Co-op buying: what to look for?

Same thing happened when we were buying. Fell for a place, our lawyer thought we could do better and insisted on an appraisal while the contract was out. Came in lower than agreed-upon price, so we walked. The walk was actually because we'd found something better. Had we still wanted the first place, guess we would've gone back and knocked the price down some more.

actually, your lawyer could try to put something into the contract that will let you walk if the appraised value of the apartment is less than the contract price (as that would probably affect your ability to get the mortgage you want). You should also definitely have your attorney get copies of the last year (or six months) of board meetings - you want to know if there are any problems, possible assessments coming up which haven't been levied yet.

if the appraisal comes in lower than the contract price, there's a good chance you can't get a mortgage, at which point the mortgage contingency in your contract (something you should never waive) would kill the deal anyway.

i second the comment about the board minutes above, and would add the following: ask your attorney to ask the board for the co-op's financial statements for the past two years, maintenance history for the past five. if there were large increases in maintenance in the past, ask why. ask your attorney if he/she thinks the cash reserve for the building is adequate. ask for co-op's house rules, the proprietary lease, and by-laws. look over them and see if there's anything you don't like, e.g. house rules says no music after 10pm, by-laws says no subletting, onerous submissions to the board for renovations, that sort of thing.

Thanks guys. What about board rejection? Is that contingencies usually in the contract?

"What about board rejection? Is that contingencies usually in the contract?"

The only time I ever saw ANYONE try to get away with not having the sale contingent on Board Approval was when some boneheaded Foreclosure Attorneys started sticking it in their "Terms of Sale" for some foreclosures. But I knew they were idiots before they included that term - they just proved me right again by trying that nonsense.

As far as appraisals go, I know of a lot of buyers who know the value of the unit they are purchasing MUCH BETTER than some inexperienced appraiser, so you have to trust your own judgment (not just your judgment of the price, but your judgment of your judgment of prices).