Now that you've found an apartment to call your own, had your offer accepted (maybe even won a bidding war!), and gotten approval from the board, it's time to pop the Champagne and call yourself a homeowner, no? Unfortunately, not quite yet: you still have to get to the closing.
The closing, a meeting where all the paperwork for the deal gets signed and final negotiations take place, only comes after a period when you, your lawyers and the seller are rounding up documents, lining up the money, and doing a final walk-through of the place. Getting your ducks in a row for the closing can take longer than you might think. "You can't just wake up and say, 'I've been approved on Wednesday, let's close on Thursday,'" explains Julie Friedman, a broker with Coldwell Banker Bellmarc. "I tell clients to expect the closing to take around 10 to 14 days." But it's not uncommon for up to 60 days to elapse between an accepted offer and the actual closing.
Still, even the best prepared buyer can see the deal fall apart when it comes time to sign all the papers and collect the keys. As with most of the homebuying process, the key to finalizing a sale involves doing your homework—or making sure your lawyer is doing theirs—and knowing which issues would persuade you to walk away from the apartment (and your deposit), and which are worth a compromise.
As such, a few common hurdles to look out for, and how to get over them:
- A lawyer who doesn't know real estate: The best way to ensure a smooth process is to hire a good closing lawyer, and do it before you even start making offers. Get recommendations from friends—not just your broker—and make sure your lawyer actually specializes in New York real estate. Since it will be up to the closing lawyer to coordinate between you, the seller and their broker, your mortgage lender (if you have one), and the building's managing agent, says real estate attorney Neil Garfinkel, "you should speak to your attorney ahead of time to know what to expect. Go over the contract of sale, which will outline all the details and serve as a blueprint for the closing."
- A disastrous walk-through. While walk-throughs—when a buyer checks the apartment for leaks, dents in the walls, or anything else out of the ordinary, which often happens the morning of the closing—should be largely routine, this isn't always the case. "I can't tell you how many times we've walked into bathrooms, and a pipe has burst or the ceiling collapsed the night before," says Friedman. For flips or recent renovations, now's also the time to make sure the work is really finished. If the problems on the walk-through are the result of a genuine accident, contact the building's manager for an estimate on the necessary repairs. Have your lawyer or broker contact the seller's attorney with the figure, and the cost of fixing the damage can be worked into the last-minute negotiations so you can either get compensated or have the cost of repairs taken out of the price of the apartment. "More often than not, the seller knows about the issue, and doesn't disagree," says Friedman. If the issue is the result of a more serious infrastructure problem, though, it might be time to go back to the drawing board for a more major re-negotiation, or an entirely new apartment hunt.
- Hail-Mary negotiation attempts. One instance where your attempts to bargain can go very sour? Showing up to the closing table and trying to haggle on the actual sales price. "One buyer showed up $10,000 short, figuring he could negotiate down the price at the closing," a NYC closing lawyer once told us. "When the seller balked (imagine that), the buyer offered to go to the bank, but wanted a discount for paying in cash! He got the cash but no discount." It's an extreme example (we hope), but there's a larger lesson to be learned here, which is to air your issues—or do your negotiating—ahead of time, lest everyone involved in the closing start questioning your judgment.
- A back-up at the bank. Ah, well, this is embarrassing, isn't it? Showing up to buy an entire apartment, and the money's nowhere to be found? But it's surprisingly common, Friedman says, as the banks responsible for financing mortgages—which are in charge of sending over the actual money on the day of the closing—often hit paperwork snags. But it's not necessarily cause for panic. "It's often just logistical problems at the banks," she says, "but sometimes it's an issue like the buyer forgetting to send one final employment verification or other necessary forms." If you're getting financing, you'd do well to triple check your paperwork with your loan officer ahead of time, but if the problem is on the bank's end, it's time to play the waiting game. "More often than not, we wait it out," says Friedman. "Sometimes it takes an hour, sometimes we finish everything else, then adjourn, and come back to the closing once the money comes through."
- The stock certificate goes MIA. Something to keep an eye on when buying a co-op: while ownership of houses and condos is documented with a deed—a relatively uncomplicated document—in co-ops, ownership is marked by a "stock certificate" of the owner's shares in the building, which must be produced in its original hard copy in order for a sale to happen. "It has to be an original, not a copy," says Friedman. "Nine times out of ten," Garfinkel notes, "there's a loan on the property, which means that the bank has the physical copy of the stock certificate, not the owner." It's the responsibility of the seller and their attorney to make sure this is in place—though it can't hurt to check in with them that they've got the certificate in hand—and if it's truly been lost? The managing agent of the building will have to issue a new one, and your closing will be on hold until they do.
- You haggle over the chandelier. Even with a purchase as big as a home, the devil is in the details, and deals often get held up by squabbles over what, exactly, is coming with the apartment. Oftentimes larger appliances like refrigerators or built-in microwaves will come with the place, but things get murkier when it comes to items like chandeliers, wall-mounted electronics, window A/C units, outdoor plants and furniture, etc. This is where the contract really comes in handy, as you and the seller can use it to hammer out who gets what ahead of time. The alternative: ending up like clients of Friedman's who got caught up in a dispute with the seller over the status of a built-in bookcase, even though they were planning on doing a gut renovation on the place that'd render the bookcase moot. "After that," she tells us, "my mantra is 'don't get derailed by the bookcase.'"
- The background check gets bumpy. In every sale, there will be a sort of background check on the seller and their property—in co-ops, it's a lien search, and in condos or houses, which come with title insurance, it's a title report. (This goes back to the difference between holding a deed versus a stock certificate.) "Both look to see potential problems that affect the property and the seller," says Garfinkel. Check with your lawyer that the search is happening well ahead of time. As Garfinkel puts it, "I don't want there to be any surprises at the closing."