Getting Shafted at Closing Time
Someone on the Forum who’s about to close on his first home is looking for advice: The condo is a condo conversion that was gut renovated and essentially considered new construction with an offering plan. We are first-time buyers and I have heard alot of people say that sellers/developers may try to screw you at…
Someone on the Forum who’s about to close on his first home is looking for advice:
The condo is a condo conversion that was gut renovated and essentially considered new construction with an offering plan. We are first-time buyers and I have heard alot of people say that sellers/developers may try to screw you at the closing. Since this is a pretty broad statement, just wondering in what ways I could pontentially get “Screwed” and if anyone has any advice or experiences they would be willing to share.
One person says it’s possible for sellers to adopt a “take it or leave it” stance if the buyer notices anything in the home that’s amiss, while another says that having a real estate lawyer accompany you to the closing should prevent problems. Anyone out there been burned by a closing or heard stories about how other people have gotten gypped?
Getting Screwed at Closing [Forum]
Photo by thorscipher_mason.
I think having a good lawyer is key. She didn’t get us everything we wanted, but there were some strange charges at the closing and she whipped out her calculator and got us a little money back. The bigger shock to me was how much all the taxes and fees added up to. I did rough calculations in my head, but I think we ended up paying nearly 5% of our purchase price on closing with 15% down. It’s even more if you borrow more.
have used a good lawyer for several transactions. cost was pretty low, and was totally worth. do not consider going in alone.
also, i now live in a condo and the board has been able to get the sponsor to do all sorts of extra work – i mean a lot after closing.
just go over everything carefully and do a good punch list.
Having been screwed on both sides of the buy/sell of co op transactions, here is my advise to purchasers… especially first time ones.
1. In co ops especially – do your due diligence and talk to other residents of the building you are moving into.
2. Pay particular attention to the condition of the building externally and the condition of the internal common areas.
3. Stop by the laundry room and strike up a conversation with anyone who is there… are the machines all in working order? What do the notices on the BBoard say? Is it clean. (Indication as to the general upkeep of the place)
4. Ask to be introduced to the Super. The reaction to this request and any subsequent meeting will give you a gut feel about what you are investing in.
5. Meet your prospective Managing Agent – just pop into their office and see who will be your first contact to get anything done
Especially if you are buying from the sponsor – get an independent inspection!!! Sponsors sell to you ‘as is’ and encourage you to use their attorney – to save you money. It is cheaper, but you are better of paying for your own attorney to get an HONEST assessment of the reputation of building’s management, the financials for the cooperative, AND an HONEST disclosure of any violations – past or present – from the City building departments. There are a LOT of surprise assessments, maintenance increase costs, etc. that come down the pike AFTER you sign at closing!
TRUST ME, you will thank me if you do this. I have been mislead by the sponsors sales agent as well as the attorney I used on one transaction. My naivete as I believed them when they forecast schedules for the improvement of infrastructure, disclosed a lack of code violations, and did not disclose pending legal actions which were filed a week after I closed.
Maybe it’s just bad luck, and I did survive. But I believe in helping you avoid these headaches.
Also, look under the Management Topic in this Forum. LOTS of good advice there!
“it’s not right to use the word “gypped” as it was in the post. Gypsys are people too, and shouldn’t be referred to in this derogatory manner.”
I have been using that word forever…never giving its origin a thought…. geeze, it is
a dergatory reference to Gypsys… just looked it up in the Webster’s Dictionary.
it’s not right to use the word “gypped” as it was in the post. Gypsys are people too, and shouldn’t be referred to in this derogatory manner.
Thanks for sharing the WSJ article “The What”…. very sad situation, and it’s still unfolding.
Itend to agree that sometimes folks get too caught up in the buying frenzy, and get themselves into nightmare financial situations in the short term and the long term.
We had problems buying our first house (in Boston). We had no attorney, and when going over the documents at the closing, discovered that 1) the mortgage rate we had guaranteed IN WRITING from the bank was a full point higher on the note at the closing, and 2) the actual land area was 5000 square feet smaller than had been entered on the Broker’s listing. If we had had an attorney present, I feel sure we would have been able to deal with these two points, but in the end after calling the bank – which said ‘so sorry, we made a mistake on the initial rate calculation’ we just gave up and accepted the two changes (the rate was still low, the house acreage was still adequate.) We have always used a lawyer since then, both while buying another house and while refinancing. She helped us mightly every time.
11:08 — You mean C of O — Certificate of Occupancy.
That said, there will be punchlist items that are never really fixed. You can’t get crazy over it. The big thing is how reasonable the budget for your maintenance is — many developers understate. Expect to pay 20% more (or more). Also, the funding of the reserves. If developer controls buidling, he will put that off as long as possible.
You might want to find out if they have a CFO. I have a few friends that have purchased new places and they don’t have a CFO. The developer keeps putting them off and saying that it will come by the end of the month. This has been going on for 6 months.