We are firmly in the second half of buyers’ month and I have even more information for you guys! Because, like Compass, I try to “learn from reality,” I’ve been thinking back to all the questions people ask me when they’re wondering whether home-buying is an option. Something that people don’t seem to know and that is very important when buying for the first time and leaving a rental is TIMING. What is the process like and how long will it take?
If you have a lease, you obviously would love to close in a time frame that allows you to time it with the end of your lease. While it’s impossible to ensure that you’ll have an absolutely ideal closing date, I can, at least, give you SOME sense of how long the whole process takes. From start to finish, you’re looking at roughly 3-6 months, but there’s a lot of different pieces that add up to that total.
I’ve broken it down into three sections: Pre-contract, In-contract, and Post-approval.
Step one is to speak with a mortgage lender to find out how much you can borrow. This is your pre-approval, and will be necessary for any offer you submit. It’s also better to figure this out before you actually go property hunting, so you aren’t looking at $700,000 properties only to find out your borrowing power is only $500k. Or vise versa, maybe you’re limiting yourself and could actually purchase something substantially more expensive than you believe. Knowledge is power! And if you are a loss for who to contact, just ask. I have multiple mortgage people I work with and trust. Getting your pre-approval will usually take 1-2 weeks.
Step two: Go out and see things! This could be as simple as grabbing a friend and going to open houses, or maybe you’re really ready, pre-approval in hand, and you’re going to one-on-one appointments with your agent. Or a combination of both/anything in between! While Compass has a wealth of beautifully photographed homes to inspire you online, you really need to set foot in a space to know whether it would be right for you. This can also let you know whether you’ll be able to find something in the price point for which you’re currently qualified, or if you need to hang back and save a little bit more (no more matcha lattes for this girl!). This can take 1-3 months, generally, to educate yourself on the market and find the property you love and are ready to buy!
Step three: You found your dream home! Now it’s time for your agent to put in an offer, negotiate on your behalf, and come to a “meeting of the minds” with the seller. Once you have an accepted offer, your lawyer will step in and do the “due diligence” on the building. They will go and read the minutes and look at the financials, reporting back any red flags so you can make an informed decision whether this is, indeed, the right place for you to purchase. Then they will draft up contracts, go back and forth with the seller’s attorney, and then you’ll go ahead and sign. When you sign you’ll also put down 10% of the purchase price as a deposit. It’s starting to get real! This also takes roughly 1-2 weeks
Now that you’ve put down that big old chunk of change, congratulations! It’s time for you to hand over a thousand financial documents and hound people for recommendation letters for the board package. The intensity of what is required depends on whether a condo or co-op, plus is very building specific, but it usually asks for a lot of bank statements, employment verification, etc. You’ll also get an appraisal of the apartment to make sure the bank is willing to cover the loan you need. Because of all the moving pieces this generally takes roughly 3-4 weeks to complete.
Woo, board package is FINISHED! That’s a great moment in an agent’s life. But now we lose control of the process for a little bit. While during the prior steps I’ve been able to guide the process, co-op or condo boards are black holes. We can’t contact them, can only occasionally get insight from the listing agent about when they will be reviewing your application, and have to just sit back and twiddle our thumbs for a minute. If all goes well, eventually we will get word that you are either approved (condo) or are being called for an interview (co-op). Go in for that interview, assure them that you won’t play the drums at midnight, and you’ll get the OK from that board. Because we never know how long the board will take or if they will ask for more info, expect 2-4 weeks or so for this.
Again, congratulations! You managed to seem super financially responsible and normal and easy to live with, so the board approved you. At this point you’re almost to the end of the road, but don’t pat yourself on the back quite yet, there’s still a little bit we have to do. The bank needs to clear you to close, and then we need to organize all the people from the bank, buy side, and sell side to meet up in one room around a big table so we can all sign papers and hand checks back and forth. It’s very 80’s board room. This can take another 1-2 weeks.
Before you close, you’ll also do an additional, final walk-through with your agent to make sure everything looks good before you’re handed the keys. This only takes about 15 minutes, but scheduling it can take a little time, so we start this while we’re working on the closing as well. It’s usually easiest to go right before, although that can lead to extra-long closings if something like a leak occurred while the board was sitting on the board package!
Then you meet up at the required time, sign a bunch more papers, hand over the BIGGEST check of your life thus far (besides maybe college) and they hand you the keys!
CONGRATULATIONS! You now own a home in NYC! Easy peasy, right?
As always, let me know if you have questions on this. I think I just speed typed it in 15 minutes without looking up, because this is my life now. I’m getting to be an honest expert. Housing! Mortgages! Ask me anything!