What’s Escrow and How Is It Used In Real Estate Transactions?
Introduction
Escrow is a term that both homebuyers and sellers hear a lot about when they are completing a real estate transaction. There are a variety of uses for the term escrow, but it is mainly used to describe certain events of a real estate transaction. Overall, escrow is used to describe a contractual agreement that is being held by a non-biased third party before the finalization of a real estate transaction.
Earnest Money Deposits
Escrow is used during numerous parts of a real estate deal. The first place that escrow is used, in most cases, is when a buyer places down a deposit after their offer is accepted by the seller. The deposit money is held in escrow to ensure that no one has access to the funds until the purchase is completed fully. If a buyer chooses to complete the transaction, the money is credited to them during closing. If a buyer decides to back out, then the deposit money is released from escrow to the seller of the home.
Escrow Accounts
Buyers who are purchasing their properties with loans will typically have escrow accounts set up by their lenders. After a purchase, property taxes and home insurance bills are sent to the lenders. Lenders use the money held in escrow accounts to pay both of these bills. While property taxes and home insurance policies are paid for annually, buyers pay their lenders monthly, and the lenders then place the money into the escrow accounts.
Lenders do not always require buyers to pay more than the needed monthly payments, but some do. These excess payments allow lenders to retain safety cushions in their escrow accounts in case property taxes increase, home insurance rates rise, or buyers are unable to make their payments. A majority of lenders currently want buyers to add the maximum amounts to their escrow accounts.
Real Estate Settlement Procedures Act Guidelines
The Real Estate Settlement Procedures Act (RESPA) regulates the maximum amount of money that lenders ask for their borrowers to retain in their escrow accounts. While RESPA doesn’t require buyers to open escrow accounts with their lenders, most lenders do.
The Best Affordable Housing in New York City
Looking at housing in the New York City area can be a challenge for those who must stick to a budget. Finding a deal can be a real task, but knowing the right places to look is the key to finding a dream house that balances the budget as well. Sacrificing a nice area for the sake of affordability does not have to be the case. There are several areas in the New York City area that provide some of the most affordable housing.
Located at the southwest end of Prospect Park is the area of Windsor Terrace. This area provides a quiet and tranquil environment that feels much like a quaint sleepy little village. While nightlife and shopping may not be directly in the area, it does bring that small town charm that many homeowners are looking for. The hustle and bustle of Park Slope is just a short commute away. Townhouses in Windsor Terrace range from 1.5 million to 3 million. Though this may still seem astronomically priced, townhouses in Park Slope run anywhere from 3 million upwards to 20 million.
For those homeowners seeking out tree-lined streets, with the convenience of shopping and dining look no further than Forest Hills. The tranquility, along with many of its amenities, has definitely caught the eye of potential buyers. As opposed to Long Island or Astoria, condos can be found for almost $200,000 cheaper.
Just southwest of Brooklyn is one of the most affordable areas in the New York City area. Bay Ridge, which boasts some of the most breathtaking harbor views provides a great dining and shopping scene while still providing one of the more affordable housing areas. Both one and two-bedroom apartments can run anywhere from $354,500 and $599,000. Bay Ridge is well known for its Greek and Italian food.
Boasting one and two-bedroom apartments for around the $200,000 mark, Bedford Park is an absolute steal in Manhattan terms. While the commute to midtown can take around 45 minutes, the area also provides both the metro and buses into town. Bedford Park is also home to the New York Botanical Garden and is within close proximity to Lehman College as well as Fordham University.
Can Having a Roommate Save you Money in NYC?
New York City has always been one of the most expensive places to live in the United States. The soaring cost of housing in the Big Apple leaves many renters feeling as though they have no choice but to seek out a roommate with whom they can split expenses. Just in 2017, a study showed that up to 40% of adults renting in the city were living with a roommate. There is even a special program for elderly renters which helps them share their homes as well as the costs. While many may not be fond of having to share their living accommodations, the real question is whether or not having a roommate is worth it?
To answer the question quite briefly, yes, it is! A report that was put together by SmartAsset shows that a one-bedroom in New York City runs roughly $2,915 a month, while a two-bedroom apartment runs $3,717 a month. This is quite pricey, but by having a roommate to split the cost with you save almost $12,600 per year. While it may not be the most comfortable living arrangement, it will undoubtedly help with the cost of rent throughout the year. In the end, you will save money!
Living with a roommate can also help in other aspects of housing, such as utilities. Electricity, cable, internet, and water are all utilities that are in addition to rental expenses. If you were to add these utilities on to the high cost of rent in New York City, it could get expensive very quickly. With a roommate, you have the option to split the cost of utilities right down the middle. Living in New York City can be quite expensive, but choosing to live with a roommate can make it more affordable.
A roommate doesn’t necessarily have to be a stranger. It could be someone you already know. Check with friends and coworkers to see who might be interested in a roommate. Having a roommate you’ve already established a relationship with can make the situation much easier for both of you. As long as your personalities mesh well together, the experience can be a positive one that benefits both parties.
About Avraham Glattman
Avraham Glattman is the owner of First American Properties Group, a real estate business based in New York City, New York.
Avraham brings over 26 years of experience working as a real estate agent in the city, where he continues to work today. He graduated from Newport University with a Bachelor’s Degree in Business Administration and Management and remained at the university to attain his Masters of Business Administration (M.B.A.). After graduation, he jumped straight into the real estate field in 1992 in the greater New York City area. Throughout his career, Avraham has explored listings across the New York area, keeping a detailed account of the locations, pricing and comparable properties in the housing market.
After gaining a wealth of knowledge about the real estate marketing in New York, Avraham Glattman decided to take it a step further by creating First American Properties Group with his longtime business partner, Pete Jacov in 2008. First American Properties is a real estate and development company that services the five boroughs of New York. The company currently owns residential and commercial properties in Queens, Downtown Brooklyn, Harlem, and Manhattan. The company focuses on monitoring the growth and development in different areas of the city, so they can work to establish more patterns of growth and help revitalize the area.
While monitoring the different areas of New York City, Avraham Glattman consistently keeps an eye out on up-and-coming neighborhoods that he could potentially invest in. For example, after seeing Harlem, Avraham was immediately impressed by the neighborhood’s charm, leading him to invest in properties in the area. With a convenient location next to the subway and charming business like music venues in the area, it was not hard to see what attracted Avraham to the area.
Today, Avraham Glattman continues to find new investments with First American Properties Group, alongside his business partner, Pete Jacov. Together, they are working towards the goals that they set for First American Properties Group. The goals include acquiring property in the Harlem area to renovate and sell, as well as acquiring properties in all five boroughs.
Avraham Glattman is also the proud owner of 1927 Café Bar Popularr. Located in Harlem, the café serves a variety of open-faced Mediterranean sandwiches, called ‘Toastics’, and many types of coffee. Café Bar Popularr is proud of the rich artistic traditions of Harlem, and invites local musicians, authors, and comedians to visit and share their talents with friends.
Avraham was born and raised in Israel, where he went graduated high school. Not long after, he served in the Israeli army for three years, before he was sent to the United States to work with an Israeli newspaper in Brooklyn, NY. Not long after making the move to New York, Avraham met the woman that would become his wife in 1991. Together, they have three children.
In his spare time, Avraham Glattman enjoys spending his time with his wife and three children and loves to explore new parts of New York City. Avraham’s incredible dedication to both his work and family brings him immense happiness and purpose each day.
To learn more about who Avraham Glattman is, visit AvrahamGlattmanNewYork.com.
