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the contract

the waiting game

June 7, 2016
the contract, the particulars, the story
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unnamed-4above: my friends sara and martha, who i took to see the grand apartment over memorial day weekend. i thought i would close a few days afterwards.

you know what i’ve heard a lot of lately? this:

“so, what’s going on with the apartment?!”

it’s my own fault, of course. because i’ve been, you know, chronicling it on this here blog, and on instagram, and also telling all of my friends and some of my acquaintances and basically anyone else who will listen that I AM BUYING AN APARTMENT.

except that right now, i’m not. right now, i’m doing a whole lot of nothing, because i’m waiting on other people, who appear to be doing just that: a whole lot of nothing.

unnamedme, explaining to sara and martha how i intended to bust out that wall and create a breakfast bar

see, everyone told me that as soon as the co-op said yes, i was good to go. that was the final frontier, the last hurdle. after that, the closing would happen “asap” or in real life terms, “within 7-10 days.”

guess what, folks? it’s been 7-10 days. and AIN’T NOTHING BEEN SCHEDULED. ZILCH. NADA. 

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what am i waiting on? just another lawyer. specifically, the co-op lawyer, who apparently has to sign off on the “estate paperwork” from the sellers before closing can officially be scheduled. did anyone think to tell me this, i don’t know, at any point in the process?

of course not. all they said was, “board approval is the last step! then you’re golden and everything starts moving.”

meanwhile, the only thing moving is my heart, which is beating exceptionally fast because it’s trying to keep up with all of my (slightly misplaced) aggression. sorry, heart.

suffice it to say, i am frustrated. and that word barely covers it. i’m angry that no one thought to mention, way back in january when i put in an offer, that buying from an estate would be INFINITELY MORE COMPLICATED and take WAY LONGER THAN AVERAGE. instead, all they said was, “oh, but the potential!”

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is the potential there? sure. i mean, can you see it in the above photo? not really. but i could see it in my imagination. and i know that someday, when this is all said and done, the grand apartment won’t just be grand. it will be great. but i am oh so sick of waiting around for everyone else to get their shit together. where is the urgency? these are NEW YORKERS FOR CRYING OUT LOUD. 

and yet, things are moving like molasses. like turtles wading through molasses. like the slowest turtles you’ve ever seen, DROWNING IN MOLASSES. and all i can do, beyond bitching and moaning on the internet, is wait. wait, and preemptively meet with my architect tomorrow (which will hopefully bring about some actual motion in this process, and maybe even a real blog post!). stay tuned, friends. hopefully soon i will have some actual news to report. until then, i leave you with this gem, of me in the kitchen, thinking about just how much work there is to be done, and how much time is a wastin’ every minute that i am not doing anything.

unnamed-2

 

the interview

May 26, 2016
the contract, the particulars, the story
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Law & order SVU Spiraling Down stephanie march andre braugher treat williams 2

stephanie march interviewing a witness on SVU//how i felt last night at my co-op interview

my thinking around the co-op board application process went a little something like this. i was all, PLEASE LIKE ME. PLEASE, PLEASE LIKE ME. TELL ME I AM A GROWNUP AND THAT I CAN DO THIS AND THAT YOU THINK I’M FINANCIALLY STABLE AND EMOTIONALLY CAPABLE OF BUYING A HOME.

and they were all, sell us your soul, give us your first born child, oh and while you’re at it, can you please do a full audit of all of your financials, and tell us how much is in your 401k (you haven’t been saving enough…), show us your tax returns (geez, you lose a lot to taxes each year!), and tell us where, exactly, the money for your down payment is coming from, because it’s CERTAINLY NOT COMING FROM YOU, YOU 30 YEAR OLD FAILURE OF A HUMAN.

okay, so that’s not exactly what they said. what they actually said was nothing – not to me, at least. they communicated through my broker, a post-modern game of telephone that was NOT AT ALL FUN. through him, they told me to fill out a boatload of paperwork, and also, to get four references: two personal, two professional. i think these were to rule out that i wasn’t a) party animal, b) a lowlife with no job,  c) an axe murderer and d) a crazy cat lady who’d let her addiction to all things four legged and furry get out of control.

thankfully, i am none of the above. i gave up whatever sort of partying i used to do years ago, i am gainfully employed (#fridaynightjustgotpaid), i’m DEFINITELY not an axe murderer, and i currently only have ONE cat (key word here being currently).

despite the fact that i’m a relatively responsible, relatively normal 30-year old with a good job and a steady income, i was terrified, and i mean TERRIFIED that this part of the process would go horribly wrong. if i’m being honest, i’ve been terrified every step of the way. see, rejection is, in emo therapy terms, my button. it’s my biggest “thing”. hearing i’m not good enough – for anyone or anything – can easily send me on a downward spiral towards dejection and the sense that i am 100% meaningless on this earth and will never succeed at anything, ever.

i’m exaggerating.

sort of. the point is, at every point in this process, from the offer to the mortgage to the coop board, there has been a chance for someone older, wiser, and manlier than me (did i mention this process has been ALL MEN?!) to shut me down. to point a finger at me and laugh in my face and tell me they’re shocked that i ever thought that little old me, she of previous credit card debt and bad saving skills, would be able to buy an apartment in new york city.

incredibly, amazingly, no one has done that yet. at every milestone, i’ve held my breath until the moment my face turns blue, and then, magically, i’ve exhaled. because instead of hearing “no” at every turn, i have heard “yes.”

last night’s interview the co-op board was the last chance for someone (9 someones, actually) to reject me. to crush my dreams and my burgeoning social media stardom (HA) and tell me no. but this morning, instead, i got this text from my broker:

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sure, it’s not 100% official. i’m waiting on an email. but impressing a group of people who had every reason to look at their sarah dossier and say, you know what, we can do better? that feels pretty damn good.

the next step, from here, following official official approval, is to close. i’ve been told that once i’m approved, i can close in 7-10 business days, which will put me in early/mid june. the board told me they’d love to me close as soon as possible ($$$), to which i said, GURL, ME TOO. DUH. the sooner i close, the sooner i can draw up my renovation plans, and get them approved by the board. from there, it’s on to get approval from the city. only at that point (more chances for rejection, BUT OF COURSE) can i start knocking shit down and making it new again.

to my two or three dedicated readers (hi, friends!), thanks for sticking around. i promise the good stuff is coming soon.

what the heck is a flip tax, and why do i have to pay one?

March 29, 2016
budget, the contract, the particulars, the story
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last week, when i first received the draft contract for the grand apartment, my lawyer sent a list of “key takeaways” (his assumption being, of course, that i wouldn’t read the entire contract myself. BUT I DID. not that i understood it, but i tried!). the list looked a little something like this (key areas removed for privacy’s sake):

  1. Purchaser – Sarah Jacobson
  2. Apartment – Apt X, Grand Street, New York, NY 10002
  3. Apartment to be vacant and in broom clean condition at time of closing with the standard items listed in 1.11. Anything else they told you they would include in terms of personal property or furniture? this one made me laugh. pretty please, could they leave behind the ugly dorm light and random bookshelf in the bedroom?
  4. Purchase Price – keeping this under wraps for obvious reasons
  5. Contract Deposit – 10% of total purchase price (YIKES) (Due at the time the Contract is signed by you)
  6. Closing Date – On or about May 2, 2016 (this changed)
  7. Maintenance –keeping this under wraps for obvious reasons
  8. Assessment – None.
  9. Loan Amount – keeping this under wraps for obvious reasons
  10. Occupants – Sarah Jacobson
  11. Pets – None. this had to be corrected to include the queen of my life, my cat, penny lane
  12. Seller’s Rider 42 – Please Review and confirm that all is true.
  13. Appliances – Seller is not making any representation that any of the appliances are in working order. Are you replacing them all anyway? this also made me laugh. i kid you not, i asked my lawyer to write “please remove the fridge” into the rider to ensure that whatever dead body is hiding inside there will NOT be in my apartment when the keys are turned over to me. 

following this list, my lawyer had another one. this one was made up of “everything he could find out about the Corporation (apparently, that’s what the co-op is called) and the building.”

and in that list was this SNEAKY LITTLE ITEM:

Flip Tax – 25% of the net of any first sale of a unit and after the first sale its 15% of the net sale price or $5,000.00, whichever is greater.

i’m sorry, SAY WHAT? i read it multiple times, then read it again. after i handed over all of my savings, a good chunk of my inheritance, my first born, an exhaustive list of my financials and also my soul, THE CO-OP WAS GOING TO TAKE 25% OF THE APARTMENT WHEN I SOLD IT?

oh HELL no.

i called my broker. he told me he’d mentioned this to me, that flip tax was a common thing in the new york real estate world.

look: i know i tend to have selective memory. that and i smoked too much weed in college and so sometimes my memory just isn’t that great. but i swear to god, NO ONE had mentioned this tax. and CERTAINLY, no one had mentioned it in the context of my making an offer on the grand apartment.

my broker tried again. he explained that while i had correctly understood the concept of flip tax, i hadn’t interpreted the ruling above quite right. the “first sale,” he told me, refers to, well, just that. as in, the first people to sell the apartment following its conversion from a rental unit to a co-op unit would pay 25% of the profit. basically, it works like this:

seller A: the lucky person who was living in the unit when the building went co-op in the 1980s. likely got the apartment for a steal (seriously, i don’t even want to know what they paid, it’ll make me cry), and then made a BOATLOAD of money the first time they sold it. let’s just say, for shits and giggles, they bought the apartment for 80k.

seller A’s flip tax situation went a little something like this:

purchase price: 80,000

selling price (the first time the apartment was sold by seller A, the original owner): 500,000

profit made on the unit = 500,000 (selling price) – 80,000 (purchase price) = 420,000

flip tax = 420,000 x .25 = 105,000.

INSANITY, RIGHT? basically, seller A had to hand over 100 grand of their profit to the co-op. you know, because life makes no sense.

i thought this was the situation i was in.

while i wasn’t exactly right, i wasn’t exactly wrong, either. because the “first sale” already happened, my piece of the pie is “only” 15%, not 25%. that softened the blow, a little bit. and that 15% only applies, remember, to the profit i make – not to the gross selling price.

a little research, along with more discussion with my broker, revealed that flip taxes are pretty standard in new york city co-ops. they allow the co-op to make money without having to jack up the maintenance (which, i should add, is quite low in this building).

in other words, as frustrating as that 15% is, there’s no way around it. though it may not be the LOWEST in all the land, it’s also not the worst case scenario (that would be a flip tax percentage that applies to the gross selling price. OUCH).

all parties involved in the transaction (broker, lawyer, mortgage broker, and a few other smart people i talked to) agreed that while 15% wasn’t, you know, great, it also wasn’t the end of the world, nor was it a reason to walk away.

so, i signed. but may this be a lesson for all future apartment hunters: ask about the flip tax, and ask about it early. preferably before you fall in love with a future home and imagine raising your little four legged friends (and maybe even some two legged ones) there.

hindsight’s 20/20, right?