REBNY Financial form: Required to make an offer?

If you prefer not to give out all this detailed financial information initially when making what even you think is a low offer. Then simply submit your offer in writing outlining your annual base salary, mortgage pre-qualification and an approximate liquid net worth along with the % you plan to finance. (Other things to mention would be financing contingency, note you have a NYC real estate attorney at the ready).

Let the broker know that if the seller is willing to counter offer you will provide the additional documentation. A financial statement is an important component to an offer in a co-op for the obvious reasons.

Keith Burkhardt
The Burkhardt Group

I am also submitting offers for a few coops and received the REBNY form from one person. Is it a requirement to complete the REBNY form? What happens if I do not complete the form? Is it legal for them to reject my offer or not discuss further if I do not complete it?

Thanks!
Katie

Hi Katie, I know it's intrusive and annoying but it's basically required unless you are paying all cash. If you're all cash, the listing agent will expect to see proof of funds. It doesn't have to be accurate to the penny. It's worth just doing it if you want your offer to be taken seriously. Here's an excel version you can download: http://www.hauseit.com/wp-content/uploads/2017/01/REBNY-Financial-Statement-Excel-Template-Fillable.xls

Just to chime in here, for a co-op it's 100% necessary. You'd have to pass the board and no seller would agree to spend time on an unqualified board through that process. For a condo, it's more of a formality but it's still expected. Even though you have a pre-approval letter the listing agent/seller will still want to spot check your finances to make sure you can really get that mortgage.

This is a super comprehensive article on how the whole offer and closing process works in NYC: http://www.hauseit.com/nyc-fsbo-closing-process-home-sellers/

Unfortunately there's just not too much you can do when trying to buy a co-op. A lot of people are going to see your net worth :-(

Let's get our definitions of what "required" is straight here: there is no "requirement" under the law to fill it out. The only requirement is that a broker MUST submit any and all offers to the seller. So if a buyer refuses to fill out the form, the broker is still required to pass the offer along to the seller. Now, the broker could recommend to the seller that they didn't counter because the buyer was being difficult, etc., but that is not a requirement.

There are lenders that go further than just issuing a pre approval. These lenders issue a real commitment letter even before a property is identified. Of course they have to assume your maximum price range and an estimate of common charges and taxes and or maintenance. But they can indicate limits on these. But it is a solid commitment and the process of obtaining it is the same as applying for a loan. I also have a lender who will do an income analysis on a prospective purchaser and while this is not a full commitment it is a shorter process and shortens the loan process, and income is verified.And of course a real commitment carries a lot more leverage in bidding than a pre approval which really is not very reliable. Then when you do finally decide on a property and go to contract your commitment will be updated to include the property address. But the time it takes to close is much shorter. And a commitment should take the place of having to disclose personal financial information . There is no cost incurred by the prospective borrower/purchaser to obtain the commitment.
Ellen Silverman
E.S. Funding Co. NMLS#60631
Licensed Mortgage Broker since 1990
esfundingco@aol.com

I accepted an offer on my coop and then asked for financial information prior to requesting board approval. The prospective buyers (from out-of-state) refused to provide me with this information and said they would deal with the board themselves. Obviously a deal killer and I told them deal was off. They were pissed.

I wanted to respect their privacy but it was a mistake to not get this financial information earlier in the process. It's a bit of a Catch 22 right? As a buyer, I do not want seller (and their agent) to know how affordable the apartment is based on my income/net worth. It hurts my ability to negotiate. As a seller, I have essentially all the cards if I have their financial information. That is why buyers will often produce a letter from their financial adviser/accountant asserting to a certain minimum income/net worth. That seems more reasonable than the REBNY form.

It's really a condo versus co-op question. The form is never "required" but any listing agent worth her salt is going to request one for a co-op purchase. Sorry - this is the reality in NYC. If you don't want to disclose, then buy a condo, and be prepared with a pre-approval letter from a qualified lender. The better prepared you are, the more likely you are to actually get the apartment. Those who fight the local norms and customs will be passed over for a buyer who is ready and willing to work with the process. This is true regardless of price, because without the co-op board's approval you've got nothing except a lot of wasted time. Be ready or just skip the coops.

I agree Steven. I was not going to go down the road with a buyer who would provide their financial information (and board package) to the board without my or my agent seeing them first . Not only do I risk the buyer being rejected, I lose months of time and potentially create a stigma that other buyers may question. Also hurts a seller's relationship to their board if they think you wasted their time.

But I do understand why a buyer does not want to provide all that detail especially if it's required before or alongside a bid. But that's the world we live in. I personally would never buy another coop.

At the bid stages, a letter from an accountant, investment adviser or attorney indicating a certain minimum income and net worth seems suitable to me and in fact, is done frequently especially with very high net worth buyers. In one case as a buyer, I simply sent my brokerage account statement to the agent and that was acceptable.

In my opinion, if a buyer states the type of work they do which one can reasonably relates to earnings, down payment, and bank pre-approval letter for a $ amount, it is sufficient till offer is accepted subject to more detailed financial information.

how does type of work reasonably relate to earnings? say someone is a realtor. they could be earning $0 or $5 million. and pre-approval letter is based largely on income stream, while most coops require you to have significant liquid assets post-closing.

With certain co-ops there's also a "private club"-type aspect, so that it's not just about what you have -- it's about who you are and how you live and how you spend your money, none of which is going to get captured on a bank preapproval. That stuff is not even going to be captured in an "I'm an executive of Bessemer Trust and I certify that my client of several decades owns three counties in Texas" kind of a letter, though heaven knows people try.

Still, it's not just about hitting the minimums. If the only thing co-op boards cared about were financial qualifications, Madonna would not be living in a townhouse.

ali r.

Ali, My suggestion is meant to get a feel of whether the offer is acceptable to the seller without having your salary and bank statements floating around to five different sellers. Once seller says that they like the price but show me more info so fully evaluate the bid, the bidder will need to provide that quickly. I would NEVER submit full statement with my initial offer but that is just me. I would also NEVER get into a bidding war. BTW, I did not submit my full financials to the seller of the coop I live in till the time there was "I am ok with the price but show me more" from the very-very rich seller's broker. Naturally, we had to submit who we are, down payment and mention of bank pre-approval. Coops sellers can not afford to be high-brow any more.

The sad thing about selling through a traditional agent is who knows if your offer gets submitted. They are "legally" required to present all offers to the seller yes but there's zero transparency in a traditional process. It could be casually mentioned in a verbal conversation or perhaps not at all -- who knows?!

That's honestly why I'm so glad movements like this http://www.inman.com/2016/07/25/the-underground-for-sale-by-owner-movement-in-nyc/ are finally happening in NYC. If I had the misfortune of owning a co-op I would definitely not be trusting a random person to decide what to tell me, and to "screen" for me. Pass!

JR1, FSBO is not for every one. Most people do not have a clue where to price the property and what the coop needs. In addition, many just do not have the time. There is a big structural issue with FSBO. You are not saving that much if you have to pay the buyer's broker.

300_mercer, whether or not selling FSBO makes sense depends on how valuable your time is. Even if you have to pay the buyer's broker, you can still save 3% by using a flat-fee MLS company like Hauseit to take care of the marketing and RLS posting for you. 3% of $1million is $30,000 in savings to you.

So even if it takes you 100 hours of work to sell your co-op in NYC, you are effectively saving $300/hour which is getting very close to the billable rate for an attorney!

As far as pricing is concerned, it's become easier than ever to simply run a comps report on StreetEasy and look at the recent activity in your area. In addition, most people in NYC likely have friends who are agents and would probably be happy to take a quick look at your pricing.

This is another good article about the FSBO situation in NYC: http://observer.com/2016/09/the-biz-of-the-fsbo/

Tony, bid offer in real estate is much higher than 2.5 percent - more like 5-10% and even higher for high priced properties. How does an owner trust that an agent would not have gotten them more? If most buyers were not represented by broker, the savings are higher and will support FSBO. Personally, I would not look at FSBO as most FSBO have unrealistic pricing.

Also, When you list the apartment yourself, you have to deal with many unqualified and unreasonable buyers (+ brokers trying to get your listing) many of who are easier filtered out by a seller's broker. I will start a separate thread about why not sell via auction.

The REBNY financial statement is essential when submitting an offer on a co-op and often required when also making an offer on a condo resale. We have released a calculator that helps automate the calculations and populate the PDF quickly and easily. I hope this helps: https://www.elikarealestate.com/rebny-financial-statement-form/

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