The Real Estate Transaction - Buying A Co-Op in the Bronx/Yonkers Area

They say the bread and butter of Real Estate is Listings! I certainly understand that, as a listing agent you can list and let the other agents do the selling and yet you still make at least half the commission. Not only that, but if you get Buyer yourself you get the entire commission! Sweet deal, it’s true.

So…call me an underachiever or a true service oriented professional…even a servant of the people…but I love to work with Buyers. To me the challenge of searching through the jungle of possible options out there and getting to know these people as they look for that new place to call “home”, and then actually being instrumental in knowing I helped them find it is just beyond fulfilling. Money is a necessary evil but it certainly does not buy the feeling I get when working with a Buyer. It is challenging at times when a Buyer is learning to trust you sure, it can require a good measure of patience…but it is rewarding nevertheless in every way for me!

So…working with Buyers, most of them not exactly seasoned, and First Time Buyers especially, they tend to have a LOT of questions…questions like “How long does it take to close once the contract is signed?” or “What happens next after I sign the contract?” and these are just 2 of the many. For Co-Op purchases it is that much more involved, so, I came up with a little outline that puts a bit of a time line as well as the steps that usually occur in a typical real estate purchase. There are MANY things that can cause a deviation and I could probably write a blog about each of them but for now…hope this helps some of you out there that wonder…What? When? How? Why? I am sure I will be editing and fine tuning this for weeks to come as I think of more things but this is the first draft.

The Real Estate Transaction - Buying A Co-Op in the Bronx/Yonkers Area

The Search

This can take one month to 2 years or more, depending upon the criteria the Buyer is looking for as compared to what is available on the market. This is usually the longest process of the Real Estate purchase.

Negotiations

Initial Offer (Buyer)
Counter Offer (Seller)
(Back and forth as many times as necessary until an agreement is reached. If the Initial Offer is strong enough or the seller is desperate enough there may not be a counter at all.)

Time Frame: Can take between 1 to 10 days depending upon how fast each side responds. One way to shorten this time is to time the offer. Giving a time frame in which the other side must respond in order to continue negotiations can help to control the lag in time between counter offers. This can put some stress on both parties but it is still practiced in most negotiations as it makes the process much more efficient.

We have a Deal

This means Buyer and Seller have reached an agreement and a final offer has been accepted by both parties (Seller and Buyer). We have a deal is also known as an “Accepted Offer”

Time Frame: Within 1 to 3 days, Buyer and Seller's lawyers contact each other, and Sellers lawyer draws up the contract.

Contract

The Buyers Lawyer, Buyer and Buyer's Agent do their due diligence to make sure the terms of the contract are favorable, as well as all pertinent information that can affect the purchase, in a coop that would include things like a Co-op's financials. As soon as contract is signed by both Buyer and Seller it becomes what is called a "Fully Executed Contract".

Time Frame: The contract is signed typically 10 business days after an accepted offer (a.k.a. "we have a deal"). Many people tend to be a little surprised as to how fast things move once a Deal is reached, which makes sense since the search and negotiations seem to go on at a leisurely pace in comparison. Possible delays at this stage may happen for reasons such as, one party’s lawyer is out of town for a few days or if the information is not given to the both Attorneys in a timely manner so that they can start the process of drawing up and reviewing the contract.

Mortgage

As soon as there is a Fully Executed Contract, the Buyer immediately contacts their Mortgage provider and at this point they will be able to lock in a rate and sign a Good Faith Estimate (GFE) which will detail all pertinent information in regards to the mortgage as well as the approximate closing costs.

Time Frame: Within 10 business days, if the Buyer provides all the paperwork required in a timely manner, the Mortgage provider will extend a "Commitment Letter" which basically says "We will give you the mortgage"...but this usually has certain conditions, from something as simple as the latest pay stubs to further documentation that was not asked of the Buyer before this time.

Co-op Board Application

Simultaneously, as soon as contract is signed, the Buyer will begin filling out the Purchase Application and put together the paperwork including Fully Executed Contract of sale, Commitment Letter from Mortgage Provider, W2's and pay stubs and reference letters as well as anything else the Coop Board requires so that it is ready to be submitted to the Board.

Time Frame: The application should be filled out and ready as soon as possible so that as soon as the Commitment Letter comes in from the Mortgage Provider it is ready to be sent as a complete package to the Board for their perusal. This means the application is usually submitted to the Board between 8 to 14 business days after contract is signed.

Co-op Board Interview And Approval

The Co-Op Board meets once a month. If the Buyer submits the application but the Board has already met that month, they can request a special meeting outside of the usual monthly meeting date and the Board may agree to meet with the Buyer just to Interview them. After the interview the Board will review all the paper documentation and the combine that with the actual information they garnered at the interview and either approve or deny the Buyer's application. Some Boards are tougher than others. A basic rule of thumb that most Boards have is that the Buyer's carrying charges (Maintenance + Mortgage) be 1/3 of the annual income of applicant. Another thing that they look for is an amount equal to that of 6 to 9 months carrying charges left over in the bank after all the closing costs and down payment is said and done.

Time Frame: Depending upon when the Board last met and when they will meet again, whether a special meeting just for the Interview or the next months meeting, this can take anywhere between 1 week to 6 weeks after Application has been submitted. The Board Approval Letter can take anywhere between 2 to 6 business days after the Interview.

Clear to Close

The Commitment Letter's Conditions must be met in order for the Underwriters to give Final Clearance to the file and allow a closing date to be set. One of those conditions is the Board Approval Letter. If they are satisfied that Buyer has met all the conditions specified in the Commitment Letter, the File will receive the "Clear to Close" stamp of approval and a closing date is set.

Time Frame: This can take anywhere from 3 business days to 6 business days after the Board’s Approval Letter and all the rest of the conditions have been met. It can depend on availability of all parties involved as well as any special requests…(Buyer’s, Seller’s and Bank’s Lawyers may or may not be available on a given day…as well as title closers and of course the Buyers and Sellers themselves.