Home Buying in New York>Question Details

Ellie, Home Buyer in California/NY

I am an all cash buyer and I've found a co-op (sponsor unit at that) that I truly love. However, this is for

Asked by Ellie, California/NY Sun Nov 23, 2008

a pied a terre, and I certainly do not need to buy anything right now. I did not think I would find the perfect place so quickly, but I am tempted to go for it. However, a part of me really thinks I should wait several more months, because I really don't think the impact of the financial crisis has hit NYC yet, to any significant degree. However, this apt already has one other very interested buyer, so I'm very sure it would be gone, and that would be quite disappointing. What to do, what to do? Any gut instinct advice out there? I am really conflicted. The only negative thing about the apt itself is the high maintenance (more than $1.60 a sq/ft). Other than that....it's perfect (and unique enough that I do not think I would easily find another like it). Thanks for comments.

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HI Ellie.

Before you make any AGGRESSIVE offers as someone suggested, you would have to take several things into consideration.
First you would need to know how long ago this property has been listed.
Second you would need to know or try to find out why the seller is selling. Not everyone is desperate for money and not every sale is a fire sale.
Third you would need to know how well the property is priced. Not everything is overpriced on the market, some of the properties are priced just right. Last month alone in my firm 10% of the sales which were made sold at asking or above asking.
This being a sponsor sale, I think you hit the jack pot. There are usually no board interviews for sponsor sales. Many sponsors are trying to unload the inventory and move on, which gives you more o fa bragaining power.
There are dozens of cooky cutter apartments sitting on the marke right now and not moving. And only a handful of unique homes that wont sit around for too long.
You were fortunate enough to find this unique home and not spend months of headaches and frustration like many other buyers go through trying to find the perfect home.
If the second buyer is serious about this apartment, it wont last much longer.
It's ultimately up to you, if you can let go (emotionally) and not bite your elbows next year trying to find another "PERFECT" place, wait it out. People buy because they love something and there isn't such a thing as the right time. The right time in my opinion is when you find something you love, you think it's priced well and you will enjoy it for years to come. Interest rates are at their lowest, prices are low, a good indication of good timing for you.
Why is the maintenance high in the building? Is it a full service building full of amenities? Have you checked if there is an assessment and thats why the maintenance is higher then what you would expect?
I have no idea which address you are talking about, that would give me a better idea as to what type of action the building has seen.
Consider this.
You don't buy this apartment and hold off to lets say 2nd quarter. Prices may or may not have dropped, depends on the neighborhood and building. If it isn't a sponsor sale and you are buying into a coop, expect an interview. Let's also assume the seller says YES to a low price, you finally wait for the board the call you in, they ask you questions, look at the price and a week or two pass by you get a NO for an answer.
Why you may ask? I am qualified, I got liquid cash, great job. Some buildings and boards can say no to a low price even if the seller says yes.
That's a very realistic scenario.

Ellie I wish you best of luck making up your mind. If there is any other information which you may need, don't hesitate to ask.
My information is in my profile, I'm free to talk to :) and would love to help.

1 vote Thank Flag Link Sat Dec 6, 2008
Hi Ellie - maintenance of $1.60 per sf for a co-op w/many amenities (I don't know what your building has) isn't uncommon. Maintenance may also be reduced (which is uncommon, but does happen). However, the bigger issue is that it may indicate that the co-op has low financial reserves. Attorneys I deal with look for $2500-$3000 in reserve, per unit of the building.
I'm an experienced, licensed agent (featured in the New York Times) with some other options that could work well for you if you're having 2nd thoughts.
Please contact me by phone so I can answer your questions & send you the property we have that works best for you.
Our website is not fully representative of what I have for you.
I hope to hear from you.
Yours Sincerely,

Gavin Parker
Licensed Real Estate Broker.
11 West 25th St., 10th Fl.
New York, New York 10010.

cell. 1.917.403.1848
fax 1.212.989.6552
email: gavin@mlx.com
web: http://www.mlx.com

Member of the Real Estate Board of New York
Member of the Manhattan Association of Realtors
Member of the National Association of Residential Real Estate Investment Advisors
Senior Relocation Consultant All Around Moving Services, LLC.
0 votes Thank Flag Link Fri Jan 16, 2009
Go with your gut. It's always right. At the end of the day, you have to live there no matter how long or short. This isn't just a business or investment decision. It's a second home. You have to like it and it has to be something more than a good deal on paper. Pray on it and follow your heart. These are crazy days and times we're living in. Let your spirit and soul lead the way. While other people have their opinions, your own advice is your best advice.

Good Luck!
0 votes Thank Flag Link Sun Dec 7, 2008
It is a buyer's market right now, which means you have many more choices than just a few months ago. There is more inventory right now than there has been for a while. You say you found the perfect place quickly, but the maintenance is high. If the maintenance is high for your budget, maybe it is not perfect in every way. Maybe you might want to see a number of other units and see if you can find something that is perfect in every way including the maintenance. Also, since it is a pied-a-terre for you, I hope you have checked if pied-a-terres are allowed. Some co-op buildings do allow it, but most require that it is your primary residence. I get the impression that you are not working with an agent. The best thing you can do for yourself is work with an agent. The commission is always paid by the seller, so it will cost you nothing and you will have someone screening properties to get you exactly what you want as well as to negotiate for you, do your board package, and deal with the bumps in the road that every deal inevitably runs into. Feel free to click on my info and contact me if you would like more help.
0 votes Thank Flag Link Wed Dec 3, 2008
Yes Julie, I am sorry. I misquoted you.

Cheng, you can't really collect good rent from a co-op. Oftentimes renting is allowed on a short term basis only, , or charged a renter's 'premium' which is simply the co-op mafiosing themselves in on your action, or banned outright. All of those three create limited investment return possiblitities.
0 votes Thank Flag Link Mon Dec 1, 2008
Btw, cash buyers are all over the places these days. e.g. danny who just bought 5 condos with all cash!!! Ken Kumar bought 1935 Raspberry Ct Edison NJ 08817 1br 1ba condo at $203,000 also in cash ... and the is his 2nd one, and he is investing another one.

Helen has $5 million cash, where can she put? forget about wall st, no stocks! no CDO's! no banks! (who is going to put $5 million in banks? largest banks like Citibank? rediculous!

I think financial crisis has hit NYC already, otherwise, you do not see 2 IT professionals sharing to rent 1br condo paying $1,400 ... but if you are like the people above paying cash to buy the 1br condo at $203,000, that is pretty good income.

The only mistake you could make if you have $5 million cash and went out to buy $10 million dollar house that was to be escaped by Wall St CEO's, COO's, CFO's ...etc. The property tax could eat out your saving!
0 votes Thank Flag Link Sun Nov 30, 2008
If you know Edison Hollow South http://raspberryct.blogspot.com/ has been always sold out due to the fact fact it can walk to Edison Train Station http://edisontrainstation.blogspot.com/ about 40 minutes to NYC, you know that the real estate is very strong in Greater New York City area ...

A report shows that new home construction jump 22% in Greater New York City area, I guess, due to recent collapse on mortgage rate http://www.bankrate.com/brm/graphs/graph_trend.asp?tf=180&am…

Tell me when gas price dropped down to $1.34 http://www.kcgasprices.com/ what else can be invest other than real estate? At least you can collect some good rent, right?
0 votes Thank Flag Link Sun Nov 30, 2008
Just wanted to clarify...
Antolin also made some really great points, except I never said " YES, BUY IT!" As a matter of fact I recommended you did not pay all cash and that you explore all your options with the help of a professional.
Web Reference: http://joliemuss.com
0 votes Thank Flag Link Sun Nov 30, 2008
Well, not surprisingly, 3 out of 3 of the real estate professionals so far have responded with, "YES, BUY IT", but to be fair to them, they have to eat too, especially with two major holidays will have come and gone within 1 month.

You really should consider the monetary cost of this apartment. I will just assume a few basic things, maybe I am totally wrong, but maybe I am pretty close. I assume that you have found a 500 sq ft studio for probably around 200,000. Not a bad deal at $400/sq foot, especially if you are going to live in it. But since this will be a pied a tierre, you will not get the full benefit of living in it, and will have to pay maintenance instead.

At 500 sq ft and 1.6 sq/ft maintenance, you will be PAYING $825/month to NOT live there full time. In addition, you will lose the investment returns of your 200,000, lets assume it is in a 3% bank account, which generates 6000/yr or 500/mo. Ok, there are tax implications, perhaps you would only get $375/month after taxes from your account, and perhaps although I doubt it, you would be able to deduct the taxable portion of the maintenance, the pittance that it would be, but that still means that you will be PAYING $1200/mo to NOT live there.

The quick and simple answer? If you come to NYC and spend more than 1200/month on hotel rooms EVERY MONTH EVERY YEAR go ahead and buy that place. If you do not spend 1200/mo here in the Big Apple EVERY MONTH EVERY YEAR on hotel rooms, then forego it altogether. You can, of course, "clump it", and see if you spend more than 14,400/yr on hotel rooms here in NYC, that would also be another way to compare it. But still, since you would only be using it as a pied a tierre, you have to ask yourself is it worth it.

One last thing: you might be considering renting it out. If you do that, you still have to pass the financial 1200/month hurdle- that is can this 500 sq ft place be rented out for 1200/mo, as well as the co-op board hurdle; they might deny it, or want a piece of the action. But most importantly, you said that you wanted it as a pied a tierre, and you won't be doing to much 'pied-a-tierring' if you have it rented out.

So here is the formula:
1) Calculate the maintenance cost.
2) Add to that the interest lost, after taxes, on the cash purchase price.
3) Do you spend that much in NYC on hotels each month. If equal to or greater, buy it. If not, keep hotelling.

Good Luck,
0 votes Thank Flag Link Sun Nov 30, 2008
Morgan expressed some very good points! In addition you might consider working with a buyer broker as they will do some comparables and also help you make that lower priced offer..It's always better to have an intermediary make an offer, because in a negotiation it's very important to keep your cards close to your chest! In NY the selling agent 's loyalty is only to the seller.
(*Correction: In my previous post I left out:" if it's a Sponsor unit, " you most probably have to pay a NYS transfer tax)
Web Reference: http://joliemuss.com
0 votes Thank Flag Link Sun Nov 30, 2008
My gut instinct says that if you are more concerned about getting the best price you should wait. If you wait longer prices will come down more, but if your "perfect place" is as unique as it sounds will something like it be available when prices soften even more. Trying to time the market is just as impossible as guessing if more "perfect apartments" will come on the market at better prices. So what it comes down to is how much you weight price, versus the long term satisfaction you will have from buying an apartment that has everything that you are looking for. I would recommend making an aggressive offer. If you think the market is going to go down 5%, 10%, 25%, whatever you are comfortable with offer that amount off the property, the worse that can happen is that they counter or don't accept your offer.

Good luck.

Morgan Evans
Prudential Douglas Elliman
0 votes Thank Flag Link Tue Nov 25, 2008
Congratulations on finding something that you truly love! If you have second thoughts or don't need the place perhaps paying all cash isn't the way to go. I hope you are working with a buyer broker as you most probably also have to pay a transfer tax and you may not have been told about this. In addition a coop will probably be hard to get permission to rent should you want to do that for part of the year because of the high maintenance. How do you know that it really has another interested buyer? Please let us know..
Web Reference: http://joliemuss.com
0 votes Thank Flag Link Sun Nov 23, 2008
Asking this question at Trulia is like a Zebra asking hungry lions whether or not she should take a drink of water at their hole.
0 votes Thank Flag Link Sun Nov 23, 2008
I think you answered the question yourself. It is my opinion that you should never try to time the market. The best time to buy is when you are ready to buy. Don't second guess yourself. As you said, the apartment may not be available if you don't act now. Good luck to you.
Web Reference: http://www.corleyre.com
0 votes Thank Flag Link Sun Nov 23, 2008
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