If you’re considering buying in New York City, you should know a lot has changed in recent months because of the pandemic. Many parts of the buying process moved online or are being done differently to promote social distancing. You’ll find a greater reliance on video tours; open houses are done by appointment only; co-op board interviews are virtual; and filings are done electronically.
Instead of using paper documents, your co-op or condo application package will be digital, and while the online shift simplifies the process, there are some pitfalls to avoid—like submitting before you’re ready or omitting important documents.
The purpose of the board package is to show the board you are a qualified buyer—and these disclosures are notorious for feeling invasive and perhaps even more so as a result of the economic uncertainty caused by the pandemic. The scrutiny of your tax returns and financial statements, as well as the need to provide personal and professional recommendations, can feel excessive.
However, if you consider it from a different angle, all that scrutiny is actually for your own benefit. The ownership structure of a co-op means you are becoming a tenant shareholder of a corporation and the due diligence is all part of screening for candidates who will contribute to the building’s financial wellbeing.
[Editor's note: An earlier version of this post was published in January 2020. We are presenting it again with updated information for January 2021.]
Increasingly, application packages for the purchase of a condo require similar amounts of documentation and in some cases, even an interview. For a list of everything you’ll be expected to provide, read ”How to make your co-op or condo application package rejection-proof.”
For tips on how to assemble your application package most efficiently, read on.
1. Start prepping early
It’s your job to get all the documentation together but a broker can help you with the filing and make sure there are no omissions.
Usually, there are one or two rounds of back-and-forths between the broker and the buyer, says Ari Harkov, an agent with Brown Harris Stevens. You can cut down on time between offer and closing if you are well organized.
“Most contracts require packages to be submitted within a certain time frame. Be sure to check your contract and consult with your attorney so you know what dates and deadlines you need to meet,” Harkov says.
Now that applications are largely being prepared online, Harkov says the process of compiling and submitting board packages has become both simpler and more complicated. “Digital packages help streamline the process and save paper, but they are also fraught with pitfalls and challenges,” he says.
A comprehensive review of a package is more difficult when it’s online and Harkov says software glitches or unfamiliarity with the system have resulted in incomplete packages being accidentally submitted.
2. Follow the checklist
Know what to include—and what not to include. A management company or brokerage will send you a guide explaining exactly what you need to have in your package.
Your broker can provide samples of application documents and starting early gives you time to request any necessary statements.
You should also have your broker reach out to the seller’s agent to find out exactly how the board wants the package delivered, what software is being used and who it will be sent to. You can get organized by scanning documents and having them ready to upload.
The bottom line: Include everything asked for and don't put in more than you need. A big no-no: pictures. "We don't care about what your house in the Hamptons looks like and we don't really care what you look like," says one Upper East Side co-op board treasurer
Remember that in addition to financial information and reference letters, your co-op or condo application must include a written insurance quote or active insurance policy—on an apartment you are not even approved to buy yet. Fortunately, the co-op and condo insurance insurance experts at Gotham Brokerage can provide exactly what you and your board need in a fraction of a business day. They’ll also swiftly accommodate any changes (for example, if your closing is delayed), and fully refund any policy costs if you don’t complete your purchase for any reason. Click here to get started.
3. If you're financing, you'll need a commitment letter
Co-op board requirements vary from building to building but there are some nuts-and-bolts requirements: financial statements that show assets and income, specifically tax returns and bank statements. "Those are the heart and soul of the package in broad strokes," Harkov says.
“In today’s lending environment, many banks are taking at least 45 days to issue commitment letters,” he points out. And remember to stay on top of the letter’s expiry date—this kind of oversight could become a sticking point for a seller.
Usually, the board will want two years of tax returns and your most recent bank statement. When it comes to stocks and retirement account reports, the most recent paperwork is usually fine.
4. Include a cover letter and table of contents
A cover letter and table of contents lets board members easily find what they need.
Harkov makes a point of supplying two cover letters: “One is the table of contents and one explains who you are, [where] you put your income, your assets post-closing, and your debt-to-income ratio. So if a board member doesn't want to read the whole package, they can get everything they need from these two parts," he says.
5. Flattery will get you everywhere (only if you're sincere)
"Compliment the building—honestly—in the buyer's intro letter, because every member of the board chose to live in the building," says Betsy Hoffman, a real estate salesperson with Engel & Völkers Brownstone Brooklyn. "By adding a few lines highlighting the pros, it's a great way to acknowledge the smart financial choice they once made,” she says.
Hoffman’s advice is to make it “more than just about the dollar and cents of who you are” by adding the human touch of how neighborly and friendly you are.
6. Don't leave any blanks
Co-op board members are volunteers (with jobs and families in many cases) and they don't want to spend a lot of time going back and forth asking for more information—plus the longer it takes for them to approve you, the longer it'll take to close on your apartment. One mistake for buyers paying cash is not showing that amount of cash on the financial statement, leaving the board to wonder where you’re getting the money from.
"Sometimes people will say there will only be two occupants in the apartment, but their tax returns show they're liable for other people," says Caroline Surace, director of transfers at Halstead Management. "You need to explain that," she says.
Discrepancies need to be clarified. "Our building doesn't allow for new pets," says the Upper East Side treasurer, "but sometimes people say their pet is an emotional support animal. If that's true, we need documentation to back that up."
The idea is to preempt any questions. For example, if you're recently divorced, be prepared to give detailed information about alimony payments, whether you give or receive.
7. Choose references wisely
Make sure references are well written and typo-free.
"Pretty much every co-op will ask for some amount of reference letters," says Harkov. "They fall into several categories: An employee letter, which comes on company letterhead and verifies your compensation; a business reference letter from a superior or colleague, which offers substantive feedback about you in a work environment, including details on how responsible you are; a personal reference letter, and a letter from your current management company confirming that you pay rent or monthlies on time."
Specificity is key when it comes to references, says Harkov. "You want your references to include details like, 'she helped me when my kids were sick,'" he says.
One Yorkville co-op board member puts it this way: "What separates one applicant from the next is the personal aspect—specifically, the recommendation letters. Because when it comes down to it, once we are all in agreement that the applicants have the financial capacity to purchase, we really just want to see if they will make nice neighbors. Who are they asking to recommend them? Do they read like boilerplate or do they really tell me that these are good, nice people?"
Two high school teachers who bought a co-op in Forest Hills, Queens, told us they were certain their “Disney-style” letters of recommendation were what clinched the deal for them.
So who should write your personal reference letter anyway?
References should be from colleagues or friends who can speak honestly about you. If they are NYC co-op owners themselves, so much the better. “The idea is to use someone who gets how important it is to have good neighbors and can vouch for that fact that you would make one," says Harkov. If you know someone who’s a board member on a NYC co-op or already lives in the building—even better.
For more tips, we have samples of reference letters addressed to co-op boards.
8. Double and triple check the package
"Multiple qualified eyeballs are always a good thing," Harkov says. The buyer's broker pulls the package together, but the seller's broker, the managing agent, and even the lawyer should review it. Check for typos and see if anything stands out that needs a correction.
9. Don't expect condo board packages to be easier
Condos can be equally cautious about who they are letting into their building. As a condo buyer, this should reassure you. Hoffman says, “Just by doing the exercise it shows you the board is taking the finances of buyers seriously. The hope is you are one of many neighbors who have gone through this to make sure you are stable and no one is going to default.”
10. Bring your A-game to the interview
The pandemic has pushed so much online—meetings, school, even family get-togethers—so the online format of the board interview is something most buyers are now fairly comfortable with. It’s certainly easier to schedule. The general advice is to treat a remote or online call as you would a regular interview—as if you were applying for a job.
Dress appropriately, be respectful, and keep it friendly. If you’ve spent the time preparing the application you should know your package inside out so you won’t get tripped up by any questions about it during the interview.
Earlier versions of this article contained reporting and writing by Lucy Cohen Blatter.
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