1. You DO NOT have to spend a ton of money. (Relatively speaking.)
There are many strategies for those who want to buy luxury real estate in New York City, but do not want to spend an exorbitant amount of money. One way is to buy a unit on a lower floor of a luxury building. A second floor unit can cost up to 19% more than a comparable first floor unit. Another option is to look for units with higher maintenance or common charges per month, as they often have lower sales prices. Alternatively, some lines in a building may be priced higher than others … for example, a unit line with windowed bathrooms will sell much more on the open market than a line whose bathrooms are lit only with fixtures.
2. Get approval from the bank.
If you need a mortgage to buy luxury real estate in New York City, you will want to obtain a mortgage approval letter from your bank stating the amount of the mortgage loan you are approved for. Smart sellers can legally tell their brokers to only show properties to buyers who are “bank approved.” A bank qualification letter is not the same as an approval letter and will not qualify you to view a property under the bank’s approval requirements.
3. Know your terms.
In the real estate industry, “terms” refer to the stipulations under which money is delivered. For those who close cash, this relates, among other things, to the number of days required to close. For mortgage holders, it refers to their interest percentages, as well as the time required to obtain the funds from the bank and transfer them to the corresponding TRUST account. In a real estate transaction, terms are as important as cash, because they dictate to sellers under what conditions they will be able to recover their original purchase price. Knowing your terms inside and out will make it easier for your broker or agent to negotiate with sellers for you.
4. You CAN do your own research, and you probably should.
According to the National Association of Realtors, 88% of people start their real estate search online. In New York City, home of the savvy shopper, more than 90% of shoppers and renters begin their search online. The importance of doing your own research is staying ahead of your competition, other buyers ready, willing and able. Each New York City luxury building has its own buying rules and its own amenities to offer. Each area of Manhattan has its own downsides, quirks, and advantages. And not all real estate agents or brokers are the same. You’ll want some to do some preliminary research to stay ahead of YOUR competition, other buyers ready, willing, and able. Which brings us to our next point …
5. The competition IS fierce.
You’ve probably heard this adage before regarding the New York rental market: bring a bank certified check and be ready to close a rental unit you like as soon as you see it, because the next person to see it might just get it out from under your nose. A similar fervor applies to the New York City buyer’s market, especially for New York City luxury real estate. International cash buyers are probably your strongest competition in the New York luxury market. They can walk in and say “I’ll take it,” and cash buyers can close in as little as two weeks. Know your own financial situation and know how quickly you are ready to move into a property that you like. The ability to quickly go to ESCROW will give you a significant advantage over other buyers.
6. YOU NEED a competent broker.
Just because a property falls under the luxury umbrella does not necessarily mean that it is problem free. Structural issues like improper weight of pillars and roof problems, evidence of water damage and mold, or plumbing and HVAC problems are just a few of the problems that can be found in any property. That is why it is critical that you have a home inspection done before signing on the dotted line. Most importantly, make sure your purchase contract includes a home inspection contingency – that is, a statement that allows you to freely walk away from the property if the inspector finds a problem with it. A competent broker will also not waste your time or his own showing you properties that are not satisfactory.
7. The New York luxury real estate market never really dipped.
The New York City real estate market is a market unto itself, comparable to no other in the United States. Play according to your own level of supply and demand rules. The international demand for luxury real estate in New York continues to be a major reason why Manhattan prices are so high compared to other areas. REBNY reported that 2012 was the most successful year (over $ 30 billion in property sales) for real estate in New York since 2008. REBNY also reported that broker confidence in the market was higher in January 2013 than in any month of 2012. Sales numbers across most brokerages point to the fact that we continue the trend toward a seller’s market, as sellers and cooperative boards continue to be able to choose from a pool of potential buyers. Know that the New York luxury real estate market is not depressed in any way and take this knowledge into account in your approach to buying.