flip tax

Why not say NO and walk away if necessary.

I had the same issue at my apartment. The listing sheet indicated a flip tax that was the purchaser's responsibility. This was the first thing that my broker negotiated away. When I received the coop's financial statements the notes clearly indicated that the coop was assessing a flip tax on the seller. The seller is basically increasing the selling price if you agree to pay the flip tax. If it is a bidding war you might be willing to do it (ie the selling price is undermarket). If he is more motivated to sell it then he probably agree to give this up (just like any other adjustment in the sales price).

thanks - this confirms my thoughts. yes, I think the broker is trying to show the seller a higher price, saying: they offer that amount + flip tax so you seller are getting this. the only thing is that our offer is our best .. so keep lokking!

Broker's listing sheet ALWAYS has the flip tax being absorbed by the purchaser. Everything is negotiable and I just view it as part of the "ask' when I put in my offer.

flip tax is imposed in every coop i have ever seen on the shareholder selling the unit. Trying to shift same to the buyer is a negotiating ploy and one i would never agree to. IMHO, the reason I would NEVER buy a coop is the flip tax. Its an nrecoverable expense (runs generally from 2-5% of GROSS SALE PRICE), although some less mature coops I have seen either do not impose one or impose it purely on the profit rather than gross sales price). Basically, you have to split you're hard earned profit with a bunch of yentas who did nothing but sit on their fat asses passing useless rules to govern your life. I passed on a mint pre war coop for this very reason. The flip tax made it a no brainer. Conceptually, its just plain ridiculous that you have to (a) share the cost of maintenance on the building and (b) share your profit (if any) with a bunch of people you'll never see again. Beware of flip taxes in a coop and always ask what they are before even thinking about buying into such a situation.

Totallyanonymous- plenty of co-ops impose a flip tax on the buyer for the reason that you're about to live in this building and the money will benefit you and the rest of the shareholders. At the end of the day the flip tax is part of the total sale price and not something that should deter you from finding a home. If you don't believe in a flip tax or the co-op process then a building without a flip tax or a house is the way to go.

In my building the flip tax is a $ amount per share and amounts to much less than, say a % of gross sale price.

the purpose of the flip tax is to replenish the building's cash reserves. Either way they get you. A high flip tax may translate into lower monthlies or vice-versa - you have to look at the entire financial picture of a building in order to determine whether the flip tax makes sense. No flip tax is a great selling point but if the bulding has low cash reserves, is in need of work and has low monthlies - there could be an assessment down the line.

Flip taxes are unique to coops but condos have other closing costs, so in some ways it can even out.

Agree with uptowngal. The closing costs on purchasing a co-op are a fraction of the closing costs on a condo. So I think, from the perspective of a frugal buyer, a co-op is a far more attractive buy, despite the prospect of a flip tax sometime down the road. (Which many co-ops, including mine, don't have, by the way.)

I think a relaxed, financially healthy co-op with no restrictions on sub-letting beats a condo, and costs a lot less. South of 14th street (and North of Canal) it's the only way to go without getting paying $$$$$.

As for the initial topic here, all I can say is, what a cheeky seller!

UG-- "replenish the coop's cash reserve"? Excuse me, but that would presuppose that the cash reserve is being used. If the coop had any financial acumen, they wouldn't have to dip into the cash reserve. Thats the entire idea behind having a "reserve". Moreover, with the rate apartments are sold, its highly dubious that a coop would have to successively "replenish" the reserve after each unit sale. More likely, they want to "amass" the reserve so the powers that be (i.e. the people who have the time to have fruitless board meetings in apartment 19F every third Tuesday) can decide how they would like to spend other people's money. And a RESALE of a condo has no fees that a coop doesn't have (other than the flip fee). Also, whats the dollar amount per share flip tax in your joint?

MQ-- I have seen the smaller (former) HDFC coops in the east village tend to have no flip tax or a flip tax based on the profit. i find this is because the buildings have zero amenities other than a roof deck and possibly a courtyard, certainly not a doorman, not in the east village anyway. I'd love to find a relaxed, financial healthy coop with no restrictions on subletting and no flip tax. Can you drop a hint as to where that might be, besides fairyland?

TA, the cash reserve is there for a purpose other than making the balance sheet look pretty - for things like emergency repairs that would otherwise be covered by assessments or maintenance fees. Again, it depends on how well managed the building is financially. My building charges $6 per share flip tax, which would amount to approx. $2400 for my unit; in the past 10 years we've had one brief assessment and only one increase in maintenance fees.

Closing costs at sale (incl flip taxes) can be factored into the total cost of owning - so if you predict you'll be in your place for x years and you factor in the flip tax on a net present value basis you can compare that with your total costs of owning a condo - this includes when you buy, sell, maintenance, broker's fee, etc.

$6 per share?? please advise what building!!!! thats exhorbitantly cheap, unless they issue 10,000 shares per unit. You are in Manhattan proper right? Please know that your coop is NOT par for the course from what I've been seeing. Absent an unruly flip tax, then yes, depending on the location and board oversight, a coop may be better.

Yes, I'm in Manhattan. Don't want to disclose too much b/c of privacy - the board is well managed by professionals who actually understand this stuff (lawyers, bankers, etc.). I moved in earlier this year - I've heard all the horror stories about coops but my experience buying was easy, and units sell quickly. Building is in a good location, high resale potential. So comparing with the higher cost of purchasing a condo this seemed like a better deal....and so far it's worked out well.