The Homebuying Mistakes NYC Buyers Should Avoid

Buying a home in New York City comes with a ton of perks: world-class culture, iconic history, and vibrant nightlife — but, despite what you may have seen on TV, an easy real estate market isn’t on the list. And homebuying mistakes in NYC can cost you!

While Carrie Bradshaw and Monica Gellar naturally fell into their chic, spacious apartments with shockingly low price tags, the truth is that kind of luck is nearly inconceivable in today’s market. The New York City real estate landscape moves at lightning speed, and there are a number of easy-to-miss homebuying mistakes NYC buyers need to avoid if they want to score a home.

So, let’s inject a dose of reality into your New York real estate dreams because there are amazing properties all over the five boroughs that could be yours if you know where to look, who to work with, and how to stand out as a buyer.

Put your best foot forward in this competitive market by avoiding these common homebuying mistakes NYC buyers can fall into.

Reading listings incorrectly

It’s common for first-time NYC homebuyers to assume that the square footage on a property listing is accurate. Unfortunately, those measurements can often be exaggerated or misinterpreted by sellers or brokers.

You can confirm the square footage of a condo listing by using the building’s publicly available “notice of property value” via the New York Department of Finance. But for a pre-war co-op, for example, the square footage may not even be listed — or it may have been copied from a years-old listing before renovations or changes. Unfortunately, these are harder to confirm online because their square footage isn’t officially documented.

If you have a good real estate agent at your side, they’ll be able to double-check the square footage of a listing or investigate on your behalf to make sure what you see is what you get. See a listing you’re interested in? Call NewDevRev at (646) 770-3379 to find out more about it.

Not having a mortgage pre-approval— a huge home-buying mistake in NYC

Getting pre-approved for a mortgage used to be a bonus that would help you stand out as a serious buyer when touring homes. But today, in a market as competitive as New York City, getting preapproved has become a necessity. It’s much easier to compete for a property you’re interested in by proving that you have a broker or lender who’s already lined up to work with you.

Luckily, most of today’s mortgage pre-approvals don’t take long. Expect to spend a few hours determining which loan type and rate is best for you, filling out an application, and then waiting to hear back within a few days. Keep in mind most pre-approvals only last for about 60 to 90 days before you have to apply for a new one with your updated financial information. Your agent can always help you find the best lender, and answer any questions along the way.

Not having a good agent

Your agent is your lifeline in New York City’s chaotic real estate landscape. Make sure you have someone on your side with a clear idea of your budget, goals, and schedule, and are ready to communicate with you anytime you need them.

Many homebuyers will make the mistake of skipping an agent altogether in hopes of handling their house hunt on their own. But that means they miss out on having a partner in the process who can guide them to the best listings, find the best lender and attorney, and set up all the calls, meetings, and coordination required throughout both your house hunt and home buying process. If you have any questions about home buying in NYC, connect with NewDevRev.

Underestimating costs

Many buyers make the mistake of focusing solely on their down payment. That’s not necessarily a bad idea considering it’s often the largest homebuying cost. But there are a few more numbers that you need to take into account to build a realistic budget.

On top of a down payment, buying a home also comes with closing costs, mortgage and attorney fees, title insurance, and taxes. And in New York City specifically, there’s one more number to keep in mind: your post-closing liquidity. This is the reserve of cash leftover in your account that proves you’ll be able to cover the next 1-2 years of mortgage expenses and, depending on the building, maintenance costs, common charges, and real estate taxes.

Let’s dig into what homebuyers can expect to pay for a home in New York City.

Down payment

Across the country, down payments can be anywhere from as low as 3% to as high as 50% of a home’s purchase price. But in New York City specifically, your down payment cost will likely depend on the kind of home you’re purchasing and the type of loan you apply for. If it’s a townhouse, single-, or multi-family home, you’re probably looking at a down payment between 5% and 20%.

Co-op buildings usually ask for a down payment in the range of 20% to 30%, but some can be higher than that, too. The overall prices of co-ops tend to run lower than condos, however, much of the cost comes up front in the down payment. For a condo, the listing price you’ll see will likely be much higher, but their down payment demand is usually around 10% to 20% of that price.

Closing costs

Closing costs are an umbrella term for all the fees and taxes associated with the purchase of a home, which need to be paid in cash at closing. They usually add up to 2-4% of the sale price, but for condos, new construction, and homes worth more than $1 million, they can be more like 4-5%.

Closing costs for homebuying in NYC

Mortgage fees

Getting a mortgage usually means paying fees for the origination of the loan, the broker’s commission, as well as a mortgage recording tax which varies depending on how much money you’re borrowing. Going with a digital lender can often help cut down on these extraneous mortgage costs, but be sure to shop around and make sure you’re getting the right loan for your home.

Attorney fees

You’re pretty much required to work with a real estate lawyer to buy a home in New York City. They look over your offering plan or contracts and take care of any red tape around title insurance and transfer of ownership. Traditionally, lawyers are paid per hour, but in the real estate world, it’s one payment upfront. Expect that to be anywhere from $1,500 to $5,000 for a good real estate attorney who’s got your back.

Transfer taxes

There’s a specific tax for New York City buyers called the New York City Real Property Transfer Tax. It’s generally part of your closing costs, but in most cases, it’s paid by the seller. However, if you buy a new development or any property sold for the first time, this tax becomes the buyer’s responsibility. It’s 1% of the purchase price if your home is sold for $500,000 or less. If it’s more than $500,000, then it’s at least 1.425%. If your home is priced over $1 million, you’ll also owe the NYC mansion tax.

Not moving fast enough

A common homebuying mistake NYC buyers can make is waiting too long to make their move, whether it’s going to see the home in person or actually making an offer. When you see a home you want, it’s important to discuss, make decisions, and take action as quickly as you can in order to beat the competition.

This is where an agent can help you. The better they know your situation the faster they can move on your behalf to get in touch with sellers and put together an offer. If you want to learn more about how to navigate the real estate market, give us a call at (212) 301-1140.

Not making a competitive offer

When you make an offer on a home in New York City, it needs to stand out to the seller. How do you make that happen? The simple answer is research. An agent can make sure that you understand how your offer stacks up when it comes to the building’s value, history, and the neighborhood it’s in. An experienced New York City real estate agent can help you put together the strongest offer possible.