You want these answers sooner rather than later.
Use these words when you are telling the other side about your Buyer’s financial profile, otherwise you run the risk of representing the accuracy of the financial picture you are presenting.
Rather than stating my client gets a bonus of $250,000 a year, say “my client advises his bonus is $250,000 a year. Or attach a statement from the client and summarize it, “According to the statement attached, my client has bonus income of $250,000 a year …”
It’s a safer route and won’t come back to bite you should the numbers come out differently once the package is prepared.
If your Buyer has to sell their home in order to qualify for a mortgage to purchase the new home, they must include a separate sale of home contingency in their purchase contract for the new home.
The important point for brokers is to understand that the standard mortgage contingency does not include (and expressly excludes) a sale of home contingency:
Paraphrasing the standard forms:
A Commitment Letter conditional upon a sale of a home is an enforceable Commitment letter that satisfies the mortgage contingency whether or not such condition is met. The Purchaser accepts such risk and cannot cancel the contract if such condition is not met.
The reasoning behind is that the seller can evaluate matters directly in front of them (i.e. the Buyer’s credit, the value of their own home), they can’t evaluate an entirely different transaction in the sale of another home.
For me, it took years of practice and hundreds of closings before I truly felt comfortable marketing myself as an expert and actively promoting my services.
People are sharp and aware, they know when someone has that base of knowledge and experience.
For you, while it’s important to get clients and spend energy on building relationships, it’s essential that you become an Expert.
What you put in, is what you’ll get out.
Conduct an open house. It’s a terrific opportunity to learn about the needs of buyers and their concerns; field their questions and get a read on market concerns. During the downtime, read and research.
Attend a closing. Pay attention to everything that's going on, listen to the attorneys explain the title and loan docs, learn the role of the transfer agent, what exactly do they do, why do they have the Buyer sign an acceptance of assignment of the old lease but also issue a new lease to the Buyer.
And during these times, try to stay off the phone. Stay engaged and interested in the event. Conversation and engagement are at the heart of a broker's wheelhouse, step out if you must answer an email or text.
Work to become an expert and help people and the benefits will circle back.
Always use formal names, not abbreviations (Donald instead of Don.)
For the Sellers, use the names that they took to title in. If a condo or house, look on ACRIS. For a Co-op, see if they have a copy of their stock certificate. Worst case, take their formal names off their drivers licenses. If a Seller has since changed her name, use “f/k/a” (“Lisa Starr f/k/a Lisa Lipschitz”).
For the Buyers, take their formal names off their drivers licenses. 2nd, use Official ID. 3rd Passport. 4th Verbal and we’ll figure it out.
When you get your listing, a few clicks at the Department of Buildings ("DOB") website will tell you if the home has any Open Permits. My suggestion is to get in front of the challenge if it exists.
Open Permits impact value and marketability. Buyers are concerned that by inheriting an Open Permit, they could be required by the building or the DOB to close it; they are concerned that potentially the work was not done properly and up to code; and more importantly that their buyers (when they sell) will take issue with the Open Permit.
The work may have been done by the Seller and for whatever reason (often non-payment to the architect) the permit was not closed. That’s an easier scenario to deal with as the seller has direct knowledge of the work, the seller can undertake to close the permit and an escrow established to secure the obligation.
The more challenging scenario is when the permit was opened by a prior owner in the chain. In that case, the Open Permit is usually a surprise to the seller — and there starts the challenge. (Note, the DOB website has only been around for a few years and it was not previously the norm to do a physical DOB search.)
The Seller can try to track down the prior architect, but people and files fade with time. Often a new architect needs to be engaged ($) or willing to give an estimate (with the hope of being engaged); often a plumber or electrician is also needed to complete work or file paperwork.
A seller can try to say take it or leave it (“It’s not my issue”), but that position is not too persuasive when the next buyer may raise the same concern.
Since it’s now the norm for lawyers to search the DOB for Open Permits, it’s probably a good idea for brokers to as well. Click to download a PDF that will show you how to find an Open Permit.
It’s our job to keep things in control. That’s why people choose us as their guides, it's why other brokers and lawyers want to work with us.
If a message can be delivered better through me, I’ll take the lead even if it falls within a “broker” responsibility, such as requesting a preapproval to get comfort on a financing contingency or by poking for documents for the board package. Likewise, I may use you to discuss a closing date when the other attorney is rigid. Or perhaps both of us will use the banker to assist with evaluating a non-contingent deal or requesting an extension.
We will be stronger and more effective as a team.
Also, let’s be constantly aware of our tone, our reactions and the words we choose. Let’s focus on taking a breath before we talk, to listen, appreciate and then suggest a course of action.
Every communication is an opportunity for us to create an impression and to deliver a message, let’s make each one count.
Thank you for allowing me to send this message to you. I look forward to working with you this year and to help you be a success.
Stay tuned for helpful practice tips, coming up shortly and regularly.
Try to conduct the walk-through inspection a sufficient amount of time prior to closing (maybe the day before) so that you have enough time to trouble shoot any issues; i.e. if something doesn't work, to have enough time to determine a cost to repair, through a handyman, the super or otherwise.
Often, if the inspection is done right before the closing, there is no time to evaluate the cost to repair an item. Then, the parties are stuck at closing without a resolution except to guess or to hold an escrow. An escrow is in no one's interest; it requires extra services and time and is routinely discouraged.
In a recent closing, the seller was out of the apartment a week prior but the parties chose to do the walk-through an hour before closing. Two light switches wouldn't work, the seller would not hold an escrow and we were stuck guessing at what it would cost an electrician to fix the problem. The building only had a part time handyman who was off for the week. Two hours later, we came to a number by calling electricians from the table and then had to compromise as it was just a guess. A bit uncomfortable.
If we are ambassadors to a smooth process, let's take the steps necessary to create the time to manage a potential issue.
(Of course, we can't always make this happen. Sometimes sellers move out the morning of, or even simultaneously with the closing. In those instances, will take what we can get and use our experience to get us to close. In that instance, we'll figure it out and use our experience.)
Here's what we look at:
“No Guarantors allowed”, “The person occupying the apartment must be a Purchaser”, “Purchaser must have 2 ½ years of mortgage, maintenance and other debt payments in cash after closing.” These are common examples of what’s contained in a sale package.
This is essential information for you to know.
One of your first steps in starting a new deal should be to contact management and secure a copy of the sales package. For a Seller’s Broker, it is a useful tool going into a sales pitch. For both Brokers, the information will focus your marketing efforts and qualification process.
Maximize your efforts. I’ve seen accepted offers abandoned after the sales package is secured. That doesn’t have to happen with your clients.
Socials were once routinely inserted in the contract, in fact the standard form still has a fill in section for socials, but since personal information is now actively protected, we leave that section blank on the contract. The socials aren't legally needed until the the closing is set and the ACRIS (transfer tax forms) prepared. At that time, the lawyers will handle communicating them. So for the deal sheet it's one less thing the client needs to worry about.
Have a purpose to the move; understand where you want to end up with the move, who your recipient is, the options of how they may react to the move and then what your options for reply might be. Communicate the move with the tone, emotion and wording to optimize your desired result.
We have the ability to deliver a message however we want, so think about it before just reacting and you'll find yourself progressing under a plan of action.
The standard form of contract lists lighting fixtures as an item of personal property included in the sale. If the Seller intends on taking a Chandelier, make sure you detail it in the Deal Sheet and the lawyer excludes it in the contract.
It can be a costly mistake not to have the consent of one of the owners to the sale or not knowing about an owner. We have had the unfortunate experience of having to cancel a deal prior to contract because it was discovered after the deal sheet had been prepared, that there was another person on title who had died. As it turned out, title was not held “with right of survivorship” and the probate proceeding had previously been closed without the apartment having been addressed. The result was months of lost time to reopen the estate proceeding and include the apartment in the estate. Unfortunately, the property had to be taken off the market.
The other person on title could be an ex-spouse, a sibling, parents or an unrelated party. You need all owners to consent to the sale. So hit that issue as soon as you get the listing.
If your clients are not confident, confirm it yourself. For a co-op, you can confirm it by asking for a copy of the stock certificate or getting a copy from the managing agent. If it’s a condo or house in nyc, get a copy of the deed on line at the recording site known as ACRIS. All you need is the Unit’s Lot and Block which you can get from that site.
Get a copy of the Board Package as soon as you get the listing. It will set forth permitted financing, costs and may also review procedure on transfers and income and asset requirements–good info to know.
Make sure the Carrying Costs are accurate. Ask the client for a recent maintenance/common charge bill. We are often seeing outdate info on the Deal sheet which only leads to problems. PS — if you took a listing during the year that rolls into the next year. Could can pretty much be certain that numbers have changed.
When do they want to move? Do they need the right to stay in the home after closing? Have they received notice of an increase in maintenance or upcoming assessment? Do the appliances work? Have there been any water leaks? Were renovations done to the unit?
Chandeliers are included in the sale UNLESS they are specifically excluded in the Contract of Sale. The standard form of contract lists lighting fixtures as an item of personal property included in the sale. If the Seller intends on taking a Chandelier, make sure you detail it in the Deal Sheet and the lawyer excludes it in the contract.
NYS = 0.4% sales price. NYC = 1% for $500,000 or under; 1.425% over $500,000.
Get to contract quicker. But don't forget these 10 items most often left off of Deal Sheets:
You want your client pre-approved before begin making offers. Seller’s brokers want to see the pre-approval. You will come in that much stronger. You and your client will also want to know you have it, especially if you are waving the mortgage contingency.
Assets, income and expenses. Do this when you start working for your buyer. The more you know about your buyer, the better you can represent them and the more ready you will be to submit your offer.
Find out the building’s permitted financing or minimum asset and income requirements. Don’t waste anyone’s time if your client does not meet the requirements. Often a client’s housing costs (mortgage and maintenance) can not exceed 30% of their income.
Let them know apartments are purchased in “as is” condition. Make sure they are comfortable with what the “as is” condition is.
Don’t forget NYS Mansion Tax — applies to condos, co-ops and houses, $1 Million purchase price and over = 1% on full consideration on Purchaser.
Download our memo (PDF, 73k) : Waiving the Financing Contingency — How to do it Competently
We are centrally located in Midtown Manhattan. Use the form below or call us for a consultation and review of your deal. We can then work out a reasonable flat fee for your closing.
Greg Maybaum, Real Estate Closings
420 Lexington Ave, Suite 300
New York, NY 10170