By Dexter Guerrieri
President of Vandenberg, Inc. Published: November 2003, New York Living
Buying a townhouse is a milestone for most people, perhaps analogous to embarking on a new career or starting a family. There are definite steps to take to be prepared:
- Decide what part of town you want to live in
- See townhouses in your desired location. See as many properties as you can to familiarize yourself with what’s on the market, and to see how various townhouse configurations feel to you. Often buyers begin by going to open houses but find that the four-line description in the newspaper does not quite describe the property they then see.
- Link up with a broker. A good agent can become your eyes and ears to interpret those ads and will notify you immediately when appropriate properties come on the market. Make sure you and your agent have a clear understanding of your priorities and needs.
–Choose a broker who has a specialty in townhouses, whose business it is to know all the townhouses currently available in the area where you wish to purchase.
- Decide how much work you are willing to do, anywhere from fixing the bath to combining apartments on two floors, or a gut renovation. Educate yourself regarding renovation costs.
–Know your options. Can you expand the roof up a floor, dig out the basement, or add an extension in the backyard?
- Decide whether you want to buy a townhouse with tenants in it. Familiarize yourself with rent-stabilized or rent-controlled tenancies. Note that many buyers decide to buy a building with tenants because the price is lower.
–Familiarize yourself with the option of an “owner-occupancy” proceeding to take over rent-stabilized apartments (if necessary).
- Narrow your search to specific criteria. After deciding how much work you’re willing to do and whether you want regulated or non-regulated tenants in the building for income purposes.
- Be financially prepared
–Speak to a mortgage broker and/or a banker who specialize in townhouses, possibly getting pre-approval.
–Learn about closing costs. Figure out how much you will need at closing-typically 20% to 40% of the purchase price.
- Be prepared to move quickly. There are very few properties on the market at any given time that will meet your criteria.
- Negotiate. Negotiations are done between the real estate agents; sometimes offers are made in writing. This typically involves offers and counteroffers, which may stretch over days or even weeks. However, in New York, brokers do not prepare contacts.
- Agree on price and terms.
- Hire an attorney who specializes in this sort of sale. Beware of attorneys who spend most of their time litigating or doing corporate real estate. It’s most productive to have someone who knows townhouses and does lots of real estate closings.
- After you have an accepted offer, have an engineer inspect the property, addressing structural issues, exterior façade or pointing, the roof, the boiler, plumbing, and electrical, so there will be no surprises after you buy the building.
- Seller’s attorney prepares the contract, which is then forwarded to the buyer’s attorney for review.
- Sign the contract, which will call for a deposit of 10% of the purchase price, which goes into an escrow account of the seller’s attorney to be held until closing.
- Formally apply to banks, if you require financing.
- Interview prospective architects and contractors, as needed, during the contract period.
- Before closing:
–Arrange for phones, electric, and gas to be changed
–Arrange for homeowner’s insurance, you won’t be able to close without it if you’re borrowing from a bank!
- Close and get your key.
In the flurry of activity, don’t forget why you are choosing a townhouse in the first place; because of the Old-World charm; the comfortable dimensions of the space; having a wonderful garden and roof garden; the great value per square foot (lower than an apartment); and the freedom to make choices to renovate without being watched over by a co-op board.