TIP 1: Inspection of a house or cooperative or condominium apartment is essential

While most people buying a house arrange for an inspection by a home inspection firm, it is much less common in the purchase of a condominium or cooperative apartment. Real estate brokers may even discourage it.

Yet, our experience has been that an inspection of an apartment is very important. All sorts of things can show up on an inspection from plumbing problems that an owner is responsible for to problems with windows to non-working appliances.

Take the time and spend the money to have an inspection done. Also, personally accompany the inspector on his inspection. There is nothing like hearing it directly and while the inspection is being done.

TIP 2: Learn about your closing costs before signing a Contract

There are various closing costs in selling or purchasing residential real estate and many people learn about these costs only at the Closing.

For example, if you are selling an apartment or house in New York City, there is a New York City Transfer Tax equal to 1% of the gross selling price if the selling price is $500,000 or less and the amount becomes 1.425% if the selling price is greater than $500,000. This is in addition to a New York State Transfer Tax that is essentially equal to .4% of the gross selling price. A sale in New York City of a $505,00 apartment or home would therefore result in total transfer taxes of 1.825% or $9,216.

If you are obtaining a mortgage as part of your purchase which most people will do, there is something called a mortgage recording tax that could equal 1.75% of the mortgage amount. The mortgage recording tax in New York State varies by county outside of New York City. There are certainly other closing costs which you should learn about before signing a Contract.

TIP 3: Ask questions about an enclosed terrace, or "greenhouse" in an apartment or decks, pools and the like in a house

Some people "improve" their apartments or houses without getting the necessary municipal permits. This can be disastrous. In New York City, be aware of enclosed terraces and "greenhouses" in particular. We are aware of many instances where plans were not approved by the New York City Buildings Department and legalizing such units requires an architect and can be an expensive undertaking.

In Long Island, the lack of permits for decks, swimming pools, garages and other structures is fairly common in many areas. The purchaser's bank will require the structure to be removed in order to close, and the Contract may not give the purchaser any remedy at all. The time to deal with these issues is in advance at the time the Contract is being negotiated.

TIP 4: Mortgage contingency clauses can result in unexpected surprises

The mortgage contingency provision of a Contract can be the most important term in a residential real estate Contract. Typically, these clauses will require a purchaser to accept any mortgage commitment for the agreed upon mortgage amount, provided it is not conditional on an appraisal.

If things like requiring the sale of an apartment or home owned by the purchaser, or paying off debt, are conditions in a commitment, the purchaser will generally be required to accept the commitment or risk losing his down payment unless this has been negotiated in advance in the Contract.

If the commitment is conditioned on an appraisal that has not yet been done, generally an extension of the time to obtain the commitment without that condition will have to be arranged. This is an area that often leads to disputes so care should be taken in advance, when the Contract is being negotiated, as to what kind of mortgage commitment will be acceptable so that major surprises are eliminated.

TIP 5: Know - in advance - what the real estate taxes actually are, or what any special assessments are in a coop or condominium.

Sellers often don't know their actual real estate taxes on an annual basis and this is not something to be left to chance. A purchaser must determine what the real estate taxes actually are, and then make sure that there are no special exemptions applicable only to the current owner (i.e., a veterans exemption). Otherwise, the actual real estate taxes may be considerably different from what the purchaser may have been led to believe.

A representation of actual real estate taxes, exclusive of exemptions, is obviously desirable in the Contract itself as well as providing for a remedy if it turns out that the representation is inaccurate. Knowing about ongoing special assessments, or other charges, in a cooperative or condominium apartment is also very important. A special assessment may be scheduled to go into effect only after a purchaser closes, an unhappy surprise that could have been avoided if it was discovered in advance.