I have been working with several buyers from outside the US who are looking to buy in New York for investment or as a pied-a-terre. I would like to share some of my thoughts on how to be a successful bidder in today’s market. Some of these points will apply to domestic buyers as well.
• Be prepared to move quickly and be able to assure the seller that you can close the deal. Whether you are purchasing with cash or including financing, you need to have everything lined up in advance of even looking at properties. Know your budget. Buying in the current market is not about getting a bargain. Any desirable property is going to attract multiple bids, and an unprepared buyer will miss out on the best of the very limited inventory that is available. Some all-cash buyers think that they can offer less than those who are financing, but a qualified buyer with a loan commitment up front will be just as attractive to a seller.
• Have a knowledgeable agent who can provide all the information you need to make informed decisions, negotiate on your behalf, expedite the process of submitting bids, and coordinate with lenders, attorneys, sellers’ agents, managing agents, and coop and condo boards, to ensure a smooth transaction.
• Coop or condo? Condos typically sell for more than comparable coops. If you are buying for investment, a condo is the only option. There are a few “investor-friendly” coops, but you will need to pay cash and when it’s time to sell, you will only be able to deal with cash buyers, limiting the resale potential. Some coops allow foreign buyers and pieds-a-terre. If you want to go this route, be prepared for a very rigorous approval process. Condos are easier, but the application packages are now almost identical to those for coops.
• Be prepared to provide full financial disclosure, including but not limited to, bank and brokerage statements, tax returns, and proof of assets and liabilities. Simply submitting a letter from even the most prestigious financial manager will not be sufficient.
• Cash or financing? Paying cash is the best way to ensure that you will be the winning bidder. You may be able to borrow from a bank in your home country, often by mortgaging or refinancing a property you already own, or you could borrow against securities held in a brokerage account, if your broker offers securities-backed loans. This could result in your having sufficient cash to purchase without additional financing. If financing is the only option, it is essential to get a loan commitment in advance. There are a number of lenders who will make loans to foreign nationals, usually limited to 55 or 60 percent of the purchase price, and with higher interest rates than they offer to domestic buyers.
My company, Wohlfarth & Associates, represents buyers and sellers not only in New York City, but also in the Hamptons, Fire Island, the Hudson Valley and coastal Maine. We are very active in numerous international real estate associations. I can provide referrals to attorneys, lenders, and securities firms who have extensive experience dealing with the international community.
I am always happy to answer questions regarding the above.
Robert P. Rems
Licensed Associate RE Broker
Wohlfarth & Associates Real Estate
890 West End Avenue, Suite 1F
New York, NY 10025
Cell: (347) 263-0203
My web page: http://www.wohlfarth.com/agent/robert-rems-29.html