NYC Real Estate Investing: An Unexpected Closure

In the final installment of a four-part series on house-hunting in New York City, the doctor unexpectedly finds closure after a futile search for the perfect pied-à-terre.

June 30th was the closing deadline for homebuyers to receive a federal tax credit — up to $8,000 for first-time homebuyers and up to $6,500 for buyers who have owned and lived in their homes for at least five of the last eight years. (The tax-credit deadline has since been extended -- buyers who have already have signed contracts now have until Sept. 30th to close the deal and claim the credit.)

As a result of the initial deadline, real-estate agents and lawyers were in a frenzy in mid-June, working to complete their clients’ purchases in time to qualify for the credit by month-end.

The federal tax credit indirectly turned into the undoing of our deal yet once again. Our lawyer was busy with closings related to the deadline and didn’t have time to write the “side letter” -- the document indicating the seller would not keep our deposit under specific circumstances. Therefore, instead of closing our deal in mid-June, it didn’t happen until the end of the month.

By that time, my life was upside down. My beloved husband began to show signs of a precipitously deteriorating cervical disc that could require surgery. In spite of this alarming situation, I dutifully signed the contract for the New York City co-op and had it ready to make the return trip to New York by evening. Federal Express, however, usually so punctual, didn’t show. While waiting for them, I started the application form required by the board -- it was intense. As one real-estate agent told me: “The boards of co-ops are like dogs. They want to sniff you.”

The application was 27 pages, more or less, and required not only that I fill it out, but also obtain multiple references -- all to be completed within one month. Our part of the application was relatively easily, but depending on numerous people to provide recommendation letters in a timely fashion? That we couldn’t control, and it made me feel uneasy.

My husband’s medical condition was another source of worry. I said to myself: “Either this deal pops or I do.”

The next morning, I called our lawyer and real-estate agent and told them that I couldn’t proceed when my husband was ill. The entire process was simply was too nerve-wracking for me.

It made me sad that we lost this opportunity to buy a great place. Also, I regret that my real-estate agent did not make a commission, as I liked her and thought she did a good job for us. But, there is a happier note, too. New York City’s so-called mansion tax, or 1 percent of the total of any selling price over $1 million, won’t have to be paid since we aren’t buying.

And, because we aren’t selling a home in the city either, the New York City transfer tax that is 1 percent of anything sold under $500,000 and 1.425 percent more than that amount won’t have to be coughed up either.

I’m thinking, “A twist of fate saved us a lot of money.” Unfortunately, we don’t have that special place in Manhattan either.

Some house-hunting resources:

ResidentialNYC.com: A site to search for New York City properties. Be sure to search the information guide.

Habitatmag.com: A portal designed for board members and property managers of co-ops and condos, but with useful information for property buyers as well.

Curbed.com: Fun and informational blog about New York City real estate.

UrbanDigs.com: Macroeconomic discussion and investment strategy for Manhattan real estate.

The RealDeal.com: Manhattan real-estate tips which are not directed at residential real estate, but helpful for home buyers nevertheless.