Broker derailing negotiation -what should I do?

for a co op, he definitely needs the financial sheet filled out.
you can write in rough estimates of numbers, but he needs to make sure u are qualified to pass the board- i am surprised your attorney told you otherwise.

the seller cannot respond to an offer that may not be realistic. you would be surprised how many people are not qualified to buy a co op but think they are.

this is entirely standard- as long as he sent u the rebny financial statement. having a broker does not hurt you either- especially in a co op, in which you will need guidance, etc in preparing the board package, etc..

the seller's broker is just doing his job and it's totally normal, at least your attorney should know that..

There are two types of financial disclosure forms that I have seen. One is a REBNY disclosure form, which is only two pages long, and it asks for basic information such as income, retirement assets, what other liabilities you have, what you expect your housing expenses to be, and how much cash you'll have post-closing. This form is very, very standard in New York, and it is used to judge whether you'd be good board candidates.

The other is a more detailed in-house form -- I've met a Corcoran broker, for instance, who has a four-pager he likes to use. I think if you are daunted by this form, you can send in the REBNY form instead.

But to not fill out anything at all -- how does the seller understand the strength of your bid? He/she knows your guess at price, and the fact that someone will give you a mortgage, but how does he/she know how you'll fare with the board?

ali r.
DG Neary Realty

That's good to know - no one has ever asked us for this info with a first bid before. Does that mean all these other brokers weren't doing their jobs?

Where you bidding on coops? I was asked to fill the form that front-porch mentioned when I placed a bid on a coop years ago. I think it'sthe normal, default request. I am really surprised your attorney advised you not to fill it out, it's exactly the opposite advice we received from our lawyer then. How else can they evaluate your offer?

I'm sorry for the intrusive form, StF62, but NO, it does not mean other brokers weren't doing their jobs.

That is a figure of speech and an opinion, formal financial disclosure with offers is not a legal requirement or even a contract requirement in **most** listing agreement contracts. I am certain however there are sellers who add that, though, and then the broker must do it. Surely for properties worth many millions, formal financial disclosure must de rigeur prior to the first showing. (Maybe somebody who works in that rarefied world can enlighten us).

The broker's job's legal description is this: "to produce a ready, willing and able buyer." That's the law when a commission is due.

The financial disclosure form is an instrument for assessing the "able" part. Other mechanisms I use include researching other real estate already owned by the potential buyer and obtaining profession information, which I then verify. The salaries of many executives are public information.

The other objective of a seller's agent, by the way, is to get the apartment sold for the best possible price for his or her client, the seller.

You showed up broker-less, which is totally fine with me, but in that case I would want more from you than what you provided in your offer given that this is a cooperative property. No worthy broker is fixated on 6%, believe me, because you've got a long road ahead of you yet when you present your first bid.

I'd argue that the other listing brokers indeed weren't doing a good job. Fluter raises the most obvious case "other real estate already owned by the potential buyer."

Example: If you make $360,000 a year combined, that's $30,000 a month. If you bid on a $1 mm co-op and offer to put down 30%, your monthly cost of carry is going to be around $5,000. (This is a hypothetical here, don't nitpick my math.)

With just the info that you make $360,000 combined and have a mortgage prequal, it looks like you're very strong bidders.

However, the bank would still prequal you for that mortgage amount if you had a pre-existing million-dollar mortgage somewhere else -- that might make your total housing expenses around $12,000 a month, and a 40% housing expenses-to-income ratio is fine for them.

For a co-op board, not so much. Suddenly you're weak bidders, all because of something that might not have been disclosed in the bidding email, but that the seller needs to know.

We can dice this even finer -- is that pre-existing $1 mm mortgage on a $1.5 mm house, or on a $5 mm house? That's two different cases, and you see how the candidacy gets stronger in the second case -- all because of one little line you filled out on a form.

ali r.
DG Neary Realty

Yes the broker is simply doing his job to pre-qualify you for the pre-set coop financial guidelines that must be met for board approval later on in the process. Part of the brokers job outside of marketing and procuring an offer for their client, is to pre-qualify the would be buyer prior to any contract signing. If they dont, well then a big risk exists in meeting the coop boards financial minimum requirements.

You should simply have to provide a snapshot of your financial situation: assets, liabilities, salary, employment situation...then, later on you will have to document these as required for the purchase application that the board will review.

I agree with Fluter, as a broker I would want more from you as well to cover the areas noted above. Not sure why your atty advised you that it is NOT necessary, it IS! Makes me wonder about your atty too.

The broker is doing his job but he is also a dumb ass. He should be thrilled to have a buyer without a buyers broker so he can collect the entire commission for himself. He is earning about 6% and he sounds reluctant to work for it. Why couldn't he have explained the situation - like posters here did - so you knew why he was asking for the info. He also could have said, "Look - I understand you are reluctant to share these personal financial details with me. Would you consider sharing them directly with the seller so s/he can evaulate the offer properly?"

If your attorney is not comfortable, have him draft a small non disclosure agreement for him to sign as well, stating the only copies will be sent to the coop board,not left on file in broker office,etc.
No reason for the broker or an agent for the brokerage to sign such an agreement.

meant...no reason for broker or agent for... "NOT" to sign

This particular broker's demeanor probably contributed to my feeling paranoid about all this. Had he phrased it as a request as opposed to a demand (I NEED you to do this) and not followed it up with a veiled threat, it might not have raised my guard. But you certainly can't count on every broker having a good grasp of civil discourse.

i would advise you to meet with the broker with all of the information in hand. this way you can provide him the info needed without actually giving him copies of anything.

StF62, asking you to fill out the REBNY form might be a stalling tactic as well. If orders from the seller are that the broker should "play for time" (maybe there was an open house recently, and they think another offer will be forthcoming) then the listing broker might ask you to fill out the REBNY form to give you something to do for 48 hours.

ali r.
DG Neary Realty

Hi Ali,

"the listing broker might ask you to fill out the REBNY form to give you something to do for 48 hours."

Do you think it's be better to attach the REBNY form to the offer? That way, buyer shoes he/she's qualified at the time offer is made.

thanx

I ask all my buyers to complete a REBNY form and have their prequal letter available when we begin to work together. I submit both with offers 95% of the time.

Keith Burkhardt (Broker)

This is a general statement, but if you are getting a negative (vaguely threatening) feeling from the broker I would trust your instincts. Also, this broker should never get his/her full 6% -- either you or the seller should be negotiating this down (I have done this before).

yes, dwell, always better to attach a REBNY form to an offer. It makes you look fully loaded and ready to go.

ali

Thanks Ali & Keith. Makes sense, otherwise, Seller doesn't know you're qualified.

Thanks for all your comments, this is quite illuminating. I already had the prequal, guess I should add the REBNY form to that for the future. I'm not sure if I should continue pursuing the apartment described above or not. I did get a pretty negative vibe from the broker, but then I'm not trying to make friends with him, just trying to buy a place to live.

No offense intended, but were your other offers maybe lowball offers that had little chance of being accepted? I'm wondering if the brokers thought the previous offers were flawed in a way that didn't make it worth their time to vet you through the REBNY form.

Every broker we talked to in our recent search stressed the importance of the REBNY statement in addition to the prequalification letter. Putting myself in a seller's shoes, I can't imagine accepting an offer and making a commitment (even if only verbal) to a buyer without having any idea if they meet co-op board requirements.

I have to say I don't blame the broker for having an attitude because what your attorney is telling you seemingly goes against the accepted standard (is he/she a real estate attorney?), and he may suspect you're up to no good. An offer without the REBNY form is an incomplete offer and can't really be responded to. Unless they're desperate, it's not worth negotiating to a price point with buyers they're not sure can pass the board.

Obviously, only you know the full story, but I might give this broker another shot. For what it's worth, I think it's a legitimate case of miscommunication and not anyone playing games.

I get why a REBNY form can help bolster a bid.

My question is whether the REBNY form can be submitted on a redacted basis, i.e., with the requested financial disclosures to support the bona fides of the bid, but without any personally identifiable info like names, etc (thus, form would say Buyer is [sales exec][lawyer], instead of saying Buyer is John Smith.

Or, just use your first name? I also hate the idea of my personal info floating around.

No offense taken, Lad. While one of my previous offers was a lowball, the others weren't, and a couple had reached fairly advanced stages in negotiations - and it's at those stages where brokers asked for and got my financial info. I certainly don't expect anyone to proceed too far without that. But I was surprised that it was the first thing he wanted. Guess my experience 'till now was unusual.

(By the way, the broker to whom I made the lowball offer treated me very professionally, and I visit many of her listings, since she specializes in the neighborhoods we're looking at)

This conversation reminds me of when a broker totally freaked out when we wouldn't submit a bid until we'd reviewed the building financials. He said we couldn't review them until a bid had been submited/accepted - WTF, the building financials play a huge part in our bidding. If we see any reason to be concerned about future maint increases, etc. we'll adjust our bid accordingly. Fair enough that a seller would want to review a buyer's financials to holistically evaluate the offer.

scoots, I hear you but in this market its fairly standard protocol to deliver offering plan/financials/contract of sale AFTER a verbal agreement on price/terms is met.

These items cost money to procure and usually are not in pdf form (they should be), and if you gave hard copies out to everyone before hand chances are you will get less than half them back. Also, why give docs out to someone who is not a real buyer or has no intentions of submitting an offer that the seller will deem acceptable?

Thats not to say you should not review these docs prior to signing, you should! Simply, that in this fast paced market, standard protocol is to deliver them after a meeting of the minds..its generally accepted here. You disagree, thats fine and you are more than willing to request these docs beforehand but I would tell you to prepare for some resistance

Why not make the offer subject to review of bld financials?

that is assumed. When I submit any offer, in the offer letter sent in I clearly state this offer is subject to satisfactory review of diligence...but in reality, nothing is binding until a contract is fully executed anyway in this market so brokers learn very early on, that the verbal agreements are subject to satisfactory review of all diligence..

scoots comments was that he wants to review these items before submitting an offer, as they might affect his offer. well, what if he is not qualified to buy but thinks he is. What if he values the property lower than where seller is willing to go to move the property? If you gave docs out to everyone that asked before hand, you would need multiple copies of everything and mgmt charges for both offering plan + financial docs if seller doesnt have them

i actually provided buyers with 2 yrs of financials on my apartment when they visited it for the third time. they came back with another viewing. i've seen them since looking in the building, but i never got an offer and made copy of 40 sheets for them, for nothing.

It seems clear to all responding that the Broker was in fact representing their Seller’s best interest by determining the qualifications of the potential buyer/s. In most instances a Broker has knowledge or can obtain information from the Managing Agent of a building as to whether a board has certain stringent financial guidelines and requirements for a prospective purchaser/s. Therefore, it is imperative that a buyer produce a financial statement of sorts to present to a Seller or their representative for review at the time of or prior to the submission of a formal offer in writing (Which if in writing will be taken seriously and considered legitimate by the Seller/s or their Broker/s).

The misconception by a majority of people who intend to place an offer is that; by offering or presenting the financial information at the beginning stages it may undermine their negotiation strategy. This in fact may hold some weight however; it is the Sellers representative that will want to make a deal happen with a buyer/s who they know can pass the tough Co-op Board process, in addition, that party may be the stronger of several parties vying for the same property.

The sharing of valuable and sensitive financial information as part of the property purchase in a Co-op can be a viewed as a double edged sword by some, yet at least one knows they've done all they can do to participate in this process proactively and with transparency... at the end of the day if the property is meant to be theirs, it may be due to the Broker or Sellers efforts to place them that buyer/s in the best possible light before the Co-op Board in order to facilitate the eventual "approval" and transfer of ownership.

I agree with Scoots. With a co-op, you are buying shares in a corporation; it's not unreasonable to want a high-level picture of that corporation's workings before submitting a verbal offer.

Why should someone spend $1,000-$2,500 in attorney fees without having a sense of the apartment's share of the underlying mortgage, reserves, maintenance and assessment history, and recently completed and planned capital improvements?

This is NOT a lot of information to ask for, and these questions should have simple, easy answers. I'm not talking about 40 pages. The relevant information could fit on half of a sheet of paper.

Building's underlying mortgage is A, and your share is a.
Building's reserve fund is B, and your share is b.
Building's real estate taxes are C, and your share is c.
Maintenance for your unit in 2010 is D. Maintenance was d in 2009, d in 2008, and d in 2007.
The following special assessments, with reason for the assessment, have been levied in the past three years:
The following capital improvements have been completed in the past three years:
The following capital improvements are planned for the next two years:

The above is accurate as of [date].

I wish these were required disclosures! I can't imagine not knowing the answers to these basic questions before submitting an offer on a co-op.

Just to add verification that this is pretty standard these days & say it is probably a pretty good indication that they are seriously considering your offer.

When we sold our coop during the height of the market they wanted this info from the 2 prospective buyers who offered asking price, at the time of offer.

When we just recently bought a condo we made 2 offers on different apts. One was lowball & not accepted or even countered so they didn't ask for it but one was a strong bid and they did ask for it to accompany the offer, which was accepted.

there is a simple answer to this...go green and have mgmt provide all owners with a free pdf version of financials that can be made available to prospective buyers and attorneys. Still, if this became common practice, you will see plenty of unserious and unmotivated buyers request these simply because they can, and the sellers will find a deteriorating relationship between a request for bldg financials and quality/seriousness of a future offer that has not been made yet

When we sold, our mgmt agent provided one copy which we scanned to have available for PDFs (tho few asked for it) and also had a copy at the every OH for people to review onsite.

Co-ops also don't want their financial information floating around.

I concur with lad on the requesting of this pertinent information about the buildings credentials. In addition, one must be aware that the attorney representing a buyer may be able to read the co-ops minutes in their due diligence process and discover something about the building ( needed a new roof or boiler/s) that may be problematic and may suggest their client run as fast as they can away from that particular building.

Most importantly, the broker, attorneys for both buyer and seller in addition to the managing agents all perform necessary roles and functions regarding the intricacies of a real estate purchase in Manhattan and the outer boroughs. Buying property here is like no other place on the planet and if one tries to circumvent the process by doing it on their own they can be assured there will be a drama filled story to tell at ones house warming party in the event they ever get to that point.

Waverly - what other investment partnership keeps their financials secret? Most people are too dumb/lazy to read them anyway. Maybe Matt can chime in on this but my guess is that if a coop has something to hide, thats a red flag.

StF62 - what did you end up doing? At this point you've heard from others that the REBNY form is absolutely standard and I just wanted to chime and confirm that as sellers, we never accepted an offer until we had the completed form. That being said, if we got a realistic starting bid, we did enter in negotiations but just didn't agree on a final price until we saw the form and knew the buyers were serious and eligible. For cash buyers, we requested proof of funds in addition to the REBNY form. Nice to say you have the money but...

I decided to send him the form, and see where it goes. I guess I'll find out how genuine he is within a couple of days.

thanks for this discussion. question-- if we are cash buyers, but the cash is coming from a relative as a private loan, do you think its ok to represent that as your cash on the rebny form even if the transfer hasn't officially been made yet?