Due in large part to high demand and low inventory, the residential real estate market in New York remains extremely competitive. Buyers with all cash offers are being outbid and sellers with inflated concepts of value may take too long to accept an offer and loose qualified buyers. What can we do as practitioners to position our clients for success? Here are a few strategies we have used successfully in this accelerated climate:
- Assemble a good team. Communication, responsiveness, and ability to identify and resolve open issues quickly are critical to getting a deal “locked up.” Ideally, buyers should engage a local attorney before they even submit their offer. This will strengthen their offer and reduce response time. Sellers can do the same thing and have their title, survey and other relevant paperwork in order (more below). Having a good team that is responsive and accessible will substantially increase the likelihood of the deal being consummated.
- Identify potential issues early. If there are any potential issues such title/survey/boundary issues, permitting issues, underground storage tanks, septic issues or environmental issues, the parties can seek to identify and resolve these issues early in the process. Once the buyers understand the issue, they may decide to prioritize the issues they really care about and address the less important issues after the closing. If there are any knotty title issues, such as access easements or boundary line encroachments, this is something that the purchaser’s attorney can review proactively and advise the Purchasers on their potential legal exposure.
- Obtain and Disclose Property Information Early. Brokers and attorneys can proactively ask Sellers to have their deed, title, survey, and other relevant information at the ready. Brokers can obtain building department and tax records. If the Seller removed an underground storage tank, they could have that documentation ready. If the Seller completed any major renovations, they could have proof of permits and warranty information ready. If the Seller has a swimming pool, they can proactively request maintenance records from the pool company in case the purchaser requests them. If the Seller recently had the septic system pumped and inspected, they can have those records ready. In our experience anticipating potential issues and being proactive as opposed to reactive can mean the difference between making a deal and walking away empty handed.
- Obtain Mortgage Pre-Approval and Choose a Lender that Can Clear the Loan to Close Within the Parties’ Timeframe. Generally speaking, lenders seem to be issuing pre-approval letters without delay. However, some lenders seem to be struggling with clearing loans to close due to staffing issues and other reasons. Purchasers should choose lenders with a strong local presence and if the parties have agreed to an aggressive closing date, the purchaser can ask the lender in advance if that is realistic.
- Lender Appraisals. High prices favor Sellers but Purchasers with mortgage contingencies will need the property to appraise. If the price is not supported by comparable sales the risk of not obtaining a mortgage commitment increases. Where appropriate brokers may consider negotiating this contingency in advance and asking buyers to agree to make up the difference in cash if the property does not appraise.
In this market any steps you can take to expedite the process will increase the likelihood of the transaction being consummated. The importance of having a good team in place in particular cannot be overemphasized.
For questions about residential real estate law, or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to keith@betenskylaw.com. We look forward to hearing from you.
Betensky Law PLLC
118 N. Bedford Road, Suite 302
Mount Kisco, New York 10549
(914) 338-8050
keith@betenskylaw.com
www.betenskylaw.com
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