What to Expect When You Purchase a Condo in New York City

Updated: Nov 9


Once your offer is accepted by the seller, the agents/brokers to the real estate deal will prepare and send a "deal sheet" to the purchasers and sellers attorney summarizing the essential (pre-negotiated) terms. These terms become incorporated into the contract of sale that purchasers, sellers, and the escrow agent signs.

Simultaneously, you will (most likely) be ordering an inspection to determine the overall condition of the condo to find out if any immediate, short-term, or long-term repairs are needed. Often, parties to a real estate transaction will use the inspection report to negotiate additional items (e.g. repairs) into the contract prior to both parties signing. If a "repair rider" to the contract is not prepared, sometimes seller's are willing to issue a credit to the purchasers at closing to cover any and all repairs requested.

Behind the scenes, the purchaser's attorney will be requesting/receiving documentation on the condo including building financials, operating budgets, house rules/regs, bylaws etc. These "condo docs" are an important way to understand your roles and responsibilities as a unit holder in the building as well as how financially stable the building is at operating itself year over year.

Once the deal sheet, inspection report (if applicable), and due diligence period is completed, and the purchasers and sellers attorney have come to an agreement on the final terms, both parties will be ready to execute the contract of sale and any attendant riders.

In New York, it is customary for the purchasers to sign first. In fact, you are expected to send the partially executed contract and the "contract deposit" (typically 10% of the purchase price) to the sellers attorney. The contract deposit is put into the seller's attorney IOLA account (who acts as both the seller's attorney and the escrow agent to the deal). This deposit is held for the duration of the deal and will eventually be disbursed to the seller at closing.

The sellers will then sign and send back the fully executed contract to the purchasers attorney. At this point, you will officially be "under contract."

FINANCING (Obtaining a Mortgage).

Once under contract, you will be working with your loan officer (or a third-party mortgage broker) to obtain a mortgage (i.e. the loan). Typically, purchasers will have 30, 45 or 60 days to obtain a commitment letter from the bank stating that the bank is willing to advance you the funds for the real estate transaction. This language is stated in your contract of sale.

To start, you will order an an "appraisal" of the unit. The appraisal is a report produced by a third-party professional (known as an "appraiser") that determines the value of the condo. The appraised value that comes from the report is what the bank uses to underwrite the loan - NOT THE OFFER & ACCEPTED PURCHASE PRICE!!

Should the appraised value come in lower than the purchase price, in most circumstances, you will either have to come up with the difference out of pocket unless your contract allows for an exception (e.g. seller's may or are bound to drop the price to the appraised value or allowing the purchasers to cancel the deal).

From the beginning to the end, your loan officer will be requesting several documents from you including pay stubs, tax statements, and running your credit etc. Obtaining these documents/information is part of their due diligence (i.e. their underwriting of the loan) to verify that you are qualified to obtain and pay back the loan over the specified period at the specified interest rate.

PLEASE WORK CLOSELY WITH YOUR LOAN OFFICER OR BANK REPRESENATIVE THROUGHOUT THIS PROCESS. Check out the common "do's" and "dont's" of the loan approval process.

Remember, a "pre-qualification" letter is not a mortgage commitment.

Once the bank deems you qualified, they will issue a mortgage commitment letter (with or without conditions). If the commitment letter has conditions, it is pertinent that you fulfill all those conditions in order to receive the loan.

Once you are issued a commitment letter or if the mortgage commitment period passes (without an extension or another exception), you'll be deemed to have waived or satisfied the mortgage commitment contingency. What this means is should the bank not fund the loan at this point, you would still be bound to proceed with the purchase.