Top Dozen Reasons for Co-Op Board Rejections

Released on = April 26, 2007, 3:27 pm

Press Release Author = Jeffrey Sussman

Industry = Real Estate

Press Release Summary = Top 12 reasons for applications to purchase co-op apartments
are rejected and how to avoid being rejected.

Press Release Body = From: Jeffrey Sussman, Inc.
Marketing Public Relations
249 East 48 Street
New York, NY 10017

For: Carol Levy Real Estate

Contact: Jeffrey Sussman
212-421-4475
FOR IMMEDIATE RELEASE
marketingpro@aol.com
www.powerpublicity.com




TOP DOZEN REASONS FOR

CO-OP BOARD REJECTIONS

(AND HOW TO AVOID THEM)


New York, NY --- Before even beginning the hunt for that perfect co-op, the
prospective buyer should be familiar with all the possible ways one's application
might be rejected. That familiarity will enable one to focus on the appropriate
buildings as well as to make the necessary adjustments so that rejection will not
occur. It is also essential that one choose a broker who not only knows the criteria
and delicate nature of the co-op boards to which one might apply, but is also
capable of creating a fail-safe board package that will be one's passport to a new
home. Since boards never reveal the reasons for rejecting a buyer, one must rely
upon an experienced broker who understands the delicate nature of purchase
applications and the variety of unpublicized reasons why rejections occur.
"Boards never specifically state reasons for rejecting a buyer, for by doing so, it
could open itself to law suits for discrimination," says Carol Levy, President of
Carol E. Levy Real Estate, a New York City real estate firm that specializes in the
purchase and sales of high-end co-ops and condos
Ms. Levy prepared a list of the most common reasons why prospective buyers are
rejected by co-op boards and what they should know and do to avoid rejections.

1. Financials.
A. A prospective buyer needs sufficient assets following a closing. Boards focus on
the amount of liquid assets one has, and many of the premier buildings require one
to have TWO to four times the value of the purchased apartment after closing. Other
building boards may insist that one have two to three years of maintenance and
mortgage payments in the bank. And, again, that should be the amount after all
closing costs have been paid. A knowledgeable broker will not only be aware of each
building's requirements, but will also keep abreast of those changing variables, for
when new boards are elected every year, they often change the criteria for new
buyers.
B. If a buyer's income is too low, that buyer may be rejected. The rule of thumb is
that co-op boards generally want a buyer to be able to devote 25% of one's earnings
to the payment of mortgage and maintenance. If those payments for one or more
properties exceed more than 25% of one's gross annual income, one may very well be
turned down.

2. Job History.
Most co-op boards will ask to view not only a prospective buyer's earnings from
employment, but all of one's job history. They will want a buyer who has
demonstrated job stability, rather than someone who hops from job to job. It is not
uncommon for prospective buyers who had sufficient assets to be turned down by
boards simply because they changed jobs every few years.

3. Bad Credit.
Although a prospective buyer may have a good income and plentiful assets, if that
buyer has a poor credit history, including a negative track record of paying current
maintenance fees or rent, then that prospective buyer will likely be a candidate for
the board's rejection. A good broker will examine a client's financial history to
make sure that there are no red flags that will invite a board's rejection.

4. Pied-a-Terre.
Some building boards are entirely amenable to having pied-a-terres. Others make
decisions on a case-by-case basis. Still others do not allow them at all. If one is
looking for a pied-a-terre, make sure that the broker has a clear understanding of
the rules of prospective buildings.

Even if a building will consider the sale of an apartment as a pied-a-terre, the
board may reject a part-time tenant who they feel might be spending too little time
in the apartment. In such cases, the board may be concerned that the apartment could
potentially be used as a hotel for friends and family. I know of a couple who
attempted to purchase a small one-bedroom pied-a-terre; but because the couple had
three teenage children, the board worried that the apartment was too small for a
family of that size, and the children might use it for parties in their parents'
absence. If the couple had been represented by a knowledgeable broker, they would
not have had to waste time applying to a building that would ultimately reject them.

5. Guarantor.
If one requires a guarantor, then one's broker should make sure that all prospective
buildings are guarantor friendly. And since so many buildings annually change rules
and bylaws, one's broker must be up-to-date on those changes. Even in buildings that
permit guarantors, one should qualify the guarantor, for boards will require a
couple years of tax returns as well as verification of income and assets.

6. Life Style.
While many co-ops accept those who have high public profiles, there are others who
do not want any undo attention brought to their buildings. There are still other
buildings that do not want those who will disturb the peace, quiet, and security of
its shareholders. They may, for example, not sell to a paparazzi prone rock star,
who is known for a flamboyant lifestyle and hosting large, highly publicized parties
into the wee hours.

7. Home Work.
Most boards will not object to tenants working in their homes, as long as their
occupations do not involve a revolving door of client traffic. A writer, for
example, is acceptable, but a psychotherapist will most likely be rejected.

8. Failure to Fulfill Additional Requirements.
Even after receiving a comprehensive board package from a purchaser, a board may
require additional documentation for clarification, a preconditioned escrow deposit,
OR A CHANGE IN ONE'S MORTGAGE PRODUCT, prior to even granting an interview. If the
buyer is unable or unwilling to accede to the supplementary demands, then the board
will likely reject that buyer.

A fairly common requirement by boards is asking for one to three years of
maintenance in escrow. If a board feels that a prospective buyer does not have
sufficiently strong financials, the board may decide to approve a purchase, but only
if the buyer agrees to the board's demand to put maintenance into an escrow account.
After a tenant has a history of meeting financial responsibilities, the escrow
account will be dissolved and the funds returned. If a purchaser does not agree to
the maintenance escrow, that individual will be rejected.

Another example includes a purchaser who is unable to provide additional
verification of projected income, which sometimes occurs when the buyer is
self-employed. It may also occur when a buyer is simply unwilling to provide the
requisite documentation for every asset. In both cases, a board may reject a buyer's
application.

9. Low Purchase Prices.
If a shareholder attempts to sell a co-op apartment at a below market price in order
to facilitate a rapidly executed deal, the board will object, as such proposed deals
diminish the value of all the apartments in the building. For example, I have seen a
desperate seller accept an offer on his apartment that was 20% below the true market
value. The board, of course, rejected the buyer since a greatly reduced price per
share would negatively impact the share values of all the owners.

10. Pets.
As in so many of the previous cases, this one also requires that a buyer's broker
perform the necessary due diligence to learn which buildings are pet friendly. Even
if a building permits dogs, a broker must learn if there are limitations on the
number of dogs or breeds of dogs one might own. For example, numerous buildings do
not permit more than two dogs per apartment and will not permit Pit Bulls,
Mastiffs, and Rotweillers. Still others will not permit dogs that weigh more than 50
pounds.

11. Noise.
A board may reject a buyer, if that buyer has a profession or hobby that might
entail making noise that will disturb other shareholders. For example, trumpet
players, drummers, opera singers, or tap dancers may all pose noise threats that
will cause boards to reject their tenancy. And, if they are approved, their
acceptance may be contingent upon sound-proofing their apartments, prior to taking
possession.

12. A Poor Interview.
A savvy broker will prepare a prospective buyer for the inevitable board interview.
Not only should the buyer be on time for the interview and dress appropriately, but
the buyer should not ask questions that might arouse concerns or suspicions on the
part of even one board member. For example, one should never ask about subletting,
or suggest that the building install a gym or a children's playroom. Rather, one
should simply answer all questions succinctly and politely with a pleasant demeanor.
In fact, the less said the better. Once a purchaser has been accepted by the board,
has closed on the apartment and moved in, a shareholder may make as many suggestions
to or ask as many questions of the board as desired. Now having become an owner,
that shareholder is an exclusive co-op "club member" with the power to have a voice
and a vote.
Carol E. Levy Real Estate (www. Carolelevy.com) has numbered among her clients a
who's who in the fields of entertainment, finance, industry, and fashion, including
such illustrious figures as Joy Behar, Leonard Nimoy, and John Stossel. A longtime
resident and expert of the celebrated Beresford on Central Park West, Carol is known
as a power broker who provides unparalleled personal attention and constantly
achieves record-breaking prices. Carol specializes in representing buyers and
sellers of high-end properties. Her e-mail is carol@carolelevy.com
-30-


Web Site = http://carolelevy.com

Contact Details = 249 East 48 Street
New York, NY 10017
Tel: 212-421-4475
Fax: 212-421-5224
marketingpro@aol.com
www.powerpublicity.com

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