Time Line for an Apartment Purchase:
The average time period from the time an apartment is found to the time of closing is 3-4 months.
- 1-2 days Speak with a financial advisor, bank or mortgage broker
- 1 day – 3 months Seek apartment
- 3 days – 2 weeks Negotiations for the apartment
- 1 – 3 weeks Contract signing
- 3 – 6 weeks Obtaining or finalizing mortgage
- 3 – 9 weeks Board package assembly
- 1 – 4 weeks Board package submission/interview
- 30 minutes – 1 hour Co-op board interview
- 1 day – 1 week Receive board approval
- 1 – 2 weeks Closing scheduled
The first steps to take in the journey to the apartment of your dreams:
- Evaluate your finances, and decide how much of a down payment you can afford as well as how much you can realistically budget for monthly maintenance (or common charges), mortgage payment, insurance, real estate taxes, utilities, etc.
- This is the time to speak with a banker, mortgage broker, or financial advisor. Keeping in mind that the financial requirements vary from building to building and that banks have become stricter with lending, it is best to obtain not only mortgage pre-approval but also a commitment letter. This is also a good time to line up an attorney who specializes in real estate.
- Identify and prioritize your “must haves.” Do you require space, extra baths, light, quiet, a view, a garden or terrace, amenities such as a doorman, a health club, or a swimming pool? Investigate neighborhood preferences with regard to safety (day and night), schools, and transportation. Make sure the broker you choose is fully aware of your desires, so your time will not be wasted.
Although it depends on the marketplace, the typical time frame for finding an apartment varies from one day to three months. The average buyer sees approximately 25 apartments before pouncing on the perfect one. As soon as you are serious about a choice but before going further, ask to see the building’s financial statement. Take particular note of the frequency and percentage of maintenance increases and special assessments. Also, if it is a co-op, ask to see a copy of the House Rules as there may be items such as a no pet rule that could be a deal breaker.
Negotiations on the apartment can take as little as two days or as much as three weeks depending on what is being negotiated. Of course, price is the foremost item, but then there are fixtures, such as air conditioners, appliances, rugs, etc. Apartments are normally transferred “broom clean,” and any fixtures remaining should be in the sales contract.
The contractual phase of the process can typically take from one to four weeks. The seller’s attorney will draw up the contract for the buyer’s attorney. When all the terms are agreed upon, the buyer signs the contract and it is returned to the seller’s attorney with a check for 10% of the purchase price. At this point the seller executes the contract, which may include contingencies such as financing, board approval and closing date. Following signing of the contract, co-op board or condo applications are given to the purchaser and may be completed at this point if there is no financing involved.
It can take anywhere from three to six weeks, and sometimes longer, to apply for a mortgage and receive a commitment letter from the lender. A mortgage application cannot be processed without a fully executed sales contract.
Board Package/Condo Application
Once the contract is signed you should be assembling your board package with the aid of your broker. It may take two-four weeks for the gathering of this information. Complete the application submitting all materials requested; be clear and concise in response to questions. Requirements for a coop purchaser usually include full financial disclosure with supporting documents, employment history, personal and business references, tax returns for the prior three years, and a credit history. The commitment letter from your lender is usually the last item to complete your board package or condo application (note: condo purchase requirements are not as extensive).
Review your package with your real estate agent before submission to the building’s managing agent. If the package is deemed complete it will be forwarded to the members of the Board of Directors. Once they have reviewed it an interview will be scheduled, usually as part of a regularly scheduled monthly meeting. The interview lasts approximately 30 minutes to an hour; you should be prepared to answer questions about personal and financial matters.
It can take one day or one week for the managing agent to notify the seller’s broker whether or not they have won board approval.
One to two weeks after board approval the managing agent, the buyer and seller attorneys and the financial institution will coordinate a date and time for the closing.