main reasons a co-op board would reject you ?

That's why I love my co-op board. Their motto is if you can afford it, you're welcome to live here. Any rejection has been wholly based on financial ability (or lack thereof) to carry the unit.

My wife and I were rejected by a coop board because we were "pied a terres". They accepted such owners on a "case by case" basis. We were all cash purchasers with excellent financials. We have 3 kids in their twenties - all employed or in school - none withinn 400 miles of NYC.

Maybe you lost your job in the recession?

sjt--The sad truth is boards tend not to like pied a terres when 'kids in their 20's' are involved, regardless of how far said kids happen to live from NYC.

1. Finances--especially stability in current earnings.
2. Debts and outstanding obligations.
3. Credit history.
4. Social/neighborly type issues (are you the kind of neighbor they want).

1-3 get 90% of the weight here.

I've only been doing this for a few years, but I've already got a reputation as something of a board whisperer. It seems to me like rejections fall into three categories:

1) the board doesn't like your source of income. Maybe you're an actor, and they don't like actors (discrimination by employment is illegal in NYC, but happens all the time.) Maybe you're a trust-fund baby, and they don't like trust-fund babies. They see that you have money, but feel that how you got it doesn't necesarily indicate stability (as KW said) or reflect well upon your character.

2) the board doesn't like your friends. Contrary to what most people think, the rejections of a generation ago which were outright discrimination (say, East Side co-ops not taking Jews) are now few and far between. But in the world of social media, it's tough to be really private; hearing more and more stories of "Facebook rejections" where the tenor of the applicant's social media existence wasn't sufficiently grave. Maybe you belong to a subgroup that the board thinks is going to party too much, or not be involved enough in the building (see sjtmd's rejection, above). Maybe the board sees something on your taxes which reflects on the way that you live that it doesn't like.

3) You are buying the apartment at too low a price, and the board thinks if it rejects you, the owner involved will get a higher price from a subsequent sale to a future purchaser. Also illegal, but still happens.

The best defense against any and all of these rejections is a good offense. The listing broker should know the board (as well as he or she can) and your buyer's broker, if you have one, should work with him/her and with you to put together a package that is as airtight as possible.

ali r.
DG Neary Realty

Great topic. Excellent analysis, Ali.

Q for Ali:
If you want to move into a particular bld & you see a broker has done a lot of deals there, go with that broker because they know what it takes to have the Bd approve a buyer?

dwell, I well might.

ali

Thanks, ali. I have that situation, but I find the broker obnoxious. Dommage.

"My wife and I were rejected by a coop board because we were "pied a terres". They accepted such owners on a "case by case" basis. We were all cash purchasers with excellent financials. We have 3 kids in their twenties - all employed or in school - none withinn 400 miles of NYC."

As a co-op board member, I would have rejected you, too.

Pied-a-terres tend not to regard their apartments (and the building) as their homes as much as a crash pad. We're looking for buyers who want to join our COMMUNITY, not just have a place to crash (or worse, have a place for your friends and relatives to crash).

And frankly, the all-cash thing would have worked against you in this regard, since all-cash pied-a-terre buyers tend to have this "acquisition" mentality of entitlement (the apartment is part of your investment portfolio rather than your HOME), whereas someone who's stretching a bit, paying a monthly mortgage payment would tend to appreciate the property a bit more than a buyer who painlessly and effortlessly dashed off a half-million dollar cheque.

I can also see why very rich people don't like co-ops, because it's one of the very few times where the guy with the most money doesn't always get what he wants.

I'm sure everyone here remembers the article in the nytimes about 740 Park - the broker convinced her Saudi prince client that he was interviewing the Board, not the other way around, and he got in.

did you showed up to the interview dressed as boy george?

That will spin their head right round baby
right round baby right round

NYCMatt- You truly represent the snob mentality of coops and their boards. How can you assume that saving money over a twenty year span equates with "painlessly and effortlessly"? I do not get this COMMUNITY thing - do you gather around a campfire each night singing songs and telling ghost stories?
What makes you think that someone who wants to enjoy what the city has to offer on weekends, holidays, vacations will be a Keith Richard wannabe? And since when did you become a real estate psychiatrist and can diagnose the dreaded disease of "acquisition mentality"? Well, Mr coop board member, you can keep your ridiculous rules, your ever increasing maintenance charges, your assessments, your arcane house rules and ridiculous fees. I will keep my money where it can grow over time, utilize my son's major hotel executive discount visiting various cities and resorts, and enjoy not being around snobs like yourself.

dwell, it's a problem. Pity me, 'cause I have to work with those people.

sjtmd, I'm with you. I think your profession alone says something positive about the way you relate to other people.

ali r.
DG Neary Realty

"NYCMatt- You truly represent the snob mentality of coops and their boards."

Which makes his contributions here valuable. I didn't find my co-op purchase to be a particularly pleasant experience, but at least nothing surprised me.

"NYCMatt- You truly represent the snob mentality of coops and their boards. How can you assume that saving money over a twenty year span equates with "painlessly and effortlessly"? I do not get this COMMUNITY thing - do you gather around a campfire each night singing songs and telling ghost stories?"

Maybe we do. Maybe we don't.

But COMMUNITY is what we want, not absentee investors.

*****

"What makes you think that someone who wants to enjoy what the city has to offer on weekends, holidays, vacations will be a Keith Richard wannabe?"

What makes me think this? EXPERIENCE.

*****

"And since when did you become a real estate psychiatrist and can diagnose the dreaded disease of "acquisition mentality"?"

About six years ago.

*****

" Well, Mr coop board member, you can keep your ridiculous rules, your ever increasing maintenance charges, your assessments, your arcane house rules and ridiculous fees."

"Ridiculous" rules. Like what, pray tell?

My building's rules ensure the quiet enjoyment of EVERYONE in the building, no more no less. Please cite some of these "ridiculous" rules of which you speak.

And as far as our ever-increasing maintenance charges, please do point out a building anywhere in New York whose fees are actually DROPPING -- be it co-op, condo, or rental.

*****

"I will keep my money where it can grow over time, utilize my son's major hotel executive discount visiting various cities and resorts, and enjoy not being around snobs like yourself."

I'll try not to cry over your absence. It'll be difficult, but I'm sure I'll struggle through it.

other reasons:

1 - you are nude around children
2 - you publish a blog against Israel
3 - you refuse to put down carpet even though the rules require
4 - columbia county is your primary residence

I once read a magazine article about a woman living in a posh Beekman Place coop. She got mad at her assistant and tied up the assistant, then shaved off all the assistant's hair. The assistant then went to the police and reported her boss - who was then arrested. The coop board found out and evicted the woman. (I looked for the article on google but couldn't find it.)

When I searched for my "peid a terre" I typically didn't consider co-ops as brokers told me that many boards are not receptive to it. So to me its pretty simple, if you don't want me (for whatever generalized notion) then no sweat, I don't want you either and everyone moves on. There's plenty of inventory without considering co-ops. As for the statement from NYCMatt about it being a crash pad and not a home (whatever that means), if I'm dropping 2 or 3 Million bucks on a property, I'm certinaly not letting freeloader friends or relatives stay there or hanging out of the windows. As for "it being a community", what am I living on a kibutz? Are we gonig to hold hands next, have weekly assigned hall patrol, wear Red T-Shirts? To double down on "NYCMatt's" pre-concieved notion, your are exactly right. I like the fact that I don't really know my neighbors and they don't know me. I don't need to live under the shadow of a bunch of petty control freaks who get off on poking their nose into other people's business and coming up with stupid rules to follow. I want a place to live during the week, not some phony sense of community. In sjtmd's case the co-op board that rejected you did you a favor, since job 1 for any board is financial soundness. It was their right to reject you, but realize how lucky you got! You are now free to find a cooler place to live, without having to deal with a collection of people who get to decide how you use your property. Oh I forgot its not really your property at one of these places ...

sjtmd, that "community" bullshit is just that—bullshit, and Matt is the one to spew it. There's no "community" in a normal co-op. The only unifier is the confirmed financial abilities of all involved.
My co-op allows pied-a-terre as well as renting out for a few years.
The recent rejection in my building was because the potential owner created a short-term hotel situation in his/her previous dwelling, and it came to light during due diligence process by the management. Also, I have to add that I found out about it by having a drink with someone who happens to be on the board. Community my ass!

the last thing anyone needs is a bunch of buffoons telling you where you can and can not live.

Most sensible coops will let you in if you are financially sound. You really need to f*ck things up at the interview to get rejected. To my surprise, I've seen it happen when it seems that the applicant tried in earnest to pass.

Anyone have experience regarding likelihood of approval for gifting, or willing co-op to a beneficiary (daughter in my case)?

CrisT, from what I know, highly unlikely. In case of a will that I'm aware of, the board said the heir must sell, which he did. Others might know something different.

Totally agree with the sentiment that it is good to hear the comments of Matt. That officious, judgemental mentality reinforces my sentiment that coops are best avoided.

buyer not all coop board members think like Matt. They seemed reasonable at my recent interview and I'm optimistic about the building and my new neighbors.

Re: gifting, it's really going to depend on the co-op. Some will force a sale, some will re-interview the heir, some will let the gifting go through with no trouble. I'd check with the board.

ali r.
DG Neary Realty

Co-ops are like country clubs; they're restricted to "people like us," with all the snob logic that implies.

Maintaining "community" sometimes has to do with financial stability and sometimes has to do with other kinds of social stability. It's the buzzword once (and sometimes still) used to keep out blacks, Jews, gays, pop stars, etc. As in, "we want to live with PEOPLE LIKE US--people who will understand the importance of maintaining the standards of our community...." Personally, it's a bit suburban Connecticut for my tastes.

And I know it's a hopeless cause, but I do wish people learned to spell pied-à-terre and realized that it refers to an apartment in town, not to the people who live there.

Boss, I have a new p-a-t listing at 3 Hanover Square ($479K), and I found that the accent grave on the "a" did not translate through to several databases, including streeteasy.

Maybe it's a Mac vs. PC thing.

ali r.
DG Neary Realty

Yeah, the accent's probably a lost cause, but the other words really ought to be spelled properly.

>When I searched for my "peid a terre"....

>My co-op allows pied-a-terre.... [um, where's the s?]

And on RE listings I keep seeing the phrase "pied OK," which basically suggests it's OK to have a foot.

going to switch this up... i was in contract and buyers came to me and said we will never get through the board interview.
they said the reason was daughter (grown, in her 20's) was manic, tried to kill herself and was arrested for DUI. I had to make a decision as to moving ahead with the sale or letting them out of the contract.
what does the board (this board) think and what would you have done.

Is it possible to make a Zagat's rating type booklet of NYC coop boards? Is it possible to do this without getting sued? Probably not worth it, but there is a lot of info available on this site.

bubbles, I would try to negotiate keeping a small part of the deposit, but ultimately let them out of the contract and move on regardless of whether they blink within a week.

How many New Yorkers are not snobs for one reason or another?

Bubbles, have you substantiated the buyers claim re their daughter?

i kept most of the deposit and because of the timing ended up selling for much less...
but of course i always wonder if they would have been rejected by the board for that reason.

gaongaon, i really had no way to prove it one way or the other

Bubbles, an arrest for DUI? I knew of a man who checked himself into Creedmor to avoid closing on a real estate deal.

LMAO!!! i thought my store was good, that makes me feel better!!

"RICH AMERICANS DITCH HOME OWNERSHIP FOR RENTING" and the well known malady of "acquisition mentality of entitlement". I wonder how the two jive?

My understanding is that if a buyer does not pass the co-op board they get the full deposit back..is that correct? I know anything can be written into a contract but what is the standard?

Eastside, what you mentioned - full return of deposit after a board turndown -is standard. Of course both parties are out time and attys fees.

ali r.
DG Neary Realty

Anyone who believes the coop board is not on the side of the shareholders should not buy a coop or is at least looking at the wrong building.

Correct, if the buyer wold have failed the interview and i could not prove they did not act in good faith they would have received there deposit back.
my choice.. have them go ahead and pass- good. go ahead and fail- getting their deposit back- back. keeping most of the deposit and letting them out of their contract. i opted for number 3.
but always wonder if they would have passed or failed.

been there, exact same situation, see comments under building at 350 E 77 st., all cash, my permanent residence, now is out of state,in retirement, submitted mountain of tax returns etc., wanted pied-a-terre, figured part-time NYC pad, now's right time market is down, asked if they accept them, told yes, by listing broker, she was full of shit, used to live in NYC, on boards of upscale Manhattan private schools years ago when kids attended, former fifth avenue address, most probably worth more than everyone living in this building, rejected, no reason given, park avenue counsel told me don't waste money suing the BASTARDS, so what did I do, under building address at streeteasy told future buyers to beware of this building giving reason, noticed that the particular apartment I wanted didn't go under contract for another 18 months at 50K less, everytime apartment came up at this building, crossed referenced comments under building, unfortunately other owners in building suffered, but in this way they could or should have put pressure upon M-F's on board, later found out that head of board was original sponsor of co-op plan, when I walk by this building I have dog piss on it, moral of story NY is a pain in the ass,but usually worth it, all the little people think they have power, beware of this scenario, who needs them, you might no be able to sell when you have too., ended up renting in condo, with right of first refusal to purchase, very happy in end.....go after them,

Nice rant

> when I walk by this building I have dog piss on it,

боже мой!

tee it up!! yeahhh

teeman, meet NYCMATT

now commune!!!!

>all the little people think they have power, beware of this scenario.... you might no be able to sell when you have too<
Excellent point, teeman.

I once worked for a brokerage/management company & would read the minutes from Board mtgs. Bd members were often ignorant &/or narcissists. Swore I'd never buy a coop, but, what can I do? Most blds I want to live in are coops. NYC used to be a rental city, but in the 1980s, many blds were converted to coop. My old boss said that in order to get out of rent regulation, many landlords converted to coop, thereby 'selling' the bld to the tenants.

Teeman: I feel your pain.

The truth is, we are all merely short term residents on this spinning cooperative called earth. Thank goodness NYCMATT is helping direct the traffic.

Traffic cops. Lowest of the lows. Flmaoz.

"all the little people think they have power"tt

Matt --- care to respond?

Boos Tweed:
Стыд и срам!

Компания Herbalife

buyerbuer: Herbalife — Стыд и срам!

Компромат.Ru

"Goldman party honcho Richard Kimball Jr. forced out of bachelor pad"

http://www.nypost.com/p/pagesix/goldman_party_honcho_richard_kimball_YiWfpQQa3bx3ns0cH3zf5M

janejoey - interesting that a CONDO, supposedly with no enforcement powers, was able to kick out such a high profile tenant. Guess that fancy condos start to behave like coops once everyone has bought in from the sponsor (with no pesky approvals).

Manhattan can be such a funny place. I will keep my eyes peeled for the follow-up article on where he moves to next.

The board mentality really depends on the building... I'm on the board, but my building is super-laid-back. We only ask for the same docs provided to the bank for the mortgage, and it's basically a financial decision. There's not much turnover in my building, though.

If you had the approrpriate down pmt, more than the amount required in liquid assets but your debt/income ratio of mortgage and maintaince based on pure salary is around 40% vs. 15-20% of your total household income (base plus bonus- several years of tax returns to back it up) how likely or unlikely would you be approved by the board? And is the debt/income ratio gross or net of taxes? And i would assume they dont count any interest/property tax deductions in that ratio?

Any help is much appreciated.

5th: Debt/income ratio is gross, other property generally counts heavily against you, getting longstanding bonuses to count for you is a matter for the brokers to work their magic.

ali r.
DG Neary Realty

Thanks front_porch! No other property owned and no other debt. So your saying there's a chance to pass then?

>Debt/income ratio is gross<

Ali,
Not based on AGI?

And, is AGI the same as 'net income'?
Thanks :)

I think 'net income' is net of taxes, whereas AGI is before taxes are taken out (but after all kinds of voluntary deductions, 401(k) contributions, flex spending and the like) ... but ask your accountant for the truth.

Well, every board is different, and everyone runs ratios differently (which is nice, because it gives we real estate agents a chance to do our voodoo).

But GENERALLY speaking, when someone talks about a board having a "25% ratio" they mean total housing costs as a percent of gross income.

Now it depends on the board, but we try not to lean on AGI because it can be low. (In my case, as a freelancer with two businesses, AGI -- which is after business deductions, retirement contributions, and taxes leaking out of every pore -- wildly understates my income. With most salaried people, it's less of a problem).

5th, of course your easiest solution is to put more down to make your ratios look better -- but there are other possible tactics. Feel free to email me at ali {at} dgneary {dot} com.

Just put "streeteasy" in the subject line so I can find it.

ali r.
DG Neary Realty

i dont think that ownership of other properties (with no mortgage) necessarily has a negative impact

It often does, though, W.

Imagine a world where Case A is that the buyer has borderline income ratios but decent assets in stocks and bonds. Case B is that the buyer has borderline income ratios, but decent assets, including another property.

In Case A, the board is going to think "when the going gets tough, buyer is going to sell some stocks to support the mortgage."

In Case B, the board is going to think, "when the going gets tough, buyer's property taxes on the other property are going to rise, accelerating the pressure on her income. Maybe she'll choose to walk away from her obligations here, and go live in her other property."

ali r
DG Neary Realty

All these points could be nicely summarized with: you aren't like them. Coop boards are just like chickens, and other reptilian-brained creatures.

If someone refused to put down carpeting, would that be grounds?

A special pasty for riversider
http://www.nytimes.com/2010/11/30/opinion/30zhuo.html?_r=1&ref=opinion

All clear? The boycott of Riversider is over?