So, I know from experience how detrimental a Co-Op board can be to a deal…but before I go on I do want to point out that the official role of the Board much like a mini governement is to work for the residents. It is put together BY the people and FOR the people (or at least the people that live in the Co-Op complex). It is meant to represent the best interests of all current and future residents. As it happens we are all aware that when it works right it is a great thing and the sense of community in a Co-Op really helps to maintain a sense of belonging. It is no wonder then that there are so many of these in the NYC area.
It is when (as OFTEN happens) the Board abuses their power that things go awry…
Ask any agent that has dealt with Co-Ops and you will get every kind of story…even things like a personal vendetta against the seller where the Board will not approve any applicant we bring to the table not because the Buyer is not qualified but because they want to cause problems for the current owner. Oh yes, it happens!
So…it is a really beautiful thing to see that the efforts of many in the real estate industry has paid off and will hopefully continue to pay off in other parts of the city as well. I am referring to the new legislation passed in Suffolk County. One small step that we can only hope, translates to a BIG step in our direction here in the 5 Boroughs!
Read on…article courtesy of TBBOR.
In October of 2009, the Suffolk County legislature passed a resolution which now requires all coops in Suffolk County to acknowledge receipt of a buyer’s completed application and to take action on that application within 45 days.
The important parts of this legislation are as follows:
1. Within 10 days of receipt of a completed application, the cooperative shall provide the applicant with written acknowledgment of receipt of the application. If the application is incomplete or completed incorrectly, the acknowledgments shall instruct the applicant of the time and manner by which the application shall be corrected.
2. Within 45 days of receipt of an application, the cooperative shall either reject or approve the application and provide the applicant with written notice thereof and in the case of any rejection, there shall be notice of the grounds for such rejection.
3. Failure by a cooperative to take action on a completed application within 45 days of receipt by either notifying the purchaser of its approval or rejection may be considered as part of the investigation of any complaint filed with the Suffolk County Human Rights Commission pursuant to Section 89-12 of Chapter 89 of the Suffolk County Code and may be admissible in any action or administrative proceeding commenced pursuant to 89-12 of Chapter 89 of the Suffolk County Code.
Suffolk County must be congratulated in its efforts to protect against discriminatory practices in the application process of coop boards throughout the county; however, one would imagine that this law will not be applicable to many transactions in that Suffolk County, unlike New York City, is not a haven for cooperative housing. There is currently legislation pending in the New York City Council which would have a similar impact on all coops in the five boroughs of the City of New York but as one may imagine, this legislation has been met with severe resistance from various real estate industries; you are welcome to contact your local city legislator to determine the viability of the current legislation
They say the bread and butter of Real Estate is Listings! I certainly understand that, as a listing agent you can list and let the other agents do the selling and yet you still make at least half the commission. Not only that, but if you get Buyer yourself you get the entire commission! Sweet deal, it’s true.
So…call me an underachiever or a true service oriented professional…even a servant of the people…but I love to work with Buyers. To me the challenge of searching through the jungle of possible options out there and getting to know these people as they look for that new place to call “home”, and then actually being instrumental in knowing I helped them find it is just beyond fulfilling. Money is a necessary evil but it certainly does not buy the feeling I get when working with a Buyer. It is challenging at times when a Buyer is learning to trust you sure, it can require a good measure of patience…but it is rewarding nevertheless in every way for me!
So…working with Buyers, most of them not exactly seasoned, and First Time Buyers especially, they tend to have a LOT of questions…questions like “How long does it take to close once the contract is signed?” or “What happens next after I sign the contract?” and these are just 2 of the many. For Co-Op purchases it is that much more involved, so, I came up with a little outline that puts a bit of a time line as well as the steps that usually occur in a typical real estate purchase. There are MANY things that can cause a deviation and I could probably write a blog about each of them but for now…hope this helps some of you out there that wonder…What? When? How? Why? I am sure I will be editing and fine tuning this for weeks to come as I think of more things but this is the first draft.
The Real Estate Transaction – Buying A Co-Op in the Bronx/Yonkers Area
The Search
This can take one month to 2 years or more, depending upon the criteria the Buyer is looking for as compared to what is available on the market. This is usually the longest process of the Real Estate purchase.
Negotiations
Initial Offer (Buyer)
Counter Offer (Seller)
(Back and forth as many times as necessary until an agreement is reached. If the Initial Offer is strong enough or the seller is desperate enough there may not be a counter at all.)
Time Frame: Can take between 1 to 10 days depending upon how fast each side responds. One way to shorten this time is to time the offer. Giving a time frame in which the other side must respond in order to continue negotiations can help to control the lag in time between counter offers. This can put some stress on both parties but it is still practiced in most negotiations as it makes the process much more efficient.
We have a Deal
This means Buyer and Seller have reached an agreement and a final offer has been accepted by both parties (Seller and Buyer). We have a deal is also known as an “Accepted Offer”
Time Frame: Within 1 to 3 days, Buyer and Seller’s lawyers contact each other, and Sellers lawyer draws up the contract.
Contract
The Buyers Lawyer, Buyer and Buyer’s Agent do their due diligence to make sure the terms of the contract are favorable, as well as all pertinent information that can affect the purchase, in a coop that would include things like a Co-op’s financials. As soon as contract is signed by both Buyer and Seller it becomes what is called a “Fully Executed Contract”.
Time Frame: The contract is signed typically 10 business days after an accepted offer (a.k.a. “we have a deal”). Many people tend to be a little surprised as to how fast things move once a Deal is reached, which makes sense since the search and negotiations seem to go on at a leisurely pace in comparison. Possible delays at this stage may happen for reasons such as, one party’s lawyer is out of town for a few days or if the information is not given to the both Attorneys in a timely manner so that they can start the process of drawing up and reviewing the contract.
Mortgage
As soon as there is a Fully Executed Contract, the Buyer immediately contacts their Mortgage provider and at this point they will be able to lock in a rate and sign a Good Faith Estimate (GFE) which will detail all pertinent information in regards to the mortgage as well as the approximate closing costs.
Time Frame: Within 10 business days, if the Buyer provides all the paperwork required in a timely manner, the Mortgage provider will extend a “Commitment Letter” which basically says “We will give you the mortgage”…but this usually has certain conditions, from something as simple as the latest pay stubs to further documentation that was not asked of the Buyer before this time.
Co-op Board Application
Simultaneously, as soon as contract is signed, the Buyer will begin filling out the Purchase Application and put together the paperwork including Fully Executed Contract of sale, Commitment Letter from Mortgage Provider, W2′s and pay stubs and reference letters as well as anything else the Coop Board requires so that it is ready to be submitted to the Board.
Time Frame: The application should be filled out and ready as soon as possible so that as soon as the Commitment Letter comes in from the Mortgage Provider it is ready to be sent as a complete package to the Board for their perusal. This means the application is usually submitted to the Board between 8 to 14 business days after contract is signed.
Co-op Board Interview And Approval
The Co-Op Board meets once a month. If the Buyer submits the application but the Board has already met that month, they can request a special meeting outside of the usual monthly meeting date and the Board may agree to meet with the Buyer just to Interview them. After the interview the Board will review all the paper documentation and the combine that with the actual information they garnered at the interview and either approve or deny the Buyer’s application. Some Boards are tougher than others. A basic rule of thumb that most Boards have is that the Buyer’s carrying charges (Maintenance + Mortgage) be 1/3 of the annual income of applicant. Another thing that they look for is an amount equal to that of 6 to 9 months carrying charges left over in the bank after all the closing costs and down payment is said and done.
Time Frame: Depending upon when the Board last met and when they will meet again, whether a special meeting just for the Interview or the next months meeting, this can take anywhere between 1 week to 6 weeks after Application has been submitted. The Board Approval Letter can take anywhere between 2 to 6 business days after the Interview.
Clear to Close
The Commitment Letter’s Conditions must be met in order for the Underwriters to give Final Clearance to the file and allow a closing date to be set. One of those conditions is the Board Approval Letter. If they are satisfied that Buyer has met all the conditions specified in the Commitment Letter, the File will receive the “Clear to Close” stamp of approval and a closing date is set.
Time Frame: This can take anywhere from 3 business days to 6 business days after the Board’s Approval Letter and all the rest of the conditions have been met. It can depend on availability of all parties involved as well as any special requests…(Buyer’s, Seller’s and Bank’s Lawyers may or may not be available on a given day…as well as title closers and of course the Buyers and Sellers themselves.
So, we are all here because we have an inkling that social media is a not a fad but rather the reality of today. Where paid advertising on the TV or Radio was the only way to get through to folks back in the day…we now know that things have changed drastically!
I was at Raincamp (Active Rain’s Seminar) just yesterday in Manhattan at the Marriott Marquis. It was good to know what I was doing right in terms of this new way of reaching out to the world, whether it be networking with other agents or getting in touch with the community at large that in the end could end up as my clients. It was also good to learn some things that I was still not clear on.
One thing mentioned from the podium that stuck with me is …”It used to be the news was something we had to go to (whether it be sitting in front of the TV waiting for that 6pm time slot when it started or turning on the radio)…NOW, the news comes to US! Isn’t that a fact? I open up my email and there it is…today’s headlines! Or there I am getting a text message from a friend who saw on Twitter and Facebook that Michael Jackson died meanwhile on the radio at the same time the standard media or News channels were reporting only that he is in the hospital…
Add to this, the fact that with TiVo and Sattelite Radio people no longer have to listen or watch commercials and you come to the conclusion that standard advertising becomes virtually obsolete and if not yet, it certainly will within 5 years time as all the Baby Boomers are replaced by Gen X and Gen Y.
The one big thing I got out of the day was Twitter. I am NOT a woman of few words…I don’t know the meaning of “saying it in 3 words” when I could say it in 30 instead…it’s not my style. Thus Twitter really annoyed the heck out of me…what? Limit myself to 140 characters? I barely start to broach the topic I want to talk about when I reach 139 characters! But, you know what…the reality is…this annoying flutter of words is amazingly useful in real estate, so today I’ve just opened an account and am going to grit my teeth and use the darn thing!
Let me give you an example…
John Smith wakes up in the Bronx and he goes online…he tweets “I am getting ready for work, and thinking about buying a house today”.
Oh yeah, that really happens no joke! Meanwhile here I was on other channels and never saw the post, while a colleage sees it and of course jumps in with…
“Hello there John, I see you’re looking for a house…are you interested in a good deal?”
And there it is…a potential lead…a future client.
That’s the word of the day and my first post on here…I’ll have to explore some more and then see where all this blogging and tweeting takes me.
