Unexpected Costs to Prepare for When Buying a Home in NYC

Whether you are just beginning your home search in NYC, or you have conducted multiple real estate transactions in the Big Apple, it is important to be aware of or reminded of what costs to expect when buying a home in New York City that may have been glossed over when determining your budget.

Down Payments in NYC On the Rise

The initial investment or down payment is often the largest cost for homebuyers. How much of a down payment you'll need to make is determined by the property's value and the loan's terms. The standard down payment required by banks is typically 20%, however, this number is a guideline today as many lenders offer various mortgage products that have lower (or higher) down payment requirements. Because interest rates have climbed throughout most of 2022, some buyers are opting to put a larger down payment on their purchase than they might have when rates were 2-3% in order to reduce their monthly mortgage cost.

All over the country, the typical down payment is much below 10%. You may buy a home in New York City with as little as 0% down (with a VA loan) or as much as 50% down (for the most competitive co-ops).

Ensure to work with both your Real Estate Advisor and Lender as you work to set your budget, factoring in the type of building at which you are looking as well as current interest rates.

 Charges at the Start of a Loan

Most of the NYC buyers chose a mortgage as a way to finance their desired property. Mortgage rates have been fluctuating in recent years because of the Pandemic followed by high inflation. Mortgage loan origination fees typically range from 1% to 2% of the loan amount, with the higher number covering the higher costs associated with in-house processing and underwriting. If your financial standing is solid, you may be able to bargain (or shop about). If the seller wants to attract buyers in a competitive market, they could offer to cover the origination fee.

Tax on mortgage recordings

Mortgage recording taxes are assessed according to the loan amount, not the purchase price. 1.8% for loans under half a million dollars and 1.925% for loans above it apply to condominiums and one- to three-family residences, respectively. Since cooperatives do not qualify as "real property," they are excluded from this regulation.

Calculating taxes can be a daunting project, and you can easily get lost in the numbers. via

Reserves as unexpected costs to prepare for when buying a home in NYC

Liquidity needs after closure are another name for reserves. Cash, cryptocurrency, equities, and bonds are all examples of liquid assets. To convince the board of a New York City co-op that you won't have any trouble making your mortgage or maintenance payments after closing, you should have two years' worth of living expenses in liquid assets.

You can fund an escrow account with your savings as well. Non-mortgage costs, including:

• real estate tax

• common charges/monthly maintenance

• insurance premium
  

  The mortgage servicer may add these costs to the monthly mortgage payment. All of these charges will be included in your one monthly mortgage payment. Since just one payment is required, the procedure is simplified. The lender will separate the charges and pay them as appropriate. This way, you will know in advance what to prepare for when buying a home in NYC.

Paying duties on transfers

The seller is typically responsible for paying the New York City Real Property Transfer Tax. However, the transfer tax is the buyer's obligation when newly constructed condominiums or sponsor units are sold for the first time. If the purchase price is more than $500,000, you may expect to pay a tax of 1.425%, but if it's less, you can expect to pay 1%.

Moving expenses

Most people leave thinking about moving costs at the very last minute. So, moving expenses can come rather unexpectedly to them. Even more so because if you don't plan and end up moving on short notice, you'll have less choice in terms of moving companies and more bills to pay. If you're moving long distance to New York, make sure to look for affordable help, meaning, start searching for reliable movers as soon as possible.

Renovation Costs Can Add up Quickly

Depending on how well the actual property goes with your end vision, you'll need to adjust and invest in some renovations. Of course, you expect the major ones, but it's important to put on paper how much money you will put into them. Also, minor things like pet-proofing your apartment can come to mind at the very last minute, and you might end up costing you more than expected.

 Legal costs

When purchasing a home in New York City, you must hire a real estate attorney. The purchasing procedure in New York City is more complicated than in other markets, making the assistance of an attorney essential. A real estate lawyer's fees are often structured differently from those of an hourly rate law firm. You may expect to spend between $1,500 and $4,000. The most you should ever pay is $5,000. Avoid anybody who offers to act on your behalf for a few hundred dollars.

A good lawyer can help you with all the unexpected costs to prepare for when buying a home in NYC.

Warranty on title

Title insurance shields you against any financial obligations the previous owner may have left on actual property, such as a condo or townhouse. You must set aside a few thousand dollars to guarantee a clear title. In other words, less than 1% of the buying price). On a $1,000,000 property, this may cost upwards of $4,000. But your peace of mind is worth much more than that.

Final thoughts

As you see, there are a lot of unexpected costs to prepare for when buying a home in NYC. You need to consider all of these to avoid any unpleasant surprises. You can always call a reliable real estate agent and ask for help when in doubt.

Key Trends to Watch in NYC Real Estate During the Second Half of 2022

The NYC Luxury Real Estate Market enters the second half of the year after a strong first half of 2022

We are officially halfway through 2022! The NYC market experienced additional records during the first half of 2022. As we enter the back half, market dynamics have begun to shift. While markets grapple with record high inflation and rising interest rates, signed contract activity has slowed and we have also seen an uptick in inventory. In the sales market, leverage is beginning to shift toward Buyers while the Rental market continues to remain highly competitive and hot.

The New York market has had a stellar past few years, but we have not seen the lofty price appreciation levels of 20%+ that some markets around the country experienced. Coming out of Covid, we saw elevated activity metrics, given the low amount of transactions that occurred throughout most of 2020. Additionally, inventory shortages are not new to the New York market.

 Heading into the back half, the shift in pace and market dynamics can likely be viewed as a return to normal from the frenzied pace observed throughout 2021 and the beginning of 2022. Mixed economic signals have deterred some luxury buyers, but there are many that are still motivated by a deal. It is important to remember that most transactions in the Manhattan luxury market are cash transactions, so a softening of the market surfaces opportunities for these buyers.

Buyers flocked to luxury properties during the first half of 2022. Pricing will be key as we enter the back half.

 Key Trends to Watch in the Second Half of 2022:

• Consumer Sentiment: likely to remain uncertain until we see positive economic data as well as a turnaround in equity markets

• Price Sensitivity: record high inflation that has raised prices across nearly every sector is weighing on consumer psychology…Buyers are motivated by a deal so accurate pricing will be key

• Construction Costs: we do not anticipate that construction costs will drastically drop in the near future, so the opportunity cost of waiting is still something Buyers need to assess.

• Rental Prices: rents rise in both economic booms and recessions so while a slight softening of activity in the white hot NYC rental market is reasonable, we do not expect prices to see a sharp decline.

 In times like these, it is very important to partner with the right real estate professional that truly understands the local market - in New York, that can be as local as down to a specific building! Media headlines can often be misleading and inaccurate in the narrative they are telling - a professional is your best asset heading into the second half of the year!

6 Ways to Prepare for a Competitive Home-Buying Season in NYC

In general, the home buying market in New York City can be highly competitive. This is due to the high demand and low supply of properties. And when it comes to luxury real estate, things are no different. Moreover, high-end homes are unique, so they are highly sought after, just like any rare item. It's also important to note that, according to the experts, 2022 will see a rise in both real estate prices and investments. So, here are six ways to prepare for a competitive home-buying season in NYC.

Check your finances

As we all know, buying a home is never cheap. It is particularly so when you're looking for luxury real estate in New York City. Therefore, before you start visiting open houses, you must determine your budget limit.

• Analyze your finances carefully to see what you can afford and how much you’re willing to invest. Take into consideration your savings, income, and expenses.

• It would be best if you also took into account potential additional costs. For example, you might be keen on old architecture, but you have to consider the costs of renovation.

• If you're not ready to invest so much money at once, you can consider mortgages. And in this case, it’s essential to get a pre-approval. This way, you’ll know exactly how much money you can get.

• It's also advisable to look at some of the prices on the luxury real estate market. This way, you’ll know what to expect.

To prepare for a competitive home-buying season in NYC, you first must determine your budget limit.

Prepare for a competitive home-buying season in NYC by hiring the best Agent to Represent You

If you're not a professional realtor, you'll need help tackling the competitive home-buying market in NYC. Real estate professionals can offer you advice and help you find your dream home. Due to their experience and access, an agent can filter the market for your preferences and set up showings for you.

Moreover, it’s good to know that luxury properties are not always publicly put up for sale. And you only hear about some of them through word of mouth. Therefore, having a well-connected team of real estate professionals is essential. So, choose wisely if you don’t want to miss out on your dream home.

While researching professionals, it's also good to look at moving companies. Buying a home might take some time, but it's good to be ready. The professionals at Roadway Moving advise that if you leave it for the last moment, you won’t be able to find the best services and offers. So, do some market research for this as well.

Put together a team of real estate professionals to help in this process.

Determine what you want

Once you've determined your budget and found the right team of professionals, you have to figure out what you want. And don't just say a mansion or a penthouse. You have to be specific. Otherwise, not even the best team of realtors will be able to find the right home for you.

What’s important here is to understand what luxury real estate means for you. Is it the size of the house or the location? The high-quality materials that were used to build it? Or is it the specific amenities? Your definition of a high-end property can even combine all of these aspects. But in any case, you have to put it all down on paper and sleep on it. Don't make rash decisions. After all, this is a significant investment, so it has to be a good fit.

Choose the right location

Before you start your house hunt, it’s good to narrow down the location. Each of the five boroughs of NYC indeed has its unique features. Nevertheless, you have to find the perfect place for you. To do this, you should first explore on your own. Visit each borough to get an idea about the landscape, the community, the social life, the schools, etc. Afterward, consult with your team of real estate professionals. Their experience and inside knowledge can help you make an informed decision.

To prepare for a competitive home-buying season in NYC, you should narrow down the location.

Learn to be patient

Buying a home is a considerable investment, particularly if you're buying luxury real estate. Therefore, you should avoid making any rash decisions. Take your time to analyze your options. If you don’t find the right fit as soon as expected, don’t despair. These things take time. And don't get discouraged if someone else beats you to it. It's essential to be sure before placing an offer.

However, it’s also good not to be too picky and wait too long. Yes, the home you’re buying should satisfy all your needs, but there’s no such thing as a perfect house. So, you should be willing to make some small compromises. Otherwise, you might never find what you’re looking for.

 Learn to negotiate

Just because you're buying luxury real estate doesn't mean you shouldn't get a fair price. Therefore, don't skip the negotiation once you find a home you like. This is where your Real Estate Broker will be a huge asset to you as they are a negotiating expert and know the market prices well. They can advise you on what to submit for the strongest offer to win the property. It's also good to know how much competition you have. If the property is highly sought after, you might not have any other option than to place a higher offer.

Final thoughts

Because of the high demand and low supply, the housing market in New York City can be very competitive. Besides, finding the right home is never easy. So, what can you do to prepare for a competitive home-buying season in NYC? Determine your budget, seek professional help, identify what you want, and narrow down the location. Being specific is key. It's also essential to take your time and not make rash decisions. And in the end, make sure you get a fair price.

New York Renters Faced with Steep Lease Renewals

Data shows rents in New York have reached or surpassed pre-pandemic pricing

Rents across New York City have been on a tear, rising passed pandemic lows in some neighborhoods of the city. Rents plunged at the start of the pandemic as uncertainty swept the city and many renters fled to other homes outside the city or relocated. Now, however, rents are surging.

Many renters that entered into leases during lows of 2021 are approaching the end of their leases and are being caught by surprise with the steep renewal rates that are being proposed by landlords.

During the pandemic, Renters that new that would be staying put in the city began apartment shopping, finding spaces that they never thought were possible for themselves. Perhaps that was simply being able to afford to live alone or upgrading to a luxury building with full amenities in a prime location. When vacancy rates were high, landlords were desperate to secure tenants and offering extensive concessions.

The need for rock bottom prices and concessions came to an end as demand increased in New York. Rents in New York rose 33% between January 2021 and January 2022, nearly double the national average according to a study cited by The New York Times.

Rents in city’s most coveted neighborhoods experienced even larger swings, with some areas such as the Upper West Side and Williamsburg now seeing rents some 40% higher and even higher than before the pandemic.

Rents in some neighborhoods of Manhattan such as the Upper West Side have increased some 40%, more than double the national average

With pandemic deals expiring, rents are rising by hundreds of dollars a month. While many Renters who locked in COVID deals on their leases knew the deal was not going to last, many did not expect the extent to which rates would increase after the initial lease period.

The increase in rent, while a sign of the market stabilizing and the city recovering, is a frustrating situation for renters nonetheless.

In data cited by Bloomberg, it notes that tenants paid a median rent of $3,630 in February 2022, the highest for any month in more than a decade

What Should Renters Do?

Renters facing steep increases on lease renewals need to really asses the increased cost. While large rent increases are a hard pill for anyone to swallow, sometimes all the factors of moving can still be more than staying put.

Additionally, inventory is tight so finding a new option could also be challenging. Renters will need to re-adjust their expectations of what they can afford at their price range in today’s market.

Of course, if the proposed renewal price is simply out of your price range, begin your search for a new space as soon as possible. Partnering with a Broker that knows the city and can navigate the complex Rental Market will be a huge asset. Who you work with matters, so ensure you are working with an Agent that is a good fit. Negotiating with Landlords can be challenging so having a skilled negotiator on your side to get you the best deal is a must.

2022 Predictions for New York City Luxury Real Estate Market

2021 was a record-breaking year for the New York City luxury real estate market. In fact, Manhattan had an impressive $30 Billion on sales last year. With each New Year we receive the golden question of “what’s in store for the year ahead?”. While we do not have a crystal ball, we do have some key themes based on last year’s activity that help inform how the landscape of the 2022 NYC Luxury Market may shape up. In short, while there may be some slowdown relative to 2021, we do not see any signs of the pandemic recovery stopping in 2022.

Heading into 2022, we expect continued strength across the housing market. The start to the new year has already been a strong one for Manhattan luxury, marking the best start to a year since 2006. The week between Christmas and New Year saw 22 contracts signed on properties priced $4M and up.

We expect the following themes to rise to the top: Rising Prices, Rising Rates, Rising Investment in New York.

Rising Prices:

Prices have already begun to recover in the New York market, particularly in the luxury sector. Strong demand and shrinking supply has been placing upward pressure on pricing. This is likely to continue as inventory shortages may increase in certain pockets of the market, and we expect to demand to remain persistent. Price appreciation may not be as rapid as the past year, but we expect an upward trajectory. Additionally, supply disruptions that have increased input and replacement costs are contributing to rising prices.

Turn-Key:

Stemming off of the last point above, whether looking to buy or looking for a New York City luxury apartment for rent we expect a strong preference to remain for turn-key or renovated units. Challenges with labor costs as well as sources furniture, etc. has made a renovation a much larger and time consuming project that many individuals no longer want to do.

Rising Rates:

The Fed has given a confident signal that multiple interest rates are nearly certain this year. The most recent guidance from the Fed signaled 3 rates for 2022. Buyers have been enjoying historically low interest rates for years, so the initial rate hikes may cause an upfront “shock” to the market. Savvy Buyers that have been contemplating purchasing are moving to lock in rates and make the purchase before rates rise. 

Rising Investment in New York:

The city is incredibly excited to welcome a new Mayor and administration that has promised to shift the narrative of the city toward one of economic recovery and pro-business. A new Mayor could peak investors that were avoiding de Blasio’s New York. With the return of foreign buyers to New York City luxury real estate, rising inflation, and a strong rental market, we see a favorable environment for investors to consider New York for their investment.

2021 Holiday Tipping Guide

The Holiday Season has officially kicked off. With Black Friday and Thanksgiving over, holiday decorations are going up across town. With the arrival of the Holiday Season comes the question on the mind of many - “How Much Should I Tip?”

While some traditions will be put on hold, other traditions synonymous with the Holiday Season will continue, one of which is Holiday Tipping. 

One could argue that Tipping is even more important this year than ever before - it has been a challenging year for all, and for those that are fortunate and have the ability to tip those that have helped throughout the Pandemic, this is the year to do so.

Building staff in Residential New York City buildings have been essential to all residents through the COVID-19 pandemic. Building Staff have been responsible for increased cleaning protocols, receiving and managing an exponential increase in deliveries, and checking in on vacant apartments for residents that have escaped to second homes.

We’ve adjusted our annual tipping guide to account for 2020 - some of the individuals that are key in a typical year such as your Manicurist may not have played a role in 2020 because of the Pandemic. Additionally, if you are considering giving more this year to your valued Building Staff and are concerned they will expect this amount in future years, consider stating in your note with the tip how grateful you are for all they’ve done during this challenging year to set expectations. 

Our friends at Brick Underground publish a go-to holiday tipping guide, which has been circulating since 2013. We condensed it, and put our take on what is appropriate as you budget for your holiday tipping. Remember, these are simply guidelines. There are many factors that can influence the tipping decision such as the size of the building (a larger staff equates to smaller individual tips), level of service, seniority, and time in building. Additionally, owning versus renting in a building can play a big factor as well.

Of course, if you live in a building with a part-time doorman, virtual doorman, or no staff at all, the below levels could be adjusted downward.

Renters: Tips do not have to equate to the dollar amount you are paying each month for rent. If you receive a lot of packages, have a stroller that is carried in and out of the building, etc., factor this into your tip. 

It is recommended that you tip in cash. Doorman, Concierge, Supers, etc. all of bills to pay like you and I- they are not looking for fruit cakes, cookies, or homemade gifts at the holidays!

Many buildings have organized drop off locations for your tips so you can safely give to your Building Staff rather than direct contact due to public health guidelines.

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TIPPING GUIDELINES

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Super: $150-$200
Doorman/Concierge: $100-$150
Package Room: $50-$75 per individual*
Housekeeper: 1 Week Salary
Dog Walker: 1 Week Salary
Garage Attendant: $50-$100
Personal Trainer: $100*
Personal Assistant: 1 Week Salary
Hairdresser: $75-100*

*In the post-pandemic world, it is important to remember all the people fielding the large increase in orders you are placing and the sheer volume of orders they are now receiving, just for you alone. From Uber Eats to Amazon and every shopping destination in-between, there is no denying that we all place significantly more online orders than prior to the pandemic. We recommend tipping Package Room staff more than previous years. In most buildings it will be the package room employees, however, Doormen/Concierge are likely fielding these requests after hours.

Additionally, if someone such as a Trainer has moved to a Virtual Model and you continued to use their service, we recommend continuing to tip these individuals.

When: Most building staff will prefer to receive their tips in early December so they can plan their own holiday spending accordingly. Tips account for a large part of building staff’s anticipated income at this time of year.

This guide was presented in 2018 and has been re-shared to include updated information

Real Estate Market Braces for Return of Foreign Buyers

Key Luxury Markets around the Country including New York City are expected to benefit from boost in demand from Oversees Buyers

For key luxury markets around the country, especially New York, Foreign Buyers have been a key part of the Buyer pool. For the past nearly 3 years, this Buyer has been virtually absent from the New York Luxury Market.

The pandemic and associated travel restrictions prevented foreigners from physically coming to the United States. While some deals did occur virtually by foreign Buyers, that has been small compared to deal volume when travel bans were not in place.

We expect that dynamic to change and the foreign Buyer to return with strength now that the United States has lifted the travel ban on approximately 33 countries for fully vaccinated visitors. With the travel ban lifted, foreign buyers can once again enter the country and physically see and buy properties. We expect this to have a positive impact on the New York luxury market as many want to invest their dollars here.

For a luxury market that has continued to set records throughout 2021, we anticipate the return of the foreign buyer to be an additional boost of demand as we end 2021 and enter 2022. 

This could add tens of billions of dollars in transactions to the market.According to the National Association of Realtors, foreign Buyers spent $267 Billion on American Real Estate in 2018 and in 2019 they spent $183 billion. 

Wealthy Foreign Buyers are interested in high-end homes and New Construction

What We Expect from the Return of Foreign Buyers to the United States

• New demand in key luxury markets across the country such as New York, Miami, and Los Angeles

• New Construction will likely be the main beneficiary of this new demand as foreign Buyers prefer new product

• Thanks to increased asset prices across both real estate and equity markets since prior to the pandemic, many foreign buyers have elevated wealth

• The economic impact of travel resuming should be a positive for multiple sectors of the market - tourism, retail, and ultimately real estate.

My Lease is Expiring: Should I Stay in my Apartment or Rent Something New?

If you are currently a Renter or have rented a property before, you. Know that dreaded feeling when your lease expiration date is quickly approaching. With the expiration of your lease approaching comes the question, and decision, of: should I stay in my existing apartment, or find a new apartment to rent?

 It is important to remember there are two sides that are influencing here – you as the Renter, and the Owner or Landlord. This can be a tough decision to make as it is influenced by multiple factors – we discuss how to think about decision so you can enter your next lease with confidence.

Factors Influencing the Owner or Landlord 

When thinking about renewing an existing lease with a tenant, an Owner must weigh various costs. The owner is looking at these factors for you to stay:

1. Broker Fee: Depending on the state of the Rental market, it is likely that the Owner will need to offer a concession to secure a new tenant. This is typically paying the Broker’s fee so the new tenant does not have to. This is one’s rent or 15 percent of the annual rent.

2. Standing Empty: What is the risk of the unit sitting vacant for 1 month? 2 months? Even longer? When the empty is unoccupied, the Owner risks losing income.

3. Current Market Conditions: The Owner must have a pulse on the current state of the rental market at the time of your renewal – is it favorable to Owners or Tenants? This impacts the dynamic of their being able to increase the rent, how quickly they may be able to find a new tenant if they do not offer to renew, etc.

4. What is the last price a comparable apartment rented for? Perhaps you entered your lease when the market was lower, and the Owner may be able to rent at a much higher price in the current market. However, Owners prefer a good, known tenant that they dealt with rather than a new unknown tenant. This is where the tenants’ discount lays.

What to Consider as a Tenant

As a tenant, is important to approach the expiration and possible renewal of your lease with an understanding of the following questions.

1. How long do you need to extend for? One year? Six months? Month to month? The shorter the lease, the more it will cost monthly.

2. Current market value for your apartment that you are renting: If you have been paying significantly less than what it could rent for today, it is not unreasonable to expect some increase in the monthly rent on your new lease.

3. Cost of moving: Perhaps one of the biggest considerations that is often overlooked. Is saving $200/MO on rent really worth the cost of moving?

The costs of moving include more than just the fee paid to the Movers. There are both financial and mental costs.

Think about Security deposits, packing, finding movers, moving fees, broker’s commission, time lost from work, possible condo application fees, unpacking. Often times, this costs will largely outweigh the annual cost of an increase in rent.

4. How long do you plan on staying? Does your timeline have moving to a new location in 2-3 years, or perhaps moving in with a partner or buying a property? If so, it may make sense to stay in your existing apartment despite an increase in Rent. Again, the costs and stress of moving may not outweigh an increase in rent.

Summit One Vanderbilt Observation Deck Opens in Midtown Manhattan

A new observation deck has opened in New York City that once again raises the benchmark. Summit is located on the 91st-93rd floors of One Vanderbilt, a new high-rise office building in Midtown Manhattan. Perched 1,200 feet in the air, Summit is the highest vantage point in Midtown.

What sets Summit apart from some of New York’s other famous observation deck is the experience one you get to the top.

Jump onto the elevator from the Grand Central Terminal and ascend to Summit. 

When elevator doors open, you step into an immersive art exhibit designed by Kenzo Digital.Mirror floors and ceilings provide a unique perspective on your surroundings. Kenzo Digital intended to design a space that would feel dreamlike and an escape from the reality on the ground.

For those looking for a bit more than just gazing out to the skyline and horizon, you can experience “Levitation.” Levitation consists of 2 glass ledges suspended 1,063 feet over Madison Avenue, ensure to offer heart-racing views of the city below. 

Visitors that want to take things even higher can try “Ascent”, glass elevators that scale the outside of the building. They are the largest glass-floor elevators in the world and take passengers up 1,000 feet in just 42 seconds. 

Before you make your way back to the ground, stop by Apres to enjoy a quick bite and drinks by Danny Meyer’s Union Square Events. You can enjoy bites and drinks from open air terraces and indoor lounge areas.

Tickets must be purchased for access and are available at one the Summit One Vanderbilt website. Prices start at $39 and New York City residents can get a $5 discount.

Images via Summit

Condo vs. Co-Op: A Guide for First-Time Homebuyers

Buying a home is one of the most exciting adventures on which you will go. However, it can also be very stressful and frustrating, as finding the right property can take a lot of time and energy. In New York, we have different property types, and understanding the difference between them is important in making your decision. The market is primarily dominated by two types: Condos and Co-Ops.

If you are still unsure what is the right choice for you, we're here to help. Below, we have prepared the pros and cons of both property types. Understanding their differences and what ownership of each entails will make it easier for you to make the right decision.

Condo vs. Co-Op: the main differences

Co-ops and condos have many similarities, so it can be very difficult to notice any differences at first sight. Of course, as with many things, the devils are in the details.

A cooperative, or a co-op for short, is run by a non-profit corporation. The residents buy proprietary leases from this corporation. In a Co-Op your ownership is not that of real property but shares in the corporation. The proprietary leases are shares in the property. By buying proprietary leases, the residents gain certain rights such as access to communal areas of the building as well as to their individual units.

The main difference between Condominiums and Co-Ops is in the structure of the ownership. In a Condo, residents actually own real property and hold the deed to their unit. Additionally, the have an interest in common areas of the building such as hallways and amenity spaces. When you're buying a condo, you are going through the same process as if you were buying a house. The best part is that condominium buildings are everywhere, which is not the case with co-ops. For example, if Manhattan is your dream location, it will be very easy to find a perfect condo – most new construction projects are Condos.

Differences Between Condos and Co-Ops

As said, the main difference between these two types of properties is ownership. However, there are other things that make them different, understanding the full implications of the differences will help you decide which property type is best for your scenario.

●      Price - Condos are usually more expensive, but they give you bigger flexibility as they are much easier to sell or rent. However, have in mind that the down payments for Co-Ops are usually higher.

●      Fees - In co-ops, all monthly expenses are rolled into one bill known as the “Monthly Maintenance”. Also, the utilities are charged as per the percentage of share a resident owns. For example, if they own 3% of the property, they'll pay 3% of the electricity or water bill.

●      Taxes - When it comes to condos, as they're owned individually, the property taxes are charged in the same way as you would pay for a single-family home. As co-ops are considered a single property, property taxes tend to be lower as they are shared between the residents. In a Condo, you will typically face two monthly charges: the real estate taxes as well as monthly Common Charges.

●      Board Approval: Both property types have boards and your purchase will be subject to board approval, however, Co-Ops are notorious for having very strict boards and they do not have to disclose why they approve or disapprove a potential resident.

What to have in mind before making your decision?

Now that you know the main differences, here are a couple of more details to consider before making a final decision between condo vs. co-op. 

Consider your budget

Every home buying process starts with budget questions. Therefore, make sure to assess how much you can spend by consulting with your Mortgage Broker and Real Estate Agent in order to set your home search up for success. Before you choose a lender, make sure to check with at least three to ensure you are receiving the most competitive rate.

By thoroughly analyzing your budget, you'll have a clear picture of how much you can spend and what kind of property you can purchase.

When setting your budget, make sure to take other factors besides your mortgage into consideration. Keep in mind that co-ops are less in demand and therefore cheaper. However, owning a condo comes with low maintenance costs. You need to weigh both options and figure out what works best for you in the long term.

Also, be mindful of the size of the property you can get for your money. Perhaps the home you used to rent was big, and now you have to downsize. Therefore, you might not have enough room for all your belongings. An easy and inexpensive solution is to rent a storage unit. However, make sure to do your research and notice warning signs before making your choice. For example, if you see any water damage in the unit, that should be an immediate red flag. As you want your belongings to be kept safely, you need to choose the most reliable storage company you can find.

Consider how much responsibility you are willing to accept

The number of responsibilities you'll get with a property might help you resolve the condo vs. co-op dilemma. When you live in a co-op, it almost feels like being a part of a club or society. Every big decision such as a renovation or accepting new tenants has to be made jointly by all residents. Afterward, the elected board will act on any decision residents make.

If you decide to live in a condo, you can choose if you want to decide about these issues on your own or let the condo board make the calls. You may wish to be excluded from these decisions and be responsible only for your own property. It's your decision how much you want to be engaged.

Living in a co-op means that you'll have to participate in every decision regarding your building.

Therefore, make sure to do your research and find out what kind of expenses and obligations you are getting with your first home. Nowadays, all information can be easily found online. You can even buy a property remotely if you wish! Your real estate agent will be able to advise on the monthly common charges or maintenance costs for a given unit.

However, if you are a first-time home buyer, we definitely recommend hiring an experienced real estate agent to help you.