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Home Buying Basics in New York

By Marcia Stewart, Co-Author of Nolo's Essential Guide to Buying Your First Home and Every Landlord's Legal Guide
New York City housing is pricey. The average listing price of homes on the Upper West was close to $5 million in early 2016.

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Buying a home is fun, but it can also be complicated and a bit nerve-wracking. Before making this important purchase, take the time to determine what you can afford. The U.S. Department of Housing and Urban Development (HUD) includes useful resources to help homebuyers in New York.

In addition to financial issues, you’ll want to zero in on the ideal neighborhood and your top priorities for a home. You’ll learn a lot by visiting open houses and comparing sale prices and features.

And it’s crucial that you know your rights and the legal issues involved in residential real estate transactions, such as disclosures, purchase contracts, potential title defects, zoning issues, and taxes—before the process begins. Although the steps involved in buying a home are similar regardless of where you live, New York's real estate laws and practices are unique in some respects—particularly if you are looking to buy a co-op or condo.

With proper preparation, careful choice of a real estate agent, and prudent use of other qualified professionals, buying a home in New York can be a positive experience.

Advantages of Working With a Real Estate Agent in New York

Before buying a home in New York, contact a real estate agent who can help you find your home and handle all the complex procedures involved with the purchase. Be sure the agent you choose has experience representing buyers, good references, and qualifications to meet your housebuying needs in terms of your ideal location, type of property, and budget.

Some of the benefits of using a real estate agent include:

  • knowledge of the community, median home prices, and market conditions
  • ability to match homes and neighborhoods to your needs and budget
  • help preparing a viable offer and handling other paperwork
  • managing deadlines, and
  • negotiating with the seller on price and other key terms.

Your real estate agent should also help you locate other professionals to assist you in the homebuying process, including mortgage brokers and home inspectors.

And the good news is that working with a real estate agent won’t cost you anything. The seller usually pays the entire real estate commission (typically 5% to 6% of the house sale price, split between the seller’s agent and yours).

Before choosing an agent, get references from other home buyers and check customer reviews on sites such as Zillow and Trulia. You can find licensed New York real estate agents at the New York Department of State’s Licensee Info Search (or eAccessNew York). You can also search for Realtors on the New York State Association of Realtors website.

New York State law requires real estate agents to advise potential buyers with whom they work of the nature of their relationship and your respective rights and obligations. See the New York State Division of Licensing Disclosure Form for Buyer and Seller.

For more information on working with a real estate agent, see the New York State Department of State guide, Looking to Buy, Sell or Rent Property in New York State? Know Your Rights.

Seller Disclosure Requirements in New York

State law in New York (New York Real Property Law Section 462) requires that sellers provide buyers a disclosure form, which includes details on the property, including:

  • material defects in the electrical and other systems
  • conditions such as termites or asbestos
  • homeowners’ association rules, and
  • other details on the property, such as shared driveways.

Disclosures must be on a Property Condition Disclosure Statement form established by the New York Department of State. A seller who fails to provide the disclosure form will need to credit the buyer $500 at closing.

Certain types of properties (such as newly built homes and cooperatives) are exempt from state disclosure rules in New York.

In addition to state-required disclosures, sellers of houses built before 1978 must comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website, for details.

Seller disclosures are important for you as a buyer, since just looking at a property may not be enough to tell you what problems its owner encountered with it while living there.

For more details on seller disclosures, see Considerations Before Selling a House in New York.

Home Inspections in New York

Buyers should not rely solely on the seller's disclosures, however, but should hire an independent home inspector to verify the information from the seller's disclosure. Many buyers make their offer contingent upon a satisfactory inspection report to be sure no material defects exist and to identify drainage, noise, or odor problems; conditions that could lead to mold; foundation and structural integrity; and the condition of all major systems (heating, cooling, electrical, plumbing); and other problems with the property.

See What You Need to Know About Home Inspections When Buying a House for more details. You’ll also find useful information on the website of the New York State Association of Home Inspectors.

Real Estate Purchase Agreements in New York

A purchase agreement is a legal document that contains the material terms and conditions of your real estate transaction. It must be in writing and signed by the parties (buyers and sellers) to the contract, and include an offer to sell or purchase; an acceptance of the offer; the sale price, down payment, and other financial terms; who pays for what settlement or closing costs; and an adequate description of the property. In New York, attorneys commonly assist with purchase agreements because they're binding contracts. See the New York State Bar Association Residential Contract of Sale for a sample.

Title Issues in New York

A buyer should always obtain a title search from a title company before purchasing a home. The title company searches public records and other sources for any liens, easements (such as the utility company’s right to access part of the property), or other encumbrances or title restrictions that may affect the property. If the title search locates problems, the buyer should require the seller to correct those problems as a condition to closing.

You should also consider purchasing a title insurance policy to protect the title to the property against adverse claims by third parties, or any clouds on the title missed by the title search. Mortgage companies usually require buyers to purchase a title insurance policy in connection with obtaining a mortgage.

For more details on title insurance, escrow, and closing, see Sandy Gadow’s website, Buying, Selling, and Closing Simplified, which includes a state-by-state guide to closing practices.

Working With a Lawyer in New York

Unlike many states, New York requires buyers to involve a lawyer in the house-selling transaction. (N.Y. Jud. Law Section 484). Among other tasks, your attorney will assist in ensuring that the mortgage documents are in order, such as a mortgage commitment letter, good faith estimates of closing costs, escrows, and proper calculation of lender's fees; review the title report and work to resolve any issues, such as liens on the property; prepare all the closing documents, such as the deed; and calculate how much money is owed to whom at the closing of the deal, and assure that all payments are accurately made.

Check out Nolo’s Lawyer Directory, to find an experienced real estate attorney in New York.

More Information on Buying a House

The Buying a House section on Nolo.com includes a variety of useful articles on all aspects of the house buying process, including advice on getting a mortgage, figuring out what price, contingencies, and other terms to offer, arranging home inspections, and closing the deal.

For detailed information on every phase of buying a home, from figuring out your needs and what you can afford to doing the final walkthrough and attending the closing, see Nolo’s Essential Guide to Buying Your First Home, by Ilona Bray, Alayna Schroeder, and Marcia Stewart.

If you’re buying a home in New York City, check out BrickUnderground: The Insider’s Guide to NYC Real Estate. For useful information on buying a home in New York, including special advice on cooperatives and condos, see the New York State Attorney General’s Real Estate Finance Bureau website.

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