Q & A with Dottie Herman

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Q1 - My boyfriend and I are relocating to NYC from LA and Toronto - finally, an end to our long distance relationship! We are learning about the NYC market and are thinking about employing the help of an expert broker. If we do this, how much can we expect to pay in broker fees? Also, is it much more difficult to find a place on our own?

A - I'm glad to hear that you're moving to New York-this city is truly unlike any other in the world, and I hope you love it as much as I do. Especially considering that you and your boyfriend will both be new to New York, I highly endorse hiring a real estate professional to help you with your apartment search. You will learn not only about the various neighborhoods, but will also benefit from your professional's expertise in guiding you through the process, which may differ from those in your respective regions.

If you are renting, in most cases, you will be responsible for paying the rental brokerage commission fee, which is customarily 15% of the first year's rent. If you are purchasing, the seller usually pays the brokerage commission.

If you need assistance in selecting an agent, please let us know. We would be happy to pair you with someone who best suits your needs, preferences, and personality.
Wishing you all the best in your move!

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Q2 - I found a collection account on my credit report and wasn't sure what to do. I was going to pay it immediately but after listening to the radio show, I wasn't sure if it was the right thing to do. Please let me know.

A - Collection accounts occur when a consumer defaults on a debt and the creditor has had no success in getting payment. The original creditor sells or lends the debt to a collection agency. The collection agency is a third party that gets paid a commission or profiting above the purchase price on funds received from the debtor.

There are laws that apply to collection agencies and rights that you have when dealing with them. The first thing you should do is call the collection agency to find out who the original creditor is and whether you recognize it as a legitimate debt. When calling the collection agency, do not answer any questions about the debt-just find out who the creditor is, what the debt is for, and how much is owed. Once you get this information, you can send us a copy of your current credit report and call us to discuss your options. Do not make payment until we speak. According to the law, the collection agency does not have to remove the delinquency on your credit report, even if it is paid. The only obligation they have is to update your credit to reflect that it is paid, which will not change the harm  that has been done to your credit score. This type of negative credit can remain on your credit for seven years.
Once you give us the info requested and copy of your report we will be able to give detailed feedback and advice.

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Q3 - I recently opened an investment account and was wondering if/how that affects my credit?

A - There are many different types of investment accounts. It would be helpful to ask the company you opened the account with whether the account is updated on your credit and whether a credit review occurred prior to approval of the account. You may also want to check any documents that you signed with them because prior to a company reviewing your credit, they must first get authorization.
If the account has a credit extension or line attached, it may be on your credit report and show as revolving credit, but more likely it will not show, unless you defaulted on the credit aspect of the account. If the investment company did review your credit for approval of the account and this review was the only one you have had in the past year, your score could drop about 2-5 points.

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Q4 - What is the purpose of maintenance fees and when are they applicable? Co-ops, condos? Are there taxes over and above the maintenance fees? I am particularly looking at 1-bedroom apartments for sale in Manhattan so I am only interested in issues applicable to Manhattan apartment purchases. Thank you.

A - Referred to as "common charges" in condos or as "maintenance" in condominiums, these fees are used to fund the day-to-day operations that are integral to a building's functionality, such as fuel, labor, upkeep of machinery and equipment, insurance, underlying mortgage payments, and so on.

In a condominium, real estate taxes are paid in addition to (separately from) common charges. This form of ownership is deeded, and is therefore subject to real estate taxes.

In a co-op, your maintenance fee includes a portion of the buidling's real estate taxes and interest on the building's underlying mortgage payment. Depending on your tax bracket, a percentage of these may be tax deductible on your annual income tax return.

During the purchase process, it's important to review a building's financial history so that you can gain a better understanding of how the building operates, its maintenance history, and any contemplated capital improvements that may be implemented going forward. Your real estate professional can acquire the building's past and current financial statements, which you and/or your attorney/accountant may wish to review as part of the due diligence process (general protocol to look for "red flags").
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Additionally, if you would like us to pair you with a real estate agent who best suits your needs and criteria, we would be happy to do so.

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If you have a real estate question for Dottie, please send it to; Reporters@WPCnews.com