Which is the bigger Ponzi scheme?

i think thats the coop board acting in thier own best interest

How so, marco? It's a condo board, not a coop. It's not like they have the right to nix the transaction altogether; they merely have the right of first refusal, which "they" (the condo president, that is) turned over to the condo president. So the apartment DID transact for $1.3M after all. It's not like the guy paid more for the unit.

It seems to me the board president did act in his own best interest (though not the building's) by giving itself a free option to shanghai a contract. If it was in the real interest of the condo and the unit was being sold "too cheap and under market", wouldn't the better thing have been for the condo to buy it for $1.3M? Or for the condo president to have paid $1.4M? What does the condo gain from having one person vs. another buy the place at the same price?

Let me put it another way. Say you're a buyer there. How would you feel about going into contract for a unit there if you knew it would be subject to an option for an unrelated third party (not the condo) hijacking the contract 3 months later for whatever reason unrelated third party may have (i.e., the market had gone up)? I don't know about you, but I'd be less likely to bid or would bid lower. Hence, the condo owners are getting somewhat screwed by this action.

Or let me put it another way. Say you're an owner there that wants to sell. Do you think the real buyers here (which obviously have an interest in the building) are going to bother putting in a bid on your place? Unlikely. Furthermore, it's not like the condo president is going to buy your place; he's merely trying to pump his own crap.

In some markets, that sort of activity is called price manipulation.

but of course, the guy who bought it would say:

1. by re-listing at a giant markup, he is effectively (if he sells, of course) protecting everyone else's property values
2. he personally has the immediate liquidity to step in; how would the condo come up with the money so quickly
3. he is entitled to the ultimate profit (again assuming he sells at the new much higher price) because he took the risk

Letz see. From 2002 to 2007, on my condo board, if any unit was even slightly below 'mkt' some board member or a 'friend' would step in. It became such a sure thing that ppl jockeyed to be board members. Now any attorney worth more than $5/hr should tell a client of rules of condo/coop including 'right of first refusal.' now the mkt will tell if this particular 'flipper' is smarter than the mkt. But I have a little unicorn that tells me he could be the first poster child of turn in guaranteed profits in boards exercising it's 'rights'.

One other thing, this is another reason why re is NOT like other mkts. In a 'true' mkt we should see a straight shot to $500psf, but every lemming trade creates noise in the mktplace. Either I'm too stupid and all the realtwhores and lemmings are smarter than I, or....... I'll be eating the dogs and cats and they'll be eating the cat chow.

CC, according to that logic (which I am guessing is not your's but you playing devil's advocate), then the "sin" of the original buyer is that they were not going to immediately flip the apartment for a higher price.

neither...

trying to explain the logic behind this guy stepping in. i think he's wrong because i can't imagine this place going for anywhere near his new asking but i don't see anything illegal or unethical about what he's done.

plus, no sin involved on anyone's side. this seems like exactly why condo's have this clause which presumably was a known factor to the buyer.

and of course, a listing does not make a flip---that requires a sale. would agree with w67---more noise in the market masking the underlying realities.

with the hypothetical 20% down that would only run you something over $14000 a month. but you would get the furniture. instead you could rent this. but why would you, it's just larger (1653 sf v. 1355)and many thousands a month cheaper (about $6000) and it doesn't have the furniture! maybe it's on a lower floor, though. wait! it can't be, the one for sale is on the second floor. but sometimes lemmings are real stoopid, so maybe mr. developer/board president will get lucky.

http://streeteasy.com/nyc/rental/591052-rental-170-east-end-avenue-yorkville-new-york

07/05/2008 Previously Listed by Corcoran at $14,000.
11/08/2008 Corcoran Listing rented. Last priced at $10,000.
10/28/2009 Listed by Corcoran at $10,000.
11/17/2009 Price decreased by 15% to $8,500.

I think Mr. Developer is merely trying to "defend" his other 5 listings. Obviously, Mr. Developer is not a real buyer: he has 5 other listings on the market. The real buyers of this listing had shown interest in one of those 5 turkeys, but presumably they didn't like the price. So what did they do? They went with the other listing. Presumably, Mr. Developer didn't like that.

Now had Mr. Developer bought the other listing himself on the open market, that's one thing. Presumably, he could have put in a bid sometime during the 2.5 months the unit was on the market. Presumably, a $1.301M bid would have been gotten the deal done. But he didn't. Rather, he abused his fiduciary position for personal gain. I don't see what advantage was brought to the condo, hence the move was of questionable ethics.

but as a board member, he effectively has topping rights--at no premium. this is a known fact. if you think about it, there is no way he could have bought this place without a real third party bid to set the price. if you're looking for malfeasance, perhaps the $1.3 million bid was from a friend of his?

i laid out the possible gain to the condo; certainly his buying rather than the third party has not hurt the condo; i think your argument that this could discourage other bidders for other apartments is a stretch. in theory, any bid for any condo is subject to the same possibility yet people seem to be buying them.

i don't see how it helps the condo in the slightest, but i don't see how it hurts either. it sold, admittedly under some duress, at $1.3 million. for the developer to think that somehow his purchase of the unit negates the fact that the unit didn't sell at a higher amount is silly. it still is exactly what it would have been, a forced sale at a low price.

i think he's just looking for a quick profit.

i agree with ionada that this is strictly for his own profit. it doesn't help the condo at all. and who is going to stand up to the condo board president -- it could make your life a living nightmare. but the condo should be concerned about Mr. Board Pres' financials. He has a lot of inventory in this building. If he goes belly up, there would be a lot of units in distress.

I agree. Tiger woods was in it for his own penis, but now it's taking his entire franchise with him. So too this 'president' is being short sighted, and his entire co-op/condo hoarding franchise will sink him too. Allah willing.

you really make me laugh

Without digging into anything, I doubt the guy's going belly-up. He's just pushing up against market forces much bigger than himself. We'll see how it shakes out and whether he gets $3600 per sq ft in Yorkville.

A follow-up on this. From ACRIS, it seems the condo LLC was the purchaser here. The attempt to "protect value" seems unsuccessful here. The unit is still unsold after 2 years of using the LLC's funds for the purchase and paying the common charges & taxes:

http://streeteasy.com/nyc/sale/483712-condo-170-east-end-avenue-yorkville-new-york

Just to clarify, "condo LLC" (170 East End Avenue LLC) is the sponsor/developer. It sold the place to Stein in 2008 for $1,629,000 (less taxes) then bought it back from Stein's referee in 2009 for $1,300,000 (plus taxes.)

In effect, it's pretty much a wash for the developer, as far as the money goes. May as well have been unsold from the beginning. As you say, the 2009 market priced it at $1,300,000 and there's no way to undo that.

However, What happens if the market goes down and the developer (President of condo) has a remaining 5 units to sell and packages them all for a sweat deal for one investor at a lower than market price? This leaves the owners of the condo holding the bag for their units are now depreciated or will be depreciated due to an appraiser. Being a developer and president of a condo in my mind is a conflict of interest.

I do realize that what I personally consider "unkind" or "unethical" may not necessarily be illegal. I see that on a daily basis at work.

I also agree w/ inonada that the board was not successful in "protecting the value," as the sale price was recorded at $1.3M anyhow--and the LLC doesn't seem to have been successful, either, in cashing in at a higher price. They made everyone, including themselves, jump through the hoops--for nothing! I can only imagine the amount of paperwork they had to process to exercise their right of first refusal... Besides, they caused some people to be VERY unhappy. Was the "unkind act," which hasn't benefited anyone so far, worth it? Hmmm... Assuming that the unlucky buyer was well qualified and intended to use the unit as his/her primary residence, the bldg. missed out on the opportunity to gain a good, stable owner-occupant--who would have benefited the condo for sure!

I personally think this will harm this particular condo's reputation in a long run, as people will inevitably talk about how a transaction was blocked by the "mean" board, causing the sale to be delayed--which would make the bldg. sound like a coop.