I recently met with sellers who were selling their 2 bedroom coop, and didn’t know whether to renovate the kitchen to try and obtain a higher sales price. We..ell YES! Definitely! The new kitchen with appliances cost $15,000 BUT that evolved into a $25000 profit. I received over 9 bids in the first week and it became obvious that new kitchens sell!
Accordingly, I had the honor and privilege of listing 2 coops this year, and both had new kitchens. Once again, the response was immediate. Today’s buyers do not like to renovate themselves, like it ‘already done’ and the appointments were fast and furious. The key though is to make sure that any accepted offer (unless all cash) will also appraise.. As an agent, we must look at recent similarly sold coops in the area, and as a rule, appraisers like 3 similarly priced sold homes for comparison. They will take into consideration an upward market trend, but there are no guarantees. I always tell my clients that it is best to try and under price a tad as opposed to listing really high, and see the response thereafter. All cash is king, but those applicants must still pass the board so there are still no guarantees.
Whenever I take a coop listing, I will check with the management on maintenance costs, whether there are any assessments in place or will be in place, down payment requirements ( can be 10% or 20% or higher in some areas) , tax portion amount (usually 50%), if there is parking (the fees for same), which utilities are included, etc. I always get the buyer’s application and financials at that time also, so I am ready to give to the buyer’s agent.
The sellers need to also look for their offering plan!
“An Offering Plan also called a Prospectus, is a printed statement/document disclosing all material aspects of the real estate project. You should have received a complete copy of the Offering Plan (including attachments and amendments) from the person who sold you your shares in the co-op.”
If the sellers can’t find the offering plan which rather looks like a telephone book (big and bulky) then they should order one. They can range in cost from $150 – $200, and the buyer’s attorney will review this compendium prior to the buyers signing the contract.
Sometimes buyers do not realize the length of time it might take to close on a coop. Of course the first step is obtaining the accepted offer, and then it is their choice whether to have an inspection or not. I am seeing more people having an inspection but remember it is only relevant to what is inside the unit, meaning the building itself takes care of the structure of the building, the heating, the roof, etc. and the shareholder (coop owner ) takes care of plumbing, electrical, anything inside their coop. If there is a leak behind the walls, then the building will take care of that. However, if a leak starts within your coop unit then you are responsible. I recently had an inspection at a coop, and the inspector found some electrical issues which we had resolved so that was quite worthwhile.
Once the contract is fully executed (signed by both buyers and sellers), then a copy of the contract is given to the mortgage broker who can then initiate the mortgage process. As an aside, it is also important to ensure that your mortgage broker can offer a mortgage in that particular building. Some banks will not offer mortgages if the building allows rentals, and the rental to ownership ratio is very high. Good credit is required!!! Paying bills on time is important! Being able to afford the maintenance and the mortgage (debt to income) ratio is important! It might take up to 45 days in which to secure the mortgage commitment, and I always tell my buyers to complete the coop application alongside the mortgage application, as the same material required for one is also required for the other ( W 2’s, tax returns, pay stubs, etc.). Invariably the coop application will require some reference letters so that might take a few weeks also. It is nice to get everything ready for when that commitment comes through, so the coop application can be submitted to the management company straightaway. They basically have 30 days to review it, to obtain an additional credit report and to submit to the Coop Board for their review. As a buyer’s agent, I like to find out whether the Board meets ‘on demand’ or whether they have set meeting days each month. This can be important when submitting an application to the board for if you miss their monthly deadline, you might have to wait another month for that interview.
The Board is allowed to ask any questions they deem suitable at the interview so just be prepared and always cordial! I once had a very well qualified doctor buying a coop, and her sister lived in the building. Knowing the Board President’s phone number, the doctor called and demanded when was she going to be interviewed. Needless to say, that phone call angered the Board President, and she never made it to the interview – she was declined! They figured that if she was going to be a pain before she moved in, what would she be liked afterwards?
Hopefully, the client will be approved, and a n acceptance phone call will follow together with a formal acceptance letter , thus allowing the attorneys to schedule the closing. Since the coop purchase only owns shares in a coop, those shares are transferred to the new owner at the closing table. In truth, just a copy of the shares are given, as the bank retains the original as they are financing the mortgage. Since banks sell and resell their mortgages, sometimes that share certificate gets mislaid which is annoying, and causes additional work for the attorney tracking it down ..
SO, bottom line, make sure you keep all of your closing documents, offering plan in a safe, secure place and congratulations on the sale or purchase!
Westchester is GREAT!