Apr 3, 2019
The Complete Guide on How to Find an Apartment in NYC
Finding an apartment to buy is easier than finding an apartment to rent in NYC because listings are exclusively listed by the seller’s representative, whereas the rental market is rife with multiple open listings by many brokers marketing the same apartment.
Finding an Apartment to Buy in NYC
Finding an apartment to buy is easier than finding an apartment to rent in NYC, primarily because properties are exclusively listed for sale by a single agent or team, known as the listing agent. This is much easier for buyers because they can easily find the right contact for a listing, without having to guess who the seller’s agent truly is.
With that said, many popular real estate search websites have commercialized their websites to such a degree that it’s become increasingly difficult for consumers to divine who the true listing agent is. Many of these websites make a profit by making it very easy to contact a random agent who has paid to advertise on a listing, and making it very hard to contact the true seller’s agent.
However, despite these nefarious attempts at intercepting leads, it’s still possible for a savvy buyer to find out who the listing agent is. Even the worst of these search websites will put somewhere on the listing’s page, even if it’s in fine print at the bottom, whom the listing agent truly is. After all, the listing data is courtesy of that listing agent.
Finding an Apartment to Rent in NYC
In contrast, the rental market in NYC is a complete wild west, with few enforceable rules against many agents listing the same property for rent without exclusive listing agreements in place. These so called “open listings” are most common on large landlord buildings with many units, where the landlords don’t care about the additional marketing effort.
What’s worse is many of these open listings are on apartments that aren’t actually available anymore. So when potential tenants contact and agree to meet with one of these predatory agents, the customer meets the agent on a street corner and is told that the wonderful apartment they saw online is no longer available.
The agent will then proceed to take the tenant on a tour of other apartments that are still available, and likely worse than the one that attracted the tenant in the first place.
With that said, exclusive rental listings do exist, though they are more common on individual condo and co-op units. When there is an exclusive listing agreement in place, then only on agent can market the property and potential renters will have a much easier time contacting the seller’s representative.
We highly recommend having an agent help you find an apartment in NYC, primarily so you don’t have to waste time and sift through loads of fake and open listings which can be extremely hard if not impossible to tell apart from exclusive listings.
How to Decide on a Neighborhood
Before you figure out how to find an apartment in NYC, you’ll need to figure out how to find a neighborhood that you want to live in. The best way to do that is to explore the neighborhoods on foot or bicycle.
Remember that unlike London, New York City is a relatively compact metropolis, especially if you’re set on living in Manhattan. For example, if you’ve got your heart set on living somewhere in Lower Manhattan, say south of 14th Street, then it’s entirely possible to thoroughly explore that whole area by foot over the course of a week or so. For the athletically fit and ambitious, Lower Manhattan can be reasonably explored over the course of a day.
Even better, New York City has recently added a significant amount of bike lanes, included dedicated bike freeways along the west side’s Hudson River Park. This improvement, along with the addition of CitiBike docks in numerous locations across the city means it’s increasingly possible to traverse the entire city by bicycle, which is a much better way to see the city vs traversing by subway or taxi.
Should I Buy a Condo or Co-op?
If you’re looking to buy vs rent, then it’s important to understand that NYC is unique in having several common property types available. In terms of apartments, there are condos, co-ops and condops to choose from as well as the occasional building structured as a tenancy in common.
If you have a little more to spend, you can also buy a townhome or even the occasional single family, de-tached house for sale. Just remember that even though buying a townhome in NYC has many obvious advantages like privacy and freedom from condo or co-op boards, it also comes with additional responsibility such as having to maintain every aspect of the building and being responsible for disputing property tax assessments.
With that said, condos are generally preferred by most buyers because of the real property rights that come with owning a condo. After all, when you own a condo unit, you own the interior of your apartment as well as a pro rata amount of the common areas of your condominium building.
Condos do have a board of directors elected from among the owners, but condo boards generally have much more limited power vs their fellow co-op boards. For example, condo boards will have a right of first refusal vs a right of approval that co-op boards will have.
Essentially, this means that condo boards can’t reject a prospective purchaser, but can only exercise or waive their right of first refusal. Of course, boards almost always waive their right of first refusal because otherwise they’d have to raise the funds to purchase the condo at the same terms and price as the prospective purchaser.
Coops on the other hand are a very common and unique property type to NYC. A co-op apartment owner does not in fact own real property, but rather shares in a co-op corporation that owns the entire building. The shareholder also holds a proprietary lease that allows them to occupy a specific apartment, essentially indefinitely and as long as they are a shareholder.
The co-op also has a board of directors elected from among the shareholders. However, a co op board of directors operates very much like the board of a regular, for profit corporation. This board will have an enormous amount of leverage and power over the residents of the building.
For example, co-ops will have their own rules about subletting, which is a key difference vs condos where you can rent out your own property as and when you wish. In contrast, most co-ops will restrict subletting in some form, either outright or to a certain number of years.
Furthermore, the process to purchase a co-op is very involved and labor intensive. Prospective buyers must fill out a lengthy purchase application and pass a co-op board interview. And even if the buyer thinks everything went perfectly, the co-op board can reject the prospective buyer for any reason whatsoever, as long as it’s not discriminatory. And because the coop board is never required to disclose the reason for rejection, and in practice never does disclose the reason, a board can in fact be discriminatory and get away with it.
Pro Tip: So why would anyone ever want to buy a co-op apartment? Well, everything has a price. Because of the unusual and inconvenient structure of co-op ownership, co-op apartments trade at a significant discount to condominiums. A co-op apartment may trade at a 10% to 20% discount on average to a similar condo apartment.
What Property Type Should I Rent?
If you’re renting vs buying, the property type matters less because most of the rental inventory will consist of landlord buildings or individual condo units. Both will be pretty similar and easy to rent out, with professional landlord buildings usually having more standard application processes. Individual condo owners may have varying standards on what they want to see from tenants in terms of documentation.
You will have to watch out for co-op buildings however, as this unique property type will require tenants to fill out a lengthy sublease application which can often rival the length and complexity of a co-op board package for purchases.
Furthermore, the co-op board approval process can be just as time intensive for sublets as it can be with purchases. In some buildings, this means not only will you have to submit a highly detailed and intrusive co-op sublease application with supporting documentation, you’ll also have to pass a board interview.
To be honest, since there are plenty of landlord buildings and condos for rent, the only reason someone puts themselves through a coop board approval process to sublease a place is because they didn’t realize it was a co-op. There’s no logical reason otherwise to put yourself through that process when there are so many other good, cheap options out there.
For example, a typical landlord building might have you fill out a one page application form and tell you that you’re approved within the same day after running a quick credit check. How easy is that versus having to get multiple business and professional co-op reference letters, fill out a length and highly invasive coop sublease application, provide a personal financial summary with supporting documentation and sit through a potentially awkward coop board interview?
Searching Online for Properties in NYC
Many people start their home search online these days, primarily because of changing social norms as well as convenience. Many first time home buyers don’t think that they’re serious enough to potentially waste the time of a buyer’s agent. Plus, many people feel guilty about potentially getting a buyer’s agent to show them around, without even knowing how serious they are about buying.
As a result, 98% of all buyers start their home search online, presumably so they can get an idea by themselves first on what they even like and if they’re serious about buying something.
If you do decide to search online, we recommend using a search website that allows you to contact the listing agent directly, with as little advertising and lead interception as possible. Check out our list of the best home sale sites for NYC to see our latest recommendations on where to search. We’ve only picked sites where the interface is straightforward and it’s easy and possible to contact the listing agent. We’ve also highlighted a few popular websites that are actually notorious for their interception of buyer inquiries, and who routinely reroute inquiries to random agents who have paid to appear on the listing, which we believe is almost fraudulent in practice.
Searching with a Buyer’s Agent in NYC
Buyers who seek out the services of a buyer’s agent either do so because they are serious about buying and therefore expect a premium, in-person service for such a hefty transaction, or because they’ve done their homework and realize that the services of a buyer’s agent are free.
In fact, buyers aren’t even expected to sign any sort of exclusivity agreement with a buyer’s agent. Buyers are free to fire and choose another agent at virtually any time, as long as a deal hasn’t progressed too far along.
Really savvy buyers go one step further. They do their research and realize that not only are the services of a buyer’s agent free, but that they can negotiate with their buyer’s agent to receive some of the commission for themselves.
In real estate, the seller typically agrees in an Exclusive Right to Sell Listing Agreement to pay 6% of the sale price regardless of how the buyer is found. This means that the commission is typically split equally per local MLS association rules between a buyer’s agent and the seller’s agent. However, if the buyer is unrepresented, then the seller can earn the entire commission by representing both parties (i.e. dual agency).
This means that even though the buyer doesn’t pay any commission whatsoever, the buyer’s agent will still typically get paid 3% of the purchase price in commission from the seller. Buyer agents will generally not talk about how much they’re going to get paid, and will generally present it as being free for the buyer. However, just know that these buyer’s agents are getting paid just as much as the seller’s agent in most cases, and it’s quite a significant amount of money on the table.
As a result, it makes sense to try to get some of those economics back for yourself, especially if you’re a self-starter and open to doing much of the searching yourself. If this sounds like you, we recommend signing up for a Hauseit Buyer Closing Credit where you can save $20,000 or more on the average NYC apartment purchase.
Pro Tip: All of our partner brokers are reputable, traditional brokerage firms based in NYC who never openly discount their services. As a result, you won’t have to worry about other brokers treating your agent any differently. After all, the last thing you’ll want is for your broker to be focused on disrupting the industry, when they should be focused on not disrupting your deal!
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Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).
