GETTING YOUR DUCKS IN A ROW

FAILURE TO PREPARE = PREPARATION TO FAIL

We all know about the fun part of buying or renting: getting to look at the properties. There's an offer involved, usually some negotiations, and we know that you have to shell over a ton of money at closing. But what most people don't realize is how important preparing for your search will ultimately impact your success in locking down your dream home.

In New York City, real estate moves fast. I've said it before in my posts, and it's worth repeating: the good ones don't last long, and really neither do the just OK ones. This is a city of 8.5 million people, and we are constantly moving: marriages, divorces, new jobs, lost jobs, retirements, graduations; it all happens in a New York minute here.

So how do you compete in such a fast-paced real estate environment? PREPARATION IS KEY! One of my favorite messages from my real estate training was the headline I chose for this blog: "Failure to Prepare is Preparation to Fail." And it couldn't be more true in NYC, where you can lose out on your dream home in the blink of an eye if you don't have your ducks in a row.

I will keep this blog short and sweet to get right to the point. Before you ever step foot into your first open house, here's what you should have prepared:

​BUYING A HOME

1. Get pre-approved Every househunter needs a pre-approval, which is a document from a bank saying that they've reviewed your credit and key documents and that they'd be comfortable lending you a set dollar amount based on what they've seen. This not only helps you and your broker understand the price range of properties you can realistically afford, but it is a required submission with every offer. Without a pre-approval, you will not (generally) be able to submit an offer for a home. And while a pre-approval can be done in a day or so, that lag is sometimes all it takes to lose out. I have a list of mortgage brokers I can recommend to you who are lauded for their responsiveness and helpfulness and who have been essential in getting my buyers' offers accepted. 
2. Prepare Your Financial Statement I provide all my buyer clients with a REBNY (Real Estate Board of New York) Financial Statement to fill out before we start our search. This is a complete snapshot of all your assets and liabilities, and it is also a required submission with every offer. In addition, it will help your broker understand your debt-to-income ratio and your post-closing liquidity (refer to my co-op blog post to understand the importance of these two), which are essential to understand when coming up with and presenting an offer.
3. More Documents Whether you're looking for a co-op, condo, or otherwise, you will need to have a handful of documents ready (if not for the board, at least for the bank):

• ​Employement letter - length of employment, title, salary
• Tax returns - usually the last 2 years
• Credit Score - know it! Marks on your credit? Talk to your mortgage broker about what can be done.
• Pay stubs - usually the last 2 consecutive
• Bank Statements - prepare to show 2-3 months' worth
• Anything else to support every number in your REBNY Financial Form
• Reference Letters - these may be part of your board package, which will come later. So no need to have these ready right away. But if required, you'll generally need both business and personal reference, so start thinking about who you will have write your letters.

RENTING A HOME
I'm lifting this list from my Demystifying the Rental Market post, and the timing couldn't be more appropriate. My boyfriend and I are currently looking for a rental, and despite my own advice to all my clients and readers, we didn't have these documents ready when we found our dream place...and I'm convinced that the lag in putting them together gave the owner just enough time to reconsider our offer.

Will You Qualify?

• Income Requirements – Most rentals require that you make 40x’s the monthly rent. e.g. A $2,000/month would require a minimum annual salary of $80,000.
  • Not quite there? Some buildings allow guarantors, who will also be included on the lease and be liable for any defaults. A guarantor generally must make 80x’s the monthly rent, so on that same $2,000/month apartment, they’d need to show income of $160,000/year.
  • Your broker should help you identify what the restrictions are for guarantors in any building you may be looking at: some require NY state residents; others any US resident; and anything in between.
• Credit Score –Every landlord will run a credit check, so make sure you know your credit score. If there are any marks on your record, or your score isn’t very strong, be sure to talk to your broker about why so he/she can explain it when you put in your application. Don’t try to hide anything and wait for it to come out in the credit check.

 
Have These Documents Ready

• Bank statements – Bring your most recent bank statement(s) with you, and make sure there’s enough in there to cover the building’s requirements at signing: generally, 1st month, 1 month security, and a 15% broker’s fee.
• Tax Returns – Last two years (1st & 2nd pages only)
• Letter of Employment – on company letterhead, with your title, length of employment & salary
  • If self-employed, you’ll need a letter from your tax accountant
• Paystubs – two most recent (consecutive) paystubs
• Landlord Reference Letter - stating address, monthly rent, length of tenancy, and landlord’s contact information.
• Application / Credit Check Fee – be prepared to pay an application and credit check fee, usually per tenant.

Have all your ducks in a row and ready to start your search? Give me a call!

​Matt Martin
Licensed Real Estate Salesperson
831 Broadway, New York, NY 10003
O: 212.521.5704 | C: 323.790.6288
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