New York City real estate is a unique area of practice, and my affinity with it began in the Hamptons growing up. My father was a residential general contractor, and my mother eventually wound up getting her real estate license a little later in life. I was always around homes and creating, and buying, and selling homes has been part of the conversation in my life as far as I can remember.
In terms of New York City real estate, it is a world in and of itself. There are small apartments, there are large apartments, there are commercial buildings, there are residential buildings, there are residential condominiums (known colloquially as “condos”), there are residential cooperatives (known colloquially as “co-ops”), there are rentals (known colloquially as “rentals” haha), there are superintendents (known colloquially as “supers”), there are common charges (mainly for condos), there are maintenance fees (mainly for co-ops), there are real estate taxes (for both condos and co-ops), and there are purchases and sales.
Historically, the purchase or sale of an apartment in New York City began with a call to a real estate broker or agent. Note that agents are also called “salespeople.” Another quick note before we get into the process of buying and selling real estate in New York City: in order for a real estate salesperson to sell real estate in New York, the salesperson must be licensed. But having the license is not enough; the salesperson must also hang his or her license with, or more formally, associate with, a broker. Now, back to our discussion on the process for finding an apartment in New York City! As I mentioned, it used to begin with a call to a broker or agent; now, however, it begins with, guess what, drumroll…. an online search. In fact, it begins with an online search so much so that online real estate brokerages have popped up, which are showing a trend to potentially move the entire market online, although in my view we are not totally there yet.
Regardless of how the residential apartment seller or owner gets in touch with a broker or agent to buy or sell the property, or even if the buyer or seller buys or sells the property on his or her own, we now get to the fun part: the real estate contract itself. Typically the process of getting to contract is pretty straightforward. The process starts with an offer, which means once the buyer finds a property he or she likes, the buyer makes an offer. This can be a below asking offer, above asking offer, or right at asking offer. And by “asking,” I mean the price that the seller listed the property for, the price they are asking for to sell the property. The seller, once it receives the offer, can do one of four things: ignore it; reject it; make a counter offer; or accept it. There can be some back and forth during the offer and counter offer process, which some would call “haggling.” Once there has been an offer and acceptance, you’re in the home stretch, but you’re not there yet!
One thing that can also happen, either before there is an offer and acceptance, or after, but before contract (this can actually happen after contract too, which can get even more intense, which I will explain briefly below), is that there can be one or more third party bidders. That’s right, and it’s the best thing in the world for a seller who wants to maximize his or her sales price, and it’s the worst thing in the world for a buyer who wants to buy the property for the lowest price possible. Be that as it may, it happens, and it is what is called a “bidding war.”
Now here is the short note I promised on a third party making an offer after the contract is signed, but before the property is sold. But first, this raises yet another issue: what do you mean after the contract is signed but before the property is sold? Don’t you sign the contract and then take possession of the property right away? As you may have guessed, the answer to that question is no (well, typically not). What typically happens is this: the parties sign the contract, then there is time, usually 30-60 days, maybe longer, for the buyer to complete inspections, for a title search to be performed, for the buyer to complete the mortgage process, for the title company to complete the title search, and for the seller to move out. The period between the time that the buyer and seller sign the contract but before the property is actually transferred is the time that the parties are said to be “in contract.”
In any event, while the parties are in contract, the property can still be shown by the real estate broker and the real estate agent, and there may be back up offers made in case the deal between the original buyer and the seller falls through.
One quick note on what happens when the buyer backs out, or when the seller refuses to close. The most important thing to remember from this whole discussion is that we start out with what the contract of sale says; the language of the contract is super important. Typically, when the buyer backs out, the deposit is forfeited. When the seller backs out, or tries to back out, and the buyer wants to move forward with the deal and get the property, New York courts enforce the contracts in what is called “specific performance,” meaning they generally would force a seller to sell. There are always exceptions, so keep that in mind.
There are so many fascinating elements of New York City real estate that I have written a short introductory book to go over them. And best of all, that book is available right now as an eBook, and it is completely free to you. Click here for your free copy and you can start reading it right away!