Showing posts with label coop boards. Show all posts
Showing posts with label coop boards. Show all posts

Mar 31, 2014

Dos & Don'ts For Home Buyers

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The following Dos and Don't for Buyers comes from a lenders perspective. For Manhattan coop buyers finances will be even more scrutinized by the coop board than by the lender. 



Most coops have even more stringent financial requirements than lenders so don't assume that a loan commitment from a lender will  necessarily approve you  for a coop purchase. A Co-op board will require complete financial disclosure. They will look into your financial history, current and past income, assets, liabilities and references when evaluating your board package.



Dos & Don't s For Buyers

Do:

·    Continue to make housing payments on time: Until closing is set, continue to pay your mortgage or rent in a timely manner.

·    Stay current on all of your bills: Maintain good credit by paying bills on time.

·    Verify all information on your credit report: Request a copy of your credit report to verify the accuracy of the information in your accounts.

·     Make yourself available for conference calls with creditors: Depending on the accuracy of your report and the time line of settlement, credit companies may need to verify further information via conference calls. Remember - your credit may be pulled prior to the closing of your loan.

·     Save pay stubs and bank statements: Underwriters will require no less than two consecutive months of pay stubs and bank statements for qualification purposes.

·     Alert your lender if your job, salary, or compensation changes: If your income changes during the application process, alert your mortgage advisor immediately.

Don’t:

   Establish any new credit:
1.   Apply for, or open new credit cards: Opening new credit will not only add additional inquiries to your report, but will also negatively impact your score. Even if an account reflects a zero balance, a trade line has been added to your report.
2.   Co-sign for a loan or line of credit: When co-signing for a loan or line of credit, the payment will show up on your credit report and count against your debt.
3.   Don't misrepresent anything. Don't omit negative information. It is better to be upfront and explain something derogatory from the past in coop board package than to have the board discover it.

·    Close or consolidate credit card accounts: Closing credit card accounts or consolidating debt can have a negative impact on your score as a result of decreasing your credit capacity.

·     Increase balances on your existing accounts: Because a new report may be pulled just days before closing, the updated balances will be reflected resulting in resubmission of the loan. This may cause not only a delay in settlement, but can also result in a denial of the loan.

·     Make large deposits or transfers without proper documentation: Lenders require a “paper trail” for any large deposits or account transfers. (Acceptable documentation includes but is not limited to deposit slips, copies of checks, loan paperwork, etc.)

 Typical Co-op Board Requirements: (what the board is looking for)

  • 1. 25-30% Income to debt ratio. Housing costs should not be more than 25% -30% of income depending on the particular coop.
  • 2. At least 1 years worth of mortgage + maintenance in liquid assets or two years of maintenance after closing costs
  • 3. Increase in salary from previous year, potential future earning. 

Buying-coop-be-prepared-and-qualified
Coop-board-requirements
Tips to Help Pass A coop Board Interview



May 30, 2013

City Council Co-op Bill | Transparency? Accountability?

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The introduction of a bill may help move NYC coops into the 21st century. A previous bill in the city council that would have made coops accountable by having to give a reason in writing why they rejected a purchaser was defeated.

REBNY ( Real Estate Board of New York) opposed the previous bill is now supporting a bill for a transparent coop application process. While the current bill may bring more transparency to the application process, in my opinion it still falls short. Until coops are required to give a reason for rejecting a buyer they will not be accountable.

REBNY now supports the introduction of legislation in the City Council that would mandate that each coop board produce a list of their requirements for a completed application and specify response times for co-op sales applications.

The bill would require cooperative housing corporations to provide a prospective purchaser a decision within a reasonable period of receiving a completed application. This is a step in the right direction. It may make the process fairer by having a uniform application process and requiring a timely response.

Prospective buyers and their representatives who spend time and money completing a lengthy and detailed purchase application process are entitled to a timely written answer.

Cooperative housing is a the dominant form of home ownership throughout NYC. A timely written decision to a buyer’s completed application will benefit buyers and sellers of coops and may even make coops a more desirable form of home ownership and may facilitate market activity since apartments are taken off the market once a contract is signed. The coop board approval process can often take up to 90 days or more.

While introduction of this bill is a a step toward transparency, since many coops have archaic applications and procedures, full transparency will only come when coops are required to give a reason for a board turn down.

Housing discrimination is a violation of federal, state and city laws. Real estate salespersons and brokers are required to take 3 hours of fair housing continuing education every two years. No training, education or skills are required to serve on a coop board.

Oct 31, 2011

Buying A Coop: Be Prepared and Qualified

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Buying a Co-op

San Remo Apartments photo©Mitchell Hall


Being Prepared to Fulfill the Requirements of the Board


Manhattan Co-op ownership differs from that of Condominiums in that you own shares in a Corporation instead of holding Title to a piece of property.  The Corporation is governed by a Board of Directors.  It is this Board that establishes what the requirements are in order to purchase an apartment in their building.

Unlike condominiums a purchaser can be rejected by the coop board. In a Manhattan condominium the board only has first right of refusal and must buy the apartment for the same terms offered. The only way a condo can reject a buyer is to exercize their right of refusal and buy the apartment.  

Please note that the objective of the Coop Board is simply to Maintain and to Raise the value of the property and the building. 

There are three major areas in which the Board addresses this:
  • The amount of financing allowed by the Board.
  • Liquidity of the buyer after the purchase has closed.
  • The Cash Flow of Buyer 
The amount of financing a Board will allow to purchase in the co-op can range from 80% to no financing at all.  The average amount for most co-ops is 75%. Negative amortization and Interest only loans are usually not allowed. 
    After the closing of a purchase the Board will expect the prospective purchaser to have, in Liquid Assets, three to five years of their debt service.  Debt Service is the mortgage, maintenance, and any other financial obligations the purchaser may have.  This includes car leases or loans, school loans, other mortgages, home equity loans, credit cards and such. 

    The amount of this requirement varies from Co-op to Co-op and should be verified by your broker.  

    In the more affluent areas such as Central Park West, Fifth Avenue, and Park Avenue the liquidity required may be as much as several times purchase price.  The majority of Boards require two to five years of debt service depending on the building. This also should be verified by the brokers.

    Lastly, the monthly carrying cost of the apartment should be approximately 25% of the gross income of the purchaser(s.)  The total debt service of the purchaser should be in the range of 28 to 30% of the Gross Income.

    Because of these requirements, when an offer is submitted to purchase, you will be asked to disclose your basic financial profile.  Unless the owner is confident that the prospective purchaser will pass the Board requirements they will not entertain the offer. In a coop the highest offer may not be the best offer. The best offer is the highest offer from the most qualified purchaser.

    You will be asked to submit a complete financial statement with an application to purchase once there is a fully executed contract of sale for an apartment in a co-op.

    There are exceptions to the numbers above therefore it is very important to discuss your particular financial situation with your Broker.  An experienced coop broker can advise you best in these situations. 


    Oct 12, 2011

    Coop Board Requirements

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     What Do Co-op Boards Ask For - Require?
    coop board

    A: Detailed personal and financial information. If you're a first time buyer of a coop below is the typical information and documents required to be submitted with a coop board package.

    All coop purchasers (except sponsor sales) are required to submit a board package. The board will review the package, if it looks in order they will schedule an interview with purchaser.

    A Co-op board will require complete financial disclosure. They will look into your financial history, current and past income, assets, liabilities and references when evaluating your board package.
    The following documents are required for most Co-op boards.

    Completed Purchase Application
    Contract of Sale
    Credit Check Authorization
    Financial Condition and History
    Last 2 Years Federal Tax Returns w/ W2's  (some buildings require 3 years)
    Statement of Financial Condition  Net Worth (All Assets & Liabilities) Signed
    Copies of Bank Statements (Last three Months)
    Proof of Assets  (Bank, brokerage statements verifying information in purchase application, real estate deed, title or stock certficate.
    Current Salary

    (3) Three pay stubs
    References

    Up to 5 Personal References
    Up to 3 Business References
    Employer verification letter stating position, salary, & length of employment.
    Letter from Bank confirming accounts and balances
    Landlord Reference letter

    In addition to all of this you will need to gather these loan documents from your lending institution (usually takes the longest to receive): Many coops will not accept risky loan products or interest only loans and require a 20%-30% downpayment.

    Mortgage
    (many coops will not accept risky loan products or interest only loans and require 20%-30% downpayment)
    Copy of Loan Application ( information on loan application needs to match information on purchase application)                   
    Copies of Aztec Recognition Agreement (3)
    Copy of Loan Commitment Letter

    Typical Board Requirements: (what the board is looking for)
    1. 25% Income to debt ratio. Housing costs should not be more than 25% of income.
    2. At least 1 years worth of mortgage + maintenance in liquid assets or two years of maintenance after closing costs
    3. Increase in salary from previous year, potential future earnings

    Other items the board may ask for can be copies of personal ID's such as passport, driver's license, certificate of foreign status, listing agreement or the contract of sale if you are selling another property. They may ask for a cover letter or essay. They may want to meet pets and family members.

    The listing broker has a responsibility to their client to pre-qualify (the buyer) for purchase of the property. The seller broker should be well aware of what the board will look for in terms of financial and situational (such as no parents buying for children or no pied-a-terre) and should NOT allow their client to accept the offer of a buyer not financially qualified to pass the board.

    If you plan to buy a Co-op be prepared to fully disclose a complete personal and financial picture. Original and seven collated copies of everything noted above are required and possibly even more, for the board to review.  When you go to sell, you will have to pre-qualify the potential buyer. It's much better being on the board than being interviewed by the board. It is very important to work with an experienced Manhattan coop broker when selling or purchasing a coop.

    Oct 26, 2008

    Tips To Help Pass A Coop Board Interview

    1 comments
    I've received several emails regarding coop board interviews recently. Most coops will not allow more than 75% - 80% financing and purchaser's housing costs can not be more than 25% of their income (debt to income ratio).

    Here are some tips to help pass a coop board interview:
    • Being called for an interview is a good sign it means you look good on paper.
    • Be on time, dress appropriate for the building and neighborhood. Conservative is best.
    • Bring a copy of the board package with you. Be familiar with all your financials and everything in the board package.
    • Coop boards are stricter than banks, don't assume because you have a commitment from a bank you will satisfy the coops financial requirements.
    • Be able to substantiate questions about your package.
    • More is less do not elaborate and ask questions, an innocent question might offend a board member.
    • It is better to have a short interview than a long one.
    • Do not go into details about elaborate and costly renovations.
    • If the apartment has outdoor space do not discuss barbequing, it is illegal and smells.
    • Do not ask questions or bring up sublet policy or pet policy uless the board brings it up.
    • It is not a job interview, you don't have to try and sell yourself.
    • Let the board ask the questions, set the tone and conduct the interview.
    • Boards like candidates willing to volunteer to serve on the board or building committees.
    • Boards look for candidates that will "fit in" and follow rules.
    • Don't ask or expect a decision on the spot they will notify you within a few days.
    • Be prepared for a lack of privacy and to answer personal questions unless they are Fair Housing /NYC Human Rights violations.
    • The NYC Human Rights Law prohibits housing discrimination in New York City based on a person's real or perceived race, color, national origin, gender, creed, disability, sexual orientation, marital status, partnership status, alienage or citizenship status, age, lawful occupation or because children may be or will be residing with you.

    Nov 7, 2007

    Tips to Help Pass a Coop Board Interview

    0 comments
    Here are some tips to help pass a coop board interview:
    • Being called for an interview is a good sign it means you look good on paper.
    • Be on time, dress appropriate for the building and neighborhood. Conservative is best.
    • Bring a copy of the board package with you. Be familiar with all your financials and everything in the board package.
    • Coop boards are stricter than banks, don't assume because you have a commitment from a bank you will satisfy the coops financial requirements.
    • Be able to substantiate questions about your package.
    • More is less do not elaborate and ask questions, an innocent question might offend a board member.
    • It is better to have a short interview than a long one.
    • Do not go into details about elaborate and costly renovations.
    • If the apartment has outdoor space do not discuss barbequing, it is illegal and smells.
    • Do not ask questions or bring up sublet policy or pet policy uless the board brings it up.
    • It is not a job interview, you don't have to try and sell yourself.
    • Let the board ask the questions, set the tone and conduct the interview.
    • Boards like candidates willing to volunteer to serve on the board or building committees.
    • Boards look for candidates that will "fit in" and follow rules.
    • Don't ask or expect a decision on the spot they will notify you within a few days.
    • Be prepared for a lack of privacy and to answer personal questions unless they are Fair Housing /NYC Human Rights violations.
    • The NYC Human Rights Law prohibits housing discrimination in New York City based on a person's real or perceived race, color, national origin, gender, creed, disability, sexual orientation, marital status, partnership status, alienage or citizenship status, age, lawful occupation or because children may be or will be residing with you.

    Jun 23, 2007

    Coop Rights Bill: Update

    0 comments
    The NY Sun reported about the bill that would affect coop boards that has long been stalled is now getting support from law professors.

    The proposed law would require coops boards to put in writing their reason for rejecting a purchaser applicant from their coop. There is still opposition saying the law goes to far. I was quoted in the article.

    They called me about the board interview process and how I prepare a buyer for the interview.

    It's best to really keep your mouth shut, only answer questions, and not elaborate on things," a broker with Coldwell Banker Hunt Kennedy, Mitchell Hall, said. One client once talked with a board about making alterations to her apartment and barbecuing, Mr. Hall said, two things sure to turn off her interviewers.

    In that example the coop had a valid reason "quality of life" issue for other shareholders in the building. Major renovations can be of concern, barbequing while practiced and condoned it is actually illegal in Manhattan buildings.

    Richard Nixon and Madonna were rejected also for valid reasons "security" There are many valid reasons why a coop should reject a buyer. IMHO this law does not go to far.

    This bill along with the law passed last year brings Manhattan into the 21st century. It fully reflects the openness, transparency and consumer-orientation that I stand for.

    Complete NY Sun Article

    May 16, 2007

    New law may require coops to give a reasons for a board turn-down

    2 comments

    One of the first blogs I ever wrote was last July about a new law that would make the once secret Co-op sales prices public for the first time under a bill by the Albany legislature. The bill was awaiting signing by Governor Pataki and was strongly supported by Mayor Bloomberg.

    When the law passed I wrote another blog in August NYC-Coop-Law-brings-Manhattan-Real-Estate-into-the-21st-Century. Before the law was passed there were many in the real estate industry that were opposed to the new transparency law. They liked having secret information that was how business was always done in Manhattan and they liked it.

    nyc seal

    Janny Scott of The New York Times recently wrote an article Pushing coops to Explain why you can't buy about a bill before the New York City Council that will require Coop Boards to Explain why they are rejecting a buyer.

    A city council member from Queens Hiram Monserrate introduced a version of the bill in 2004. He visited my office at one of our sales meetings introducing and explaining the bill to us and discussed the coop application process and rejections. All the agents in my office were behind the bill to make coop boards accountable and to get some transparency from the secret way in which coop boards decide which buyers to accept and which to reject.

    While New York City is considered a progressive city with good civil rights and fair housing laws (11 protected classes) most home owners in Manhattan live in coops that are private corporations equivalent to private clubs.

    Under current law coops do not have to offer any explanation when they reject a potential buyer from their building. Coops also do not have to tell buyers or brokers exactly what their requirements are or what they are looking for in a buyer. They can change rules and requirements when ever they want.

    Having had two coop board turn downs in my career one as the listing agent and one as a buyers agent It can devastating for the buyer, the seller and the brokers. The seller might have already gone into contract on a new place and will likely lose their deposit. As the listing agent I was able to sell the apartment to another buyer. Rejected buyers are humiliated not knowing why they were rejected.

    While I do honestly believe most coops are reputable and are only concerned about the buyers finances I also believe in a city as large as New York with so many coops that require no special skills, training or credentials to be elected to a board abuses and discrimination can and will take place.

    Now nearly two-thirds of the members of the City Council are co-sponsoring a measure for a little more transparency from the secretive process by which co-op boards decide which apartment buyers to accept and which to reject. The bill wants co-op boards to be required to give their reasons for rejecting an applicant, and to do it in writing within five days of rejection. Seems quite reasonable to me in this day and age.

    However, the same groups that opposed making coop sale prices public including REBNY (the real estate board of New York) which I am required to be a member of and pay dues to be a broker in NYC is opposed to it and is lobbying the city council to vote against it. REBNY members include management companies that represent coop boards. The council of New York Coops and Condominiums is also opposed to it.

    IMHO the oppositions argument has no merit. If they are not discriminating and have valid reasons to reject someone then they have nothing to hide so they should put it in writing.

    They are saying if you give reasons why someone is rejected it will open coops up to law suits. The New York Times article quoted Richard Siegler, a lawyer who represents co-op boards and condos. "Maybe someone has been turned down because he is a cheater at the golf club. This is something that is not discrimination, and it's just very difficult to put in formal language or even in every case to give a reason. It has been this way for a long time."

    So does that make it right because it has always been done this way for a long time. Even though there are Fair Housing laws it is difficult to sue and prove discrimination if they are not given a reason or explanation. Many questions on most coop applications are illegal according to Fair Housing laws.

    IMHO if someone cheats at the Golf club or they are obnoxious or they have blond hair or what ever "so called valid reason" the coop has for the rejection if the coop doesn't know how to explain that or if that is even a reason to reject someone then I believe the board deserves to be sued. If they don't have a valid reason they should not be allowed to get away with it anymore.

    We are talking about buying an apartment. Financials or building quality of life issues like renovations should be their only concern. It is about time that coops explain their actions and are accountable.

    May 9, 2007

    Transparency and Accountability in NYC Coops? I hope so it is the 21st Century

    0 comments

    One of the first blogs I ever wrote was last July about a new law that would make the once secret Co-op sales prices public for the first time under a bill by the Albany legislature. The bill was awaiting signing by Governor Pataki and was strongly supported by Mayor Bloomberg.

    When the law passed I wrote another blog in August NYC-Coop-Law-brings-Manhattan-Real-Estate-into-the-21st-Century. Before the law was passed there were many in the real estate industry that were opposed to the new transparency law. They liked having secret information that was how business was always done in Manhattan and they liked it.

    nyc seal

    Janny Scott of The New York Times reported Pushing coops to Explain why you can't buy about a bill before the New York City Council that will require Coop Boards to Explain why they are rejecting a buyer.

    A city council member from Queens Hiram Monserrate introduced a version of the bill in 2004. He visited my office at one of our sales meetings introducing and explaining the bill to us and discussed the coop application process and rejections. All the agents in my office were behind the bill to make coop boards accountable and to get some transparency from the secret way in which coop boards decide which buyers to accept and which to reject.

    While New York City is considered a progressive city with good civil rights and fair housing laws (11 protected classes) most home owners in Manhattan live in coops that are private corporations equivalent to private clubs.

    Under current law coops do not have to offer any explanation when they reject a potential buyer from their building. Coops also do not have to tell buyers or brokers exactly what their requirements are or what they are looking for in a buyer. They can change rules and requirements when ever they want.

    Having had two coop board turn downs in my career one as the listing agent and one as a buyers agent It can devastating for the buyer, the seller and the brokers. The seller might have already gone into contract on a new place and will likely lose their deposit. As the listing agent I was able to sell the apartment to another buyer. Rejected buyers are humiliated not knowing why they were rejected.

    While I do honestly believe most coops are reputable and are only concerned about the buyers finances I also believe in a city as large as New York with so many coops that require no special skills, training or credentials to be elected to a board abuses and discrimination can and will take place.

    Now nearly two-thirds of the members of the City Council are co-sponsoring a measure for a little more transparency from the secretive process by which co-op boards decide which apartment buyers to accept and which to reject. The bill wants co-op boards to be required to give their reasons for rejecting an applicant, and to do it in writing within five days of rejection. Seems quite reasonable to me in this day and age.

    However, the same groups that opposed making coop sale prices public including REBNY (the real estate board of New York) which I am required to be a member of and pay dues to be a broker in NYC is opposed to it and is lobbying the city council to vote against it. REBNY members include management companies that represent coop boards. The council of New York Coops and Condominiums is also opposed to it.

    IMHO the oppositions argument has no merit. If they are not discriminating and have valid reasons to reject someone then they have nothing to hide so they should put it in writing.

    They are saying if you give reasons why someone is rejected it will open coops up to law suits. The New York Times article quoted Richard Siegler, a lawyer who represents co-op boards and condos. "Maybe someone has been turned down because he is a cheater at the golf club. This is something that is not discrimination, and it's just very difficult to put in formal language or even in every case to give a reason. It has been this way for a long time."

    So does that make it right because it has always been done this way for a long time. Even though there are Fair Housing laws it is difficult to sue and prove discrimination if they are not given a reason or explanation. Many questions on most coop applications are illegal according to Fair Housing laws.

    IMHO if someone cheats at the Golf club or they are obnoxious or they have blond hair or what ever "so called valid reason" the coop has for the rejection if the coop doesn't know how to explain that or if that is even a reason to reject someone then I believe the board deserves to be sued. If they don't have a valid reason they should not be allowed to get away with it anymore.

    We are talking about buying an apartment. Financials or building quality of life issues like renovations should be their only concern. It is about time that coops explain their actions and are accountable.

    May 1, 2007

    10 Tips To Help a Buyer Pass The Board Interview.

    0 comments
    Being invited to the interview is a good sign. The interview is the board's opportunity to meet you and ask specific questions about your application. The style of the interview can range from an informal gathering of board members in an apartment to a formal interview with board members lined up at a table with you in the hot seat.
    1. Dress-up and be prompt. In terms of dress and promptness, see tip 6 below, a board interview should be treated no differently than a professional job interview. Dress conservatively. A building in Greenwich Village will be more casual than the Upper East side.
    2. Prepare for a lack of privacy. The board has great latitude in the kinds of questions it can ask, be prepared for this and do not avoid answers to personal questions, or be angered by this intrusion.
    3. Know your Application. You should be able to quickly and concisely answer any questions asked regarding your application, preferably without having to look at your application. However, if necessary, bring a copy along.
    4. Couples should decide in advance who would answer what types of questions. For example, you may agree to answer all financial questions and your spouse will answer all other questions. Avoid discussing answers to questions with your spouse in front of the board.
    5. Unlike a job interview, do not try to sell yourself. Only answer questions asked and let the board run the show. Boards rarely turn down applicants for being too boring.
    6. Never volunteer information or engage in unsolicited conversations except for basic cordial remarks and greetings.
    7. Do Not ask Questions! Questions can often unintentionnally convey negative information to the board. For Example: "Do you have any plans to renovate the lobby?" This kind of seemingly innocent question likely to offend the board member who was in charge of the last lobby renovation. If you have additional questions you can direct them to your real estate broker.
    8. Minimize discussion of renovation. Most boards will cooperate with a shareholder but may be reluctant to approve a prospective purchaser if they think their renovations will be too disruptive, noisy or too costly.
    9. A short interview is better than a long one. While there are no hard and fast rules a short cordial interview with a few board questions and remarks is often the best co-op board interview. Do not expect an answer at the end of the meeting. Most boards do not give their decision until a day or two after the meeting.
     
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