Beginner’s Guide to Buying a House in New York
By Sean Creamer on October 03, 2023
The homes for sale in New York are just as varied as the state's landscape.
You can find a mix of quaint single-family homes and large mansions on Long Island or in Westchester County, as well as plenty of rustic cabins, farmhouses, and more in the Hudson Valley and beyond.
Yet no matter where you are in the Empire State, the homebuying process remains the same. To give buyers a step up as they consider homes, the team at Prevu Real Estate put together a quick guide on how to purchase a house in New York.
Steps to buying a house in New York
- Understand the New York real estate market
- Set your budget
- Get pre-approved for a mortgage
- Partner with an experienced agent
- Consider various towns
- Secure a commission rebate
- Submit an offer
- Get ready to close the deal
Understand the market
Before starting your home-buying journey in the Empire State, you want to understand market trends affecting home prices.
Prices vary significantly by location and property type, so you want to understand what influences these changes. First, you want to know if you're buying a home in a seller's or buyer's market. A seller's market means plenty of buyers with little housing inventory, while a buyer's market means a wealth of homes to choose from but fewer eager buyers.
From there, keep an eye on local factors, like economic developments, businesses opening up offices, and neighborhood revitalization projects, as they can influence property values.
Set your budget
As you learn what influences prices in the Empire State, you should also start crafting a well-structured budget. This process involves assessing your financial health, income, and debts.
Suppose you're eyeing a home in a NYC suburb like Sleepy Hollow. Your budget should encompass the anticipated mortgage payment and essential considerations like property taxes and local utility costs.
You also need to work on the down payment, which typically ranges from 5% to 20% of the property's purchase price. Next are closing costs, comprising inspections, appraisals, and legal services.
For instance, if you're purchasing a home on the North Shore of Long Island for $1 million, a 20% down payment would equate to $200,000. From there, closing costs typically range from 2% to 5% of the purchase price.
Get pre-approved for a mortgage
If you plan to pay for a home with a mortgage, you’ll want to get pre-approved. Getting this done early in the home buying process helps as it shows how much you can afford. Plus, sellers appreciate buyers who are pre-approved by a reputable lender, as it means they have financing and can quickly move through a transaction.
You’ll want to shop around a few lenders to compare and contrast your options, as some may have lower interest rates than others. Once you find one, they’ll use your list of assets, debts, and other financial information like W-2s and credit score to determine how much they will lend you. Ensure you avoid making large purchases on credit before buying a home, like buying a car or financing a vacation.
You should also consider which loan options best fit your needs. If you're planning to retire and want to secure a forever home on Long Island, a 30-year fixed-rate mortgage might be the way to go as you lock in an interest rate for a long period of time and can refinance down the line.
If you purchase a starter home in New Rochelle, but plan on upgrading to a larger place in the future, an adjustable-rate mortgage (ARM) may be best. ARMs offer a lower interest rate at the onset of the loan, which then changes after a set period to float with the market.
Partner with an experienced agent
Finding a buyer's agent to help you in your home search is paramount.
The real estate agent you work with should have extensive experience with the transaction process and detailed knowledge of New York’s best neighborhoods. Your agent can provide invaluable insights into pricing trends, local amenities, and if there is any new construction to keep an eye on.
But you do not want to work with the first agent you meet. Try speaking to several to get a sense of their experience and the tools they offer to help you find homes.
As a tech-forward brokerage, Prevu Real Estate offers a digital home buying platform that lets you tailor your search, entering your favorite New York neighborhoods or cities so you are the first to know when a listing in your favorite area hits the market.
As you search for listings, a professional buyer's broker can introduce you to adjacent towns and districts that may be off your radar but perfectly complement your preferences.
Once it comes time to make an offer and negotiate, your agent will work to ensure you get the best deal possible for your New York home.
Secure a commission rebate
Buying a home in New York is an expensive endeavor.
But savvy buyers working with brokerages that offer commission rebates are getting money back after closing. Sometimes called commission refunds, the concept allows your agent to provide a portion of their buyer’s agent commission when you get the keys to your new home.
By modernizing buyers' and agents' search and communication process, Prevu Real Estate can provide up a portion of the broker commission back to buyers when they close on a New York house.
For instance, if you purchase a Scarsdale home for $1,500,000 with Prevu, you can potentially receive up to 1.5% of the home's purchase price, or up to $22,500, when you get the keys to your new home.
Consider various towns
Knowing exactly where to look is essential when buying a home in the State of New York. But depending on your life goals, passions, career, family plans, or commute, some places may be more agreeable than others.
If extra space and rooms are a priority, consider a single-family home in Nassau County on Long Island. Whether you look on the North Shore or South Shore, you can find a mix of modest starter homes and larger houses for sale. If you work in NYC most of the week, consider buying a brownstone in Park Slope, Brooklyn, or a house in your favorite neighborhood in Queens.
On the other hand, buyers who rarely plan on traveling to Manhattan may want to consider vacation areas like the Hamptons, as you're within reach of NYC but just far enough away.
Submit an offer
In competitive markets like New York, you need a compelling offer. Your agent can create a comparable market analysis to guide pricing strategies, including whether to offer above, at, or below the listing price.
Depending on the market, consider waiving contingencies to make your offer more attractive. Yet whether you are buying a new or an older property, you should get the home inspected. Skipping an assessment of the dwelling from a professional home inspector can lead to missing out on critical issues hidden behind the walls or problems with the heating or electrical elements.
Another way to sweeten the offer is by being flexible. Sellers might have specific timelines in mind, so aligning your move-in date with their preferred schedule can make your proposal more appealing.
Lastly, consider making an all-cash offer. Cash offers are attractive to sellers because they remove the uncertainty of securing financing and speed up the transaction process.
Be ready to negotiate if the seller comes back with a counteroffer. This means being able to drop particular asks from your offer. For instance, if you asked for a price reduction due to needed repairs, having a solid budget behind you means you can handle the cost of any fixes so long as you still close the deal.
Get ready to close the deal
Getting ready to finalize a house purchase in New York means dealing with intricacies requiring professional help.
This means working with your agent, lender, and lawyer to bring the deal to the finish line. You will want to run a title search on the property to ensure there are no liens. The lender will also require an appraisal of the home to determine the property’s value.
Buyers must consider closing costs, which include loan origination fees, mortgage recording tax, appraisal fees, title insurance premiums, homeowners insurance, and mansion tax, if applicable.
Once the legal paperwork is in place, it's time to prepare for the move. Whether you're relocating to a Brooklyn brownstone, a Long Island suburban house, or a vacation home on the North Folk of Long Island, hiring professional movers can save you a lot of headaches.
