I’m sure you’ve heard the nightmare stories about co-op ownership in NYC, and specifically
the co-op board package application process when you’re buying.
Don’t get me wrong, some, but not all co-ops, do make the purchase process needlessly difficult
and time consuming.
There are always bad apples, in all walks of life, and NYC co-ops are no exception.
There are good plumbers, bad plumbers, good co-ops, bad co-ops, and good condos and bad
condos, for that matter.
So this video, we will demystify 5 co-op board application myths and tell you why it’s
actually a very straightforward process over 95% of the time.
I’m Nick at Hauseit.
Check out our website https://hauseit.com to learn how to save money if you’re buying
or selling a co-op, condo or townhouse here in NYC.
So let’s get started!
Co-op Board Application Myth #1: The board package is thousands of pages
Technically, this is true, but only if you have an inherently complex tax return or if
you have dozens of bank accounts (and therefore, loads of statements).
Most buyers don’t fall into either of these categories, and as a result, the completed
board application is usually no more than a few hundred pages.
Moreover, many buildings have transitioned to online board package systems which do not
require you (or your buyer’s agent) to print out physical copies.
Regardless of how many pages the completed application is, the good news is that the
preparing a board package is really just assembling a bunch of documents you already have, like
your tax returns and bank statements.
It’s not like you have to create hundreds or thousands of pages of new content.
The only quasi difficult items in a co-op board package are the reference, employer,
landlord and bank verification letters, since you’re reliant on 3rd parties to provide
them, and that takes time.
But just think of this like any other task in your job which requires you to obtain something
from a co-worker or client.
It’s totally doable, and nothing to worry about.
Moreover, most condo buildings in NYC have a similar application which requires most
if not all of these same items, including reference letters.
Co-op Board Application Myth #2: The application process can take 6 months
Yes, we have seen the board application process take 6 months.
But this was an outlier.
Over 95% of the time, the co-op board approval process takes 6 weeks or less from the time
the application is submitted.
Co-op Board Application Myth #3: They will weigh my dog at the board interview
Again, this has happened before.
But it’s not very common, and it’s certainly not the standard operating procedure for the
vast majority of co-ops.
Even if they were to weigh your dog, there’s no reason to be annoyed by this, since a co-op’s
pet policy never really comes as a surprise.
They tell you upfront what the pet policy is.
If you try to buy a co-op but you ignore or fail to ask about the pet policy, it’s a
red flag to your neighbors that you don’t pay attention and might not respect other
rules once you live in the building.
So in conclusion, review the pet policy before submitting an offer and singing a contract,
make sure your pet qualifies, and if there’s a weight limit, weigh your pet and make sure
you’re in the clear.
It’s that simple, and there’s nothing to worry about.
Co-op Board Application Myth #4: The board application fees are unreasonably high
Yes, co-op board application fees are fairly high.
They range anywhere from $300 to $1,000.
But what you might not realize is that 95% of condo buildings in NYC charge exactly the
same fees.
The application fee is largely determined by the building management company, and these
same companies manage both condos and co-ops.
Moreover, the rental application fees for condo and co-op buildings in NYC are pretty
comparable to this as well.
If we look even bigger picture, it’s also worth pointing out that co-ops have significantly
lower buyer closing costs than condos.
So even if the co-op’s application fee is $100 higher than what it really should be,
your total closing costs are still pretty good compared to what they’d be if you bought
a condo.
Co-op Board Application Myth #5: The co-op can reject me without providing any explanation
This myth is sort of true.
Actually it’s completely true, at least for now.
From time to time, the politicians in New York make noise about possible legislation
requiring co-ops to disclose the reason for a board rejection.
But nothing has happened on this front, as of this filming.
That being said, co-op board rejections are pretty rare.
And most of the board rejections are somewhat predictable, in other words, you could sort
of see it coming.
For example, if you’re buying into a co-op which has ridiculous financial requirements,
like a minimum of 50% down, and two times the purchase price in liquid assets post-closing,
and this co-op also happens to be on 5th Avenue, you sort of know what you’re signing up
for.
Here’s another example: let’s say that the co-op you’re interested in buying has
already had 3 board rejections in a row before you.
The listing agent told you this upfront.
This is a red flag that the co-op board (in other words, your future neighbors) is completely
crazy, or perhaps they’re having some petty feud with the seller, or they think the sale
price is too low.
Again, these people are crazy, and you know this going into this process.
If you choose to move forward with this co-op, the risk of a board rejection is real, and
you signed up for it, eyes wide open.
The vast majority of the time, there’s no reason to expect a rejection if you meet the
co-op’s financial requirements, you submit a complete and organized application and you
don’t ask inappropriate or arrogant questions during your board interview.
Please check out our separate blog post and video on how to prepare for a co-op board
interview in NYC.
The links are below in the description.