are based on a highly varied number of search algorithms, but also ranks close matches based on relevancy to the original search with an at-a-glance overview. RealDirect.com’s search tools also help ensure that listings with missing or incorrect information aren’t completely lost in the search process due to human error.

Data and Metrics
RealDirect’s new interface also includes dynamic tools for researching and analyzing the market. Real-time charts and graphs display current availability, pricing, size and unit breakdowns by neighborhood, including side-by-side analyses that help users compare multiple neighborhoods at once.

RealDirect.com for Buyers offers resources and access to RealDirect’s expert real estate consultants. In working with RealDirect.com, buyers have the opportunity to earn a rebate of up to 1 percent on the sale price of a home at closing. RealDirect.com provides prospective buyers with two-tiered guidance in managing their apartment search, including a unique Buyer Profile that helps clients better understand their living needs.

Check out TechCrunch’s coverage of RealDirect.

Enter to win a prize pack in RealDirect’s Search & Swag promo.

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Kids in the City – Raising a Family Without the White Picket Fence

April 2nd, 2012

According to 2010 Census Bureau data, 6.3% of New York City residents are children under age five. That means that more than 1 in every 20 people living in the city is a young child. Families that in the past would have chosen to move to the suburbs to raise their children are deciding with ever increasing frequency to stay in New York City. Apartments in the city are notoriously small and lacking in outdoor space. So, how are families managing to live and even thrive without the suburban yard with a white picket fence? Read the rest of this entry »

Posted in Neighborhoods, Tips for Home Buyers | No Comments »

Investing in NYC – A Guide for Foreign Real Estate Buyers

March 26th, 2012

From understanding building types to passing a board review, buying an apartment in New York City can be a harrying process even for locals who have months to make a decision. For buyers who aren’t based in the United States and who may only have a few days to view properties and make an offer, the purchase of NYC real estate can seem like an overwhelming process. But, with solid guidance and an understanding of the market, investing in New York City real estate can be a rewarding experience for foreign buyers. We’ve pulled together this comprehensive guide for foreign real estate buyers who are interested in investing in NYC.

Building types
Condos, co-ops, cond-ops and more, our guide to New York City building types covers all the bases. We also have a list of classic apartment layouts and some tips for the pied-a-terre buyer. While it is possible for international buyers to purchase co-op property, most prefer to purchase a condo in order to avoid any difficulty that may arise with obtaining approval from the co-op board. Buyers who wish to use the property as a rental need to make sure it is allowed by the building’s rules prior to purchase.

Mortgage
While purchasing a property with cash can simplify the process and eliminate some fees, it is also possible (although not easy) for foreign buyers to obtain a mortgage for as much as 75% of the purchase price of their property. Look for a lender that specializes in programs for international buyers and plan to provide documentation such as proof of employment, a proven history of mortgage or rent payments (at least one year), proof of funds available for closing and credit references.

Expenses
Monthly maintenance / common charges – these monthly fees vary from building to building and can range from hundreds to thousands of dollars. As a general rule, the more amenities a building offers, the higher the monthly fee will be. These charges go toward maintenance of common areas such as the lobby, gym, or pool and to pay building employees.

Property tax – this is a tax assessed by local and state governments. Check for tax abatements and available deductions to try to minimize the amount of tax you will need to pay. In co-ops, the property tax is built into the maintenance fees.

Assessment – in some instances a building will charge a special assessment. This is an additional fee on top of the monthly common charges or maintenance and can be the result of a shortage of building funds, necessary repairs, or to pay off a law suit. Buyers can ask sellers to pay off any special assessments as a condition of purchase.

Working with brokers
As a buyer in New York City, you are not responsible for paying any fees to a real estate broker. Sellers have pre-arranged with their listing agent to pay all fees for both their agent and the agent representing the buyer of their property. When you work with RealDirect as your buyer’s agent, you receive up to 1% cash back at closing.

Contract & Attorney review
Once a property is selected and a purchase price agreed upon, a contract will be negotiated and agreed upon by the attorneys for both parties. This process usually takes 1-2 weeks. Until the contract is signed by both parties, the sellers can continue to show the property and entertain other offers. So even if the sellers have accepted your offer, neither party is bound to the transaction until the contract has been signed.

Deposit
When an offer is accepted and a purchase contract completed, buyers will be required to transfer a deposit equal to 10% of the property purchase price to an escrow account managed by the seller’s attorney. This insures that the buyer will act in good faith during the transaction.

Closing costs
When you purchase property in New York City, there are an assortment of costs that go along with the transaction. Some of these costs are paid by the seller and others are paid by the buyer, including:

New York City transfer tax – this tax ranges from 1-1.425% of the property purchase price.
New York State transfer tax – in addition to the city transfer tax, the state also charges a tax equal to 0.4% of the purchase price.
Mansion tax – on properties of $1 million or more, New York State charges a mansion tax equal to 1% of the purchase price.
Attorney’s fees – attorney’s fees can be ~ $2,500.
Title search – This process verifies that the seller has a right to convey the property and once the purchase is completed nobody other than the buyer will be able to claim ownership. Cost of title search is $450 per $100,000 of the purchase price.

It is also common to encounter a host of other smaller expenses such as document fees, mortgage application fees, building application fees, recording fees, appraisal, credit report and bank fees. Many of these mortgage related fees are avoidable by purchasing with cash instead of financing.

Posted in Buying & Selling, Tips for Home Buyers, Working With Real Estate Brokers | No Comments »

Sh*t Competitors Say

March 8th, 2012

It should come as a surprise to no-one that real estate is a highly competitive business. That said, once a property is listed, 95% of real estate agents are respectful of the rules against trying to solicit the business of homeowners who have listed with another agent. We will occasionally hear from our clients about brokers from other firms using scare tactics to talk them out of working with RealDirect. Often, this is just a lack of awareness on the part of agents who haven’t worked with us yet. We understand. We haven’t been in business for decades like many of the larger NYC brokerages and it takes time to build a reputation. As we’ve sold an ever increasing number of properties, we’ve continued to earn the respect of our peers in the industry (we’ve even had a few brokers from other firms use RealDirect to sell their own home), and we hear less and less about other brokers attempting to poach our clients. But, every now and again, we hear about something like this gem sent to one of our sellers by a Senior Vice President at a traditional brokerage (excerpts pulled directly from the email are in bold and italics, with our responses below):

Now sorry but realdirect is that an online grocery seller?

Oh, I get it. You’re pretending to confuse us with a popular online grocery delivery service. Clever. While we don’t deliver food, much like Fresh Direct, we do use smart technology and stellar customer service to remove an unnecessary hassle from the lives of our clients.

How many agents they have?

What is the experience level of their agents?

It is interesting that this question is raised by someone from a traditional brokerage, where agents compete with each other for listings and commissions. In the traditional brokerage setting, the commission structure sets up an “every agent for himself” environment, so regardless of how many agents they have or how experienced they all are, the client can only count on the expertise of their individual agent. Because RealDirect functions as a team, our clients benefit from the support of ALL of our experienced agents and our marketing department, our design department and our tech department. In a traditional brokerage, those other departments (if they exist) are dedicated to promotion of the brand, whereas at RealDirect, the entire team works for the benefit of each client.

It seems more like a gimmick probably predicated in low fees

RealDirect is a REBNY firm with licensed agents and a proven track record of successful sales. In fact, while the average time on market for listings in Manhattan and Brooklyn for 2011 was 134 days, RealDirect’s listings sold in an average of 83 days. Additionally, because of our low fees, RealDirect sellers saved an average of $32,000 by working with us instead of a traditional brokerage with a 5-6% commission structure.

50% of our listings sell to buyers who are represented by a broker from another firm (the other 50% sell to unrepresented buyers, resulting in even greater savings for our clients). We work with agents from other firms all the time and most are professional, courteous and knowledgeable about their business. But for the small percentage of agents who think unethical scare tactics are good business, we’d like to point out that the numbers don’t lie. Our listings sell faster and our sellers net more money. That’s not a gimmick, that’s the future of real estate.

Posted in Buying & Selling, Home Selling, RealDirect News | No Comments »

New York City Neighborhoods – Murray Hill

March 5th, 2012

Murray Hill, located between 34th and 40th and ranging from Fifth Avenue to the East River, is a residential neighborhood on Manhattan’s East Side which is currently more affordable than many trendier areas. Apartment buildings are abundant, with side streets offering attractive townhouses. Due to proximity to UN Headquarters, many countries operate their embassies or consulates in Murray Hill’s historic mansions.

Though considered largely a residential area, Murray Hill does offer a large number of restaurants and ample opportunity for nightlife, as well as some of the world’s finest shopping along Fifth Avenue.

With subway service to the area currently limited to the 4,5 & 6 trains from Grand Central, Murray Hill has not seen the same level of real estate price increase as neighboring areas. However, construction work has already begun on the Second Avenue subway, which will make commuting to the East Side a much simpler task. For those willing to live with the temporary inconvenience of construction, Murray Hill could be a great place to call home.

Photo courtesy bondidwhat

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Top 10 Ways to Prepare Your Home for a Spring Sale

February 27th, 2012

April showers bring May flowers, but March prep work brings springtime home sales. Though it may seem too cold to be thinking about the spring real estate market, taking steps to prepare your home now will help you avoid the stress of a last minute rush to get ready. If you want to be in good shape when the weather starts to warm up, use these top 10 tips to prepare your home for sale in the spring.

1. Clean & Declutter
Make your move easier by beginning the packing process now. Clear out all clutter and remove items you don’t regularly use. Donate items that haven’t been used in the last twelve months, throw away items that are broken or damaged, shred and dispose of paperwork that is no longer needed, and move bulky pieces of furniture, holiday decor, out of season clothing and any other items you don’t need into a storage facility.

When you clean, pay attention to small details. Wash windows, dust blinds, launder curtains, dust baseboards, clean appliances, and straighten up the contents of your closets. Apartment Therapy has some great plans for getting your home clean and keeping it that way in less than an hour a day. Read the rest of this entry »

Posted in Home Selling, Marketing Your Home, Preparing To Sell Your Home | No Comments »

A Technology Culture in Real Estate

January 26th, 2012

As mentioned in a previous post, I attended the Real Estate Connect conference earlier this month. During one of the sessions, the Inman News staff revealed the results of a survey they took of over 1000 real estate agents. There were many interesting findings, but the one that resonated with me was that 61 percent of top real estate agents in the US are considering leaving their brokerage. The top 3 reasons were:

1. Disatisfaction with technology
2. Company culture
3. Lack of confidence in the vision for the future of the brand

This was particularly interesting to me because looking at the real estate business from the outside, I marveled at these 3 items, and they became the impetus behind starting RealDirect.

We believe that by embracing technology, the culture and confidence in the vision of the company will take care of itself. Here at RealDirect, we consider ourselves as much a technology company as we are a real estate company. We chose to locate in the heart of New York’s tech community, and have more web developers than sales people. But it’s our approach that is our true differentiator.

Quite simply, technology is a part of our DNA. We constantly look at our business and ask what we can do better by utilizing technology and data. Some things, like board packages for co-ops, are still stuck in the 1980′s, and no matter what we want to do, we still find ourselves killing trees to make the hundreds of sheets of paper needed for these antiquated forms. However, when a client asks us how long it will take to sell their apartment, we attack the problem like scientists and not salesmen. And the great thing about real estate is that most of the questions that come up every day have real data driven answers. A home is just a composition of space, rooms, amenities, condition, views, and location. When you break down these data points, there are tons of answers in them that make the process of buying and selling much less of a mystery. And by making the process transparent, we have the opportunity to change the perception of the real estate pro from a pushy salesman to a trusted consultant.

That is our vision of how a culture of technology can change real estate. If you share our vision, we encourage you to join the team!

Posted in Buying & Selling, RealDirect News, Working With Real Estate Brokers | 2 Comments »

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