New York vs California: 5 Major Differences in the Home Buying Process
Updated: Sep 22
As a licensed real estate salesperson for the luxury markets in New York and California, these are the five major differences I observed in home buying (also based on our own experience):
1) Disclosure Package
In New York, basic information about a property's lot size, taxes, features etc are provided by the listing agent on Multiple Listing Service (MLS), but it is up to the buyer to do the due diligence, for example to check property's tax history on the county's and village's websites; as well as to verify permits at the building department etc. Pre-listing home inspection is not common in New York. General inspections (engineer & termite) will take place after an offer is accepted and are paid by the prospective buyers.
Below is a sample of the MLS listing in New York:
Buyers in California can request disclosure package on properties that are listed on MLS, where the package is usually sent electronically via disclosures.io. California law put an unusually high level of responsibility on home sellers to tell prospective buyers about the property’s physical condition, features, pest problems, environmental concerns, and any other material defects.
One of the forms included in the disclosure package is the Real Estate Transfer Disclosure Statement (Form TDS), which includes all material facts that will affect the value or desirability of the property, and have to be signed off by the seller and the listing agent.
In New York, the Disclosure Statement is a questionnaire in which the seller is required to disclose all general information as well as structural, electrical, environmental and mechanical conditions of the property. However, given the complexity and liability to fill out such form, most sellers in New York will provide a credit of $500 to the buyer at closing in lieu of completing the disclosure questionnaire. In California, not only is the Seller Property Questionnaire required by law, the listing agent and the buyer agent are also required to fill out the Agent Visual Inspection Disclosure (Form AVID).
In California, the disclosure package will also include pre-listing inspection reports (e.g. general inspection, roof, pest etc) and receipt of any repairs completed, paid by the home seller; and the Natural Hazard Disclosure Report (a.k.a the NHD), which is typically prepared by a third party.
There are many other forms included in a California disclosure package but I am not going to get into the details today. The point is clear though, California law protects the prospective buyers.
2) Presenting Offers
In California, in order to make an offer on a property, prospective buyers and their agent have to fill out a 16-page long Residential Purchase Agreement and Joint Escrow Instructions, that serves as a contract between the home seller and the buyer. Which means, if the home seller accept the offer and sign on the agreement, both entity are immediately in contract.
In New York, it is not uncommon to see agents presenting offers via text with the amount and basic terms, such as mortgage/inspection contingencies, and any exclusives from the purchase. Accepted offers could happen verbally or via text.
After an offer is accepted, buyer's agent will accompany the buyer to complete all necessary inspections, before a tailored sales contract is drafted. Most of the time the contract is drafted and prepared by the seller's attorney. It can take couple days to weeks for all parties involved in the transaction to ironed out any issues that arise, before the contract is signed.
Although attorneys are not a required part of real estate transactions in New York, the local custom is for both buyers and sellers to be represented by their own counsel. They will negotiate the contract of sale and to represent their client at closing.
In California, attorneys are usually not involved in residential sales. Prospective buyers (and their agents) will use a standard form called the Residential Purchase Agreement and Joint Escrow Instructions to make an offer. It is completed with the guidance of a real estate agent. Also, title company in Northern California will manage the escrow accounts and act as the settlement agent at closing.
4) Actual Closing
California law doesn't require the buyer and seller to physically come together at the closing table, or ever deal with each other face to face. Buyers and sellers in California are often represented by their own real estate brokers and agents, who communicate with each other on their clients’ behalf. Therefore, it's entirely possible that a buyer might visit, ask questions about, and negotiate a purchase agreement for a home without ever meeting the home seller.
In New York, the buyer and seller will both physically attend the closing or settlement, where the buyer (or lender) will provide funds for the purchase price, the seller will sign the deed over to the buyer, the deed will be registered so that the buyer appears as the record owner, and proceeds of the sale will be distributed to the seller. Buyer will get the key at closing.
These are some of my clients at the actual closing in New York:
Another obvious different is the use of technology. In California, I'd say 99.9% of the documents are prepared and signed electronically, usually through Docusign or Zipform. In New York, although some brokerage firms and attorney offices are using Docusign, I am still seeing a lot of agreement and forms that are handwritten, and have to be signed physically.
As an agent who works in both states, I find the real estate system and platforms used in California more advanced and well adopted. After we closed on our house in California, I received a flash drive with all the documents pertaining to our purchase from my office admin. In New York, we would be carrying an actual folder with all the papers home.
Buying a home in California can be a new experience and much different than buying a home in New York. However, if you know what to expect and ask the right questions, and work with a realtor who understands the difference in both states, you too can have a smooth and successful experience.
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