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Board rejected my buyer w/o interview
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Hi everyone,
My coop apt buyer was rejected by board without an interview. Obviously no reason is given but both brokers stated that the applicant and co-applicant satisfied the financials; so I'm wondering if an error in application or a misunderstanding is the reason.

Questions:
1) What are my (best) options: ask applicants to reapply, provide clarification to the board, lobby board members, hopefully other..?

2) It's uncommon, so I'm really interested in what are people's experiences here from either coop board members, applicants that have been through this, or others.

I can't just move on because I can't afford to have this happen again with the next applicant!
Thanks for your thoughts.

I would ask what the board is looking for rather than why the buyer was rejected. They may include a hint for the reason. They are unlikely to provide a reason for rejection as this opens them to lawsuits.

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I can think of five nondiscriminatory reasons why a board might do this, and a couple of discriminatory ones. It's so hard to know without seeing the application package. However, you do need to get a hint of a reason so this doesn't happen again. Talk to the managing agent first, and see if he/she can give you anything to go forward with.

ali r.
DG Neary Realty

Do what Ali says. Also, you know your building and we don't. Do you see any yellow flags in these applicants? Were salaries heavily bonus based or otherwise subject to high risk of fluctuation? Were there employment histories full of job changes and lack of stability? Were their jobs undesirable in terms of what the board may be looking for in your particular building? Do they have any history of lawsuits or criminal investigations or actions? Did their references read alright? Have they owned property before? Is the money in their accounts from a readily discernible source? Is their relationship stable (married?) or very long term with indicia of stability like other assets held in common? Were they just barely financially acceptable thus placing a greater spotlight and focus on things like jobs and income stream? I ask because sometimes if you have a lot of money and financial wherewithal the other things lessen somewhat in importance. It is all a somewhat sliding scale of factors. Were they rejected before an interview? If not, then perhaps they bombed the interview somehow.

I seriously doubt it is simply due to a "mistake" in the application. Typically if there is a simple question needing clarification, boards will simply ask for followup information. Then again, if the overall application is a mess, that may turn off a board regardless of the candidate's finances.

And yes, I'm sure the application fee was kept since no coop returns application fees--it is a fee for applying, and is never contingent upon approval. Same situation as colleges--they don't return application fees if they reject you. Duh.

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Coop404: what were the key financials:
sales price =
bank appraisal =
% down and % financed =
Income (seperate out bonus from base) =
Maintainance =
Non-retirment funds post closing =
My guess is these numbers would contain the answer for the reject. I may be an optimist but I think most times it just comes down to money. Also, was the sale price considered too low by the board, thus providing low future comps for future sellers?

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Usually if the buyers are close financially the board will send some questions via the managing agent for clarification prior to the interview. The fact your buyers were not offered an interview would lead me to think there was something fundamentally off with the buyers profile. Since it is unlikely we will get a chance to review their application here are some co-op 101 items:

Profession of buyers: Non-traditional employment/entertainment biz?
Was their base income sufficient to keep them at a 25% or lower debt to income ratio? Some buildings are very strict about this.Recently we were told that 26% DTI would not cut it in one building.
Would they have 2 years maintenance/loan payment liquid post closing.
Did they have solid credit scores?

If they met all this then as pointed out by others was sales price consistent with recent closed deals. Did they have any special requests such as playing musical instruments such as a piano. Were they planning on any unusual/large renovations. Any strange stuff pop up if you GOOGLE their names.

Keith Burkhardt
TBG

One other item-was any of their funds coming via a gift?

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It doesn't really make much sense that the board charges the same fee whether they convene to interview the prospective tenant or not.

Triple: why doesn't it make sense to you?

404
You do need some guidence from the managing agent and the board. Trying to sell an apartment is costly. If you are providing the board with financially sturdy applicants that would appear as excellent applicants you might be missing something. I would be imperitive that the managing agent contact the board not to inquire as to why they were turned down but as to what qualities are needed to insure the next applicant succeed. Kinda of tricky wording but it's what you need to know.

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I'm a board member of coop. We always want a sale to work out. It means flip tax and it means facilitating the needs of our fellow share holders. We don't take chances with applicants. If you don't pass the financial criteria with flying colors, fogetaboutit. If there is something fishy about your income of profession or the origins of you nest egg we might ask questions but only if your very close to the line. You only get an interview if we are pretty sure your in. All you have to do is interview reasonably well. All that being said, a few nut balls have made it past the goalie.

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@Kyle: "Triple: why doesn't it make sense to you?"

Because rejecting someone with no interview is much less work and much less of a logistical burden than rejecting someone with one.

Turning a buyer down without meeting them is no hassle at all for the board members; they don't necessarily have to even meet all at once, they can look over the paperwork on their own time (and maybe discuss it asynchronously by e-mail), and if it's an open-and-shut rejection, almost no arguing or debate is necessary.

Contrast this with an interview session: having to set a date to all get together and talk things over with the buyer seems to me to be where the real hassle lies and where a board can justify taking a fee.

(If it's the management company taking the fee, then it's a little different; I'm talking about application fees where the board/co-op keeps the money.)

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Triple: the fees don't go to the board. In fact one of the most usual fees goes to the managing agent -- who has to rifle through all the pages of these documents and make sure that they're complete (as well as perform routines like credit checks) before passing the package onto the board.

That work gets done whether there's an interview or not.

ali r.

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Coop, how long did board take to reject your buyer? Did they screw around for months?

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Matt, maybe reversals don't happen in your building, but they do happen; I've just seen one (on a FSBO actually). The person you are asking to "do a little homework about the building" is a shareholder, and as such, the board members work for them.

I do agree that approaching board members personally certainly isn't the first step. However, an inquiry to the managing agent is certainly cricket.

ali r.

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NYCMatt: I think it was inferred that the OP is a shareholder by the first paragraph s/he writes: "My coop apt buyer was rejected by board without an interview. Obviously no reason is given but BOTH BROKERS STATED..."

Ali and I assumed that to mean the buyer and seller's brokers and that the writer is the seller. It also doesn't sound much like a broker's post -- more the type of questions a seller would ask.

Op refers to "both brokers" in 3rd person... OP is owner. FP: what does cricket have to do with this? :)

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It is not at all uncommon for a rejection to happen without an interview. In fact, my understanding is that most rejections occur because of issues discovered during review of the board package.

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Rejections happen all the time without an interview. I disagree with the advice about not speaking to the board...you have every right to ask them about 'what went wrong' or 'how do i avoid this in the future'....they are not obligated to give you any reasons but many will give indications.....in the case of your applicant its either price was too low(was it vs comps?) or financially they werent stable....you should speak to their broker and get his/her thoughts as well

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Truth, I've gotten Broadway performers through a co-op board. The trick was to anticipate that the board might object to noise, and to try to block that objection from the get-go.

Here, though, we have an application that was reviewed by two different brokers. Presumably if the problem were something obvious -- indelicate facebook posts or low assets -- that flaw would have been found, and an attempt made to pre-empt the board's reaction. It feels like this one is more subtle than that.

ali

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Fan attention/photographer attention.

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The bigest issue with Broadway performers would be the lack of consistency in income. Also add on the noise-related issues to practicing and warming up for auditions.

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It seems as if this is another situation in which everyone could be better off if the buyer also had a better idea of the soft requirements of the building, what type of people were on the board, what are the demographics of the building and how has it trended, and so on.

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