Board Approval & Closing

Board Approval:

The Board Package: After you have an accepted offer and a signed Purchase & Sale Agreement, it’s time to submit the infamous application, known more commonly as the board package. You will work with your Real Estate Specialist to complete the board package, which requires a significant amount of work including financial disclosures, reference letters and employment letters to name a few.

Once completed, the board package is submitted to the managing agent of the building. They’ll review your financial statements, mortgage approval and personal references over the course of a few weeks before inviting you for an interview at the building.

Board packages must be completed within 10 business days from the day the contract is signed for all cash deal or within 3 business days from the date you get your commitment letter from the bank if you’re getting a mortgage.

The Board Interview (mainly co-ops): The co-op board interview is regarded as one of the most dreaded aspects of the home buying process in New York City, mainly because of the time you have to spend waiting while your fate is determined by a group of strangers that hold the key to your future, literally. Ultimately, the board has the final say in the transaction because they get to decide who enters into their co-op community.

The interviewers will ask you any questions they have to clarify the application and get a sense of your personality. Co-op boards generally get back to buyers with an approval or rejection within a few days of the interview.

LXW Tips

• Co-op boards can turn down an applicant for any reason without giving an explanation.

• Your broker plays an essential role in putting together a board package and preparing you for the interview. Use your Real Estate Specialist!

• In recent years, condos have started to implement an approval process as well but not nearly as involved as you’ll find in a co-op.

• Due to the more extensive application, co-ops typically take a minimum of 2-3 months from offer to close.

Closing:

Congratulations! Assuming you’ve got a signed contract and passed the board interview, it’s time to transfer the funds and take title of the property.

Closings are usually held at the office of the seller’s lawyer, management company or listing broker. You and your lawyer will congregate in a room with the seller, the seller’s lawyer and the bank representative as mountains of paperwork are signed and the property is transferred from the seller to you.

After all funds are transferred and the documents are signed, the seller hands over the keys to your new apartment and you can sit back, relax and get ready to move! 

LXW Tips

• Closing generally occurs 6-8 weeks after an offer is accepted

• You will usually receive the details of the necessary checks for closing the day before/ morning of  the closing

• Be sure all of the checks are bank certified and made out to the correct entities

• Be prepared to sign mounds of paperwork at the closing table!

General Closing Procedures

What is a closing?

​A closing is where the buyer gives the seller money in exchange for ownership and title to a particular property. This negotiated exchange, or consideration, transfers ownership and title of the property. The seller also needs to sign over additional documents including the deed. The location of closing is typically the managing agent's (Property Manager) attorney's office.

The parties required to be in attendance:

• Seller
• Seller's Attorney
• Bank Attorney (if financing)
• Buyer
• Buyer's Attorney
• Real Estate Brokers (Buyer's & Seller's Broker)
• Managing Agent Representitive 

Glossary of Closing Terms:

Additional Fees: Sometimes borrowers are required to pay additional fees. Some of these including Wire Fees, Tax Service, Survey Costs, Flood Certification, Settlement Charges, Messenger Fees, Sub-Escrow Fees, and Transfer Tax. Ask your broker to explain these fees.

Appraisal Fee: Fee charged which estimates whether or not a property is worth enough to support a loan. A qualified appraiser will look over the property and produce a report.

Attorney Fee: Fees paid to attorney representing you in real estate purchase (some closes require you to pay bank attorney fees or with condos, sponsor fees for sponsor attorney maybe required. Fees vary according to type of property and $ value of the property.

Condo Board Application or Co-op flip tax: Fees charged for processing condo applications or coop shares.

Credit Report: Generally between $25 - $100 per report.

Document Preparation Fee: Fee charged by bank or mortgage company for preparation of paperwork.

Escrow: (Taxes, Insurance) - In this case money figured into a mortgage for certain conditions like taxes and insurance etc. (see real estate terms defined for a more complete definition).

Inspection Fee: Fee for inspection of property to make sure it is up to code and livable

Homeowner's Insurance: Required to protect against property damage from hazards; i.e. fires, floods etc.

Mortgage Insurance: Usually loans made from a down payment of less than 20% require mortgage insurance. This protects a lender if a borrower defaults on home loans.

Origination Fee/Points: Depending on the type of a loan and the rate a mortgage seeker chooses, he/she may pay points. 1 point equals 1% of the total loan amount.

Prepaid Interest: This amount pays the interest due from the date of funding to the end of the current month.

Recording/Transfer Fees: This covers the costs of changing the property title in official county records.

Title Insurance and Search: Fees that are charged for a title search and insurance fees. A title search is used to verify that that the seller is the true owner of the property being sold and that the seller has the right to sell it. Title insurance protects a lender in the event of a lien or other problems with the title for the property in question, that was not disclosed at the time of sale.

Time Until Closing: Generally sales take between 3-5 months to close depending on various factors. The most common factors affecting closing include: mortgage & financing, condo/coop board approval and negotiation.

Down Payment: The amount needed to purchase property varies according on the type, size and location of a property. For example is the property a single or two family dwelling, coop or condo. Area New York recommends being prepared to pay about 10-20% of total price. Some properties may accept a smaller percentage for qualification. You will also need to set aside additional monies for closing costs.

Contract of Sale: A legally binding agreement between a purchaser and a seller in which each party gives consideration, (bargains for an exchange) to define the terms of the sale.

NOTE: Sometimes there are other fees which may be charged. This generally occurs when the property is a condo or coop. Our brokers will be happy to discuss these with you.

• The mortgage broker compiles the buyer's financial information and then presents the loan application
• The bank sends an appraiser to assess the property
• The underwriters review the loan and issue a commitment letter.