Daniel Gershburg

As we move closer to the New Year and look back on what was 2008, so much has changed.  We began the year knowing of the strength of Bear Sterns, Lehman Brothers and AIG.  Also….people had jobs.  The situation now seems absolutely dire.  All you hear about on the news are new scams, new indictments, more foreclosures, less credit, etc.  Aside from the staggering unemployment figures we are facing, there is one…very very large…diamond in the rough.  It looks like its never been better for someone to purchase some real estate in New York City.   Let me please be clear about this.  It’s a great time to buy some property in New York as long as you have a sizeable downpayment, good credit, a stable emergency fund, and are not looking to get on any TLC shows for “flipping”.  

Why is that?  Well for starters mortgage rates are great and it looks like they will likely fall to historic lows pretty soon. If people thought 6% was good,  imagine having a 4.5% mortgage 10 years from now.  Perhaps even more importantly is that you are starting to see a ton of unsold inventory around New York City (specifically Brooklyn).  Prices in many of these new construction buildings have dropped anywhere from 10-20% already, and its likely they will fall even further (Im beginning to sound like a sales rep).  But without even expressing opinions on the market (because no one is ever right about that), the one thing you should know is that if you are purchasing any property in New York City right now, keep negotiating as hard as you can.  My clients have had transfer taxes and a large amount of closing costs paid by the sellers on several recent deals (not promising the same will happen to you, but it seems to be happening more and more).  Sellers are sitting on new construction developments with huge construction loans and they have to get rid of these units.  They’re really not interested in keeping your 10% deposits if you can’t close on time as they need the entire purchase price.  Having said that, make sure you are aggressive in terms of the price you ask for, as well as the credits you ask for (transfer taxes, etc.).  When you combine all of these with low mortgage rates, a lot of qualified (say it with me…qualified) people who can afford the home they are purchasing will be in a great position very soon.  

Also, please be wary of this FHA loan nonsense that is flying around.  FHA loans are not some savior loan that will make your couch more comfortable or the air smell fresher as they make it seem on TV.  Its a loan.  With a lot of drawbacks and points and escrow amounts that you have to put aside.  Sometimes its good, and sometimes its not so good.  Make sure you look into the pitfalls and benefits before you decide to go FHA.

By: Daniel Gershburg, Esq.

First the good news from this Brooklyn Real Estate attorney:  Many new condominiums in downtown Brooklyn are realizing that the Real Estate market is not what it once was and are offering a myriad of concessions including paying transfer taxes, saving potential purchasers thousands of dollars in closing costs.

Now the bad news:  The worksmanship of many of these new constructions leave much to be desired.  Brownstoner.com covers many of these buildings, and their problems, in depth, but suffice to say that the builders were looking for profits and as such have skimped on traditional worksmanship as a result.  In english…some of the buildings stink. Again, we’re not talking about all of them, but many of them have some issues.  An example:  Two clients purchased a brand new construction in the heart of Park Slope about 6 months ago.  They chose a unit that was above the garage.  The building, realtor included, had promised to use noise dampening materials to cut down on any noise the garage door would make when opening and closing.   And they did.  Except the materials they used weren’t the best and weren’t doing the job.  Now you might think that these potential purchasers should not have gone ahead with purchasing a unit above the garage, but when you have numerous people from the building explaining in detail all the steps they would take to make sure the noise was not an inconvenience…and they dont…you begin to realize that there is a problem going on.

There is no easy solution to this problem, but there are certainly proactive steps that you, the purchaser, can take when deciding whether to purchase a new condo in Downtown Brooklyn.  First hire an engineer to do an inspection before making any concrete offers.  While the building may have their own inspector, you should definitely pay a seperate inspector, who has experience dealing with new construction buildings, to come in and take a look at the premises.  She/He may find problems that the inspector for the building didn’t or couldn’t find (cough cough).  Furthermore, it will give you additional piece of mind when you plunk your security deposit down.

There are also certain contractual provisions that your Real Estate attorney can put into the contract that can compensate you in the case of bad workmanship.  Lastly, you should contact the sales agent frequently if you find something is wrong with the new unit after you sign a contract to purchase.  The agent can be incredibly helpful in eliciting a response from the building, especially if you keep at it.

The lesson  from this Brooklyn Real Estate attorney is: caveat emptor, or “Let the Buyer Beware” when you are purchasing a new condo in Downtown Brooklyn.  You can take certain steps to make sure the building you’re purchasing into is structurally sound, and the unit you are purchasing is ok.  Ultimately the decision is yours, but taking proactive steps with all parties involved will go along way towards minimizing any stress you may suffer during the purchase process.

Daniel Gershburg Esq., is a Bankruptcy & Real Estate attorney serving  clients in Brooklyn, Queens, Manhattan, Staten Island, Long Island and Westchester.  Mr. Gershburg has given lectures and presentations to both attorneys and the community at large surrounding Bankruptcy and financial advocacy in the New York City area. He is a proud member of the National Association of Consumer Advocates.   Currently he is working on his first book giving practical advice about repairing troubled credit and how to improve credit post Bankruptcy