Broker Demands Financials Before Taking Bid

More than ethical, is it legal??

I never heard of that, Mary.
Doesn't sound ethical.

ali or one of the other brokers on se can tell you if it's legal.

Did the broker just ask you or did he want to see your financials?

Thanks for response, Truth.
The broker insisted upon my filling out a form listing bank names, bank accounts as well as all other assets before letting me make a bid. I have never heard of this. Obviously it would appear to put me at a serious disadvantage for negotiating.

You see this demand many times on properties that are very high priced. The brokers do not want to show a $20 million apartment unless they are sure you can afford it. Some people just want to see how the 1% live.

Mary65: It's fairly common practice, especially in coops with tough boards. Most brokers will blame the seller or a prior Board rejection, or both. Sometimes the explanation is true; sometimes it's just a pretext for pre-screening buyers because the broker doesn't want to waste time with people who aren't likely to qualify.

If you have a rough idea of the building's requirements, you can just show enough assets to pass the Board. You don't have to show everything if you think doing so will put you at a disadvantage in negotiations. Just don't sign the form. An easy way around the signature line is to send the broker a spreadsheet with the same information as the form.

CSN.....min income to be 1% is approx 375K...so many 1% are living in cheaper digs than 20M u mention

I do not think it is out of line at all. A good broker should be aware of the requirements of the various co-op boards, and also fully aware of whether or not his potential clients can meet those requirements. This is the best way to avoid turn-downs and disappointments.

I have never worked with a broker who has not asked (admittedly not in writing, but certainly in person) what my financial situation and net worth are before making a bid on a co-op.

As a co-op board member, we look to avoid the unpleasantness of turning away unqualified purchasers, and it is part of the broker's job to guide their clients to apartments that they will actually be able to purchase. Often sellers take a lower offer from a bidder who the know will pass the board over a borderline purchaser who may not have adequate financial resources.

You should not be offended at all - sooner or later you will have to provide all of your financial information anyway, so to avoid wasting everyone's time it is easier to do it right from the start.

Show me your 1040 before I let you look at my 1986 911 listed for sale at $10k...

Why don't you drop your price to a reasonable level before pretending not to be desperate?

To all the sellers that 'don't need to sell'. It's not against the law to own multiple units.... Just enjoy your 'home' and bleed it out slowly. Flmoazzzz

Move on and lease a 997 TT for a few years. I'm sure the 1986 911 will still be there. Hahahjajjajjajjaaaaa

I appreciate all the responses.

However, I maintain that being required to give the seller's broker my financial information before a bid has even been conveyed to the seller puts me at a distinct disadvantage.

Of course I understand that I will have to reveal more information as the process continues, but we're not anywhere near that point.

w67thstreet again with the unhelpful comments. You seem to hate people that like their homes and it's totally legitimate to wonder if the broker can ask for financials. I'd ask too...at least other people aren't just on here spitting fire. Yuck..such a waste of time. You can laugh all you want but, I know you know a lot of stuff too to be helpful. Can't you get back there? Ughhh.

I am confused. Your own broker makes the bid - not the seller's broker. The sellers broker should not receive a financial package before accepting a bid. Your own broker however should have a full picture of your finances. How can the seller's broker in any way stop your broker from submitting a bid? Why would you be having direct contact with the seller's broker? The two brokers should have a general discussion of whether you are qualified or not before proceeding, but your own broker is responsible for creating your board package.

jakedavid, my error, should have said .1%

target, sounds like she's going direct and doesn't have a buyer's broker to tell her it's a perfectly regular (though not constant) practice to have buyers fill out a REBNY financial form.

As West 81st has pointed out, a potential buyer could list fewer assets on the form than she actually has -- though I don't see how it puts a buyer at a disadvantage when negotiating the price of a co-op to show that she can actually afford to purchase the co-op.

ali r.
DG Neary Realty

Target, I have bought and sold real estate before. Currently I'm not using a buyer's broker. I saw a place I liked and gave my bid to the seller's broker to convey to her client. This broker informed me that she could not and would not give my initial bid to her client without all of this financial information. Hence my original questions, is this ethical, is this even legal.

That happened to us in Miami too once...I thought..at least was under the impression a buyers broker has to at least let the sellers broker know there's a bid. I found another property but, I really liked that one (this was about 15 years ago) and still think about it. I love the one I got..even now I swear it's super to have some sunshine and they are hurting down in FL but, I think this is a good question. Curious myself.

front_porch, If the seller knows all that I'm worth (which might far exceed the asking price of the coop), I would think the seller might stand firm at an unreasonable price thinking "she has the money, she'll pay." Just because I have the money to purchase the apartment doesn't mean I should be forced to pay the asking price if I don't believe it's the fair price based upon recent activity in the building, comparables, the current market, etc.

The rich, and believe me, I'm not one of them, don't get rich by not trying to strike deals.

Mary65
2 minutes ago
ignore this person
report abuse front_porch, If the seller knows all that I'm worth (which might far exceed the asking price of the coop), I would think the seller might stand firm at an unreasonable price thinking "she has the money, she'll pay." Just because I have the money to purchase the apartment doesn't mean I should be forced to pay the asking price if I don't believe it's the fair price based upon recent activity in the building, comparables, the current market, etc.

The rich, and believe me, I'm not one of them, don't get rich by not trying to strike deals.

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Mary, Front Porch is right. And at the end of the day the market sets the price for the property, not the potential buyers ability to pay.

Mary65
20 minutes ago
ignore this person
report abuse Target, I have bought and sold real estate before. Currently I'm not using a buyer's broker. I saw a place I liked and gave my bid to the seller's broker to convey to her client. This broker informed me that she could not and would not give my initial bid to her client without all of this financial information. Hence my original questions, is this ethical, is this even legal.

The seller can make any demand of the potential buyer they want. it's up to you whether you want to play ball or not. if you want to buy something from me, im not legally or ethically obligated to buy it if you don't meet my terms. what's the issue?

I bid $88mm. Please pull your property off the market. FLMAOZ I don't have the money in my pocket but my name is Vladimir, trust me. FLMAOZ

Leslie4269
about 1 hour ago w67thstreet again with the unhelpful comments. You seem to hate people that like their homes and it's totally legitimate to wonder if the broker can ask for financials. I'd ask too...at least other people aren't just on here spitting fire. Yuck..such a waste of time. You can laugh all you want but, I know you know a lot of stuff too to be helpful. Can't you get back there? Ughhh.

yes, leslie, west67 has contributed nothing for years. his predictions about the fall of the housing market in nyc have not come to frution. he's missed the boat and is bitter but hides it with various "flamoz, coolaid" and other references. he can't cope.

would think the seller might stand firm at an unreasonable price thinking "she has the money, she'll pay."

I agree with Ali on this one. "though I don't see how it puts a buyer at a disadvantage when negotiating the price of a co-op to show that she can actually afford to purchase the co-op."

It shows that you are a serious qualified buyer. Put in a fair bid 5% below recent comps and give them a time limit to respond. if they don't pull the bid and move one. Don't let them shop your bid to other buyers because they will. Oh, and ask for a mortgage contingency even if you are a cash buyer. It can reveal a lot about the building. If the building has a difficult time getting financing for units, it will have a difficult time selling units in the building. It's a buyers market. You hold all the cards.

Are you qualified to tell these people to offer 5 percent less? What if the property is worth 10 percent to less? 40 percent more? Go back to your cave.

Brooks2
It's a buyers market. You hold all the cards.

the absolute stupidest thing i've seen written on this board in a while. without knowing the op's budget, the type of apartment, etc. only stupid people think it's a buyers market till they're actually out there looking at property. which clearly you never ever do. fuck off. go back to your day job. if you actually have one.

" Oh, and ask for a mortgage contingency even if you are a cash buyer. It can reveal a lot about the building. If the building has a difficult time getting financing for units, it will have a difficult time selling units in the building."

Clever!

Especially with co-ops, the buyer's total financial picture is essential to evaluating a bid. A rejected buyer is a waste of everyone's time. As others have said, I think disclosing your finances is likely to help and not hurt you.

That said, if you are really against it and your mind is made up, you may want at least to provide assurance that you will put 20+% down, have a debt-to-income ratio of 25% or less, and have two years of mortgage and maintenance in a liquid savings account post-closing. Those numbers are likely to quell fears about board rejection.

I have to say that if I were the seller in your case, your unwillingness to fill out the REBNY form would be raising (probably false) red flags that your finances are "creative" in some way.

mary, no need to list all the details. Just send a letter with rough outline. I would say, min $xx income over the last 3 years. Min $xx in liquid assets. $xx in liabilities. More details if offer is acceptable as the time of the board package.

Plus now some boards prefer buyers that although can pay total cash will qualify for a mortgage too. It was in a few articles and now I've heard it around too mine and my friends boards. I think we're all just in a difficult time. I have decided to stay although I thought I should sell. Willing to change my mind after thinking things through...you should too. Do what is comfortable for you and although there is some movement it definitely a buyers market.

Agree with 300_mercer. I thought that was standard operating procedure.

Thanks all. Some very helpful responses.

So, it doesn't seem to be illegal and isn't unethical under an asking price of what,$1mil.?

Over an asking price of one mil.

It's just nosy and annoying under one mil.

Because either you can afford to put in an offer for a million dollar apt. or you can only afford a 999.99K.

mary, why do not you talk to KeithB who will give you some of the commission back and help you with stuff like this.

300_mercer
1 minute ago
ignore this person
report abuse mary, why do not you talk to KeithB who will give you some of the commission back and help you with stuff like this.

because mary is a brave do-it-your-selfer who doesn't need advice from nobody. except hundreds of strangers on the streeteasy board. her next post will be a lament about a turn down on a low ball offer. hey, who needs an agents for guidance, right?

The new i-pad is available. I need an instant numeral correction app

Less than one million$ apt. = they can ask, you can send letter with rough outline.
On UWS over one million$ + spreadsheet
999k and under= rough outline after wriiten offer has been sent and reviewed.

Or call KeithB.

I don't know how this would violate "ethics" - the broker is representing the seller (assuming the seller knows that this is what the broker is doing). From a negotiation POV - if they aren't desperate for bids, sure, I'd want to know as much as possible about the buyer before countering. Wouldn't you?

I'd treat this (as discussed by others) as a opening gambit. This is an offer that they would consider, but only if your financials are strong enough. Or maybe they'd take a lowball but sure-to-pass board offer before a higher offer.

If I were you, I'd never reveal the whole picture, and certainly not with account numbers. SSNs.

I'd paint a picture of financials starting with the REBNY form as a guide (approx. X in this account, Y in retirement, Z in investments). No identifying information whatsoever. Explain my concern with privacy, and say that I'm open to showing actual latest statements (with name showing, account # blacked out) to broker but no copies. Ditto with 1040s.

Re-read your original post. No broker worth his or her salt would truly reject a bid with the form filled out with generalities. They will "take" your bid.

broker can "demand" before he/she will "allow".:

So did the broker ask first and you answered that you are qualified.
Then the broker said: "I'm not allowed to submit the offer unless it's in writing along with the completed form even though it's an initial offer."?

I read that you "gave" the offer. A written offer? By e-mail?

Lovehow this thread started "broker demands" rather then the (correct) "seller demands"

Mary, IMHO, the "seller will fleece me because he suspects he can" argument is paranoid - or to be kinder, mistrustful of other people, and that wariness is a trait that will work against you in a board process, where you have to campaign to be accepted by your neighbors.

If you're a celebrity or a mogul and you truly have disclosure issues, that's one thing, but if you're not "rich" but simply worth twice a $2 million apartment, and the process already bothers you this much, consider buying a condo.

If as listing broker I asked for a full REBNY form, and I got a letter like 300_mercer describes, I'd definitely mention it as a possible negative to the seller.

ali r.
DG Neary Realty

in a multiple offer situation, the seller's broker does not want the seller to waste time with offers from people who are unqualified or just barely marginal. you can ask what the board is looking for or see what the listing says about the building requirements and show that with a little extra. keep the rest hidden.

ab is correct--why would a seller waste time entertaining bids without having the slightest clue as to whether the potential buyer is even qualified? There is nothing unethical about this practice. In fact, it could work to your advantage if there are multiple offers and you can show your financials are stronger than those of the other bidders.

It really should not harm your ability to negotiate. The key is to always be willing to walk away.

agree with above posters on value of disclosing financial position. you'll be evaluated by the board and bank so if the bidding interest is genuine, demonstrating financial soundness is only positive.

if only other markets were as careful...

People with no money giving people with money financial advice..... stay classy guys...

Ppl who got in early in the bubble stiff arming actual people with money....

Don't want to deal with some no money bidders...... DON'T FKING SELL.

DON'T want the CL no shows.... JUST THROW YOUR SHIT AWAY.

@Ali..

Can't afford the FERRARI why don't you buy a USED PORSCHE.... what a fking car salesman...

I'm almost 100% positive that it's perfectly legal and I will tell you that if I were selling my co-op apartment I would for sure encourage my broker to require this before bids are made. Because a bid is pretty much worthless if you don't know whether or not they would be approved by the board. And even though sellers normally just choose the highest bid, it might actually make a difference if someone had a better financial profile but made a lower bid.

O.K. so it's not illegal.
I still don't know if an initial offer was made in writing and sent by e-mail, and the broker asked for all of that additional paperwork at that time. That seems to be like an entire board package minus the letters of reco. If I submit what 300_mercer describes -- at that time -- and the broker then says I need to submit the form, I'm thinking " Just should have told me that, when you were showing me the apt.". Or at least when I call the broker again after the showing and express interest in making an offer. Especially since it's so important that the broker would consider it to be a negative and inform the seller of that.

If Mary wrote " I want to make an offer of..." and the broker replied "I can't and won't relay the offer until I get this..." Maybe that sounded rude to the potential buyer.

Maybe the broker should say at the time of showing the apt.: "Initial bids must be accompanied by documentation of financials before I can relay a potential buyer's offer..."
That would be better.

I wasn't "paranoid" when I offered full price in cash for a condo I saw in Riverdale.
The brokers wanted a letter documenting my financials and when they got it -- the phantom "all-cash buyer" offered more, overnight.

I walked away.
Agree with bramstar on that.

it is illegal!

some brokers demand seeing a pre-approvald letter before even telling the property address, that's illegal too

Mary: Just find another building, apt., broker.
Tell them "If I like the apt. I'm going to make an offer in writing and send it to you by e-mail."

Then if they don't ask for more, you're good until the counter-offer.
At which time you have to go all-in with the documentation.
But it should not contain all of the info that would be in the board package. There is no need for them to have your ss#, bank accnt.#s.
Otherwise you are giving them a board package.(minus the reference letters).