I received an e-mail this morning from a potential client who is interested in purchasing a co-op at the Bridgeport Garden Apartments complex in the Black Rock of Bridgeport, CT. She wanted me to explain the steps involved in buying and financing a BGA co-op.
STEPS & COSTS IN PURCHASING A BGA CO-OP UNIT
Mortgage Pre-Approval:
You will want to meet with a mortgage broker or lender who is currently providing mortgages on these co-ops (this is an ever-changing list, check with your buyer agent) and obtain a pre-approval letter for amount of the purchase price of the home, not the amount of the mortgage when you find the right property. Make sure the mortgage broker/lender is available to produce the preapproval letter for the right price on short notice.
At Binder:
It is customary to put down 1% of purchase price. This check will be deposited within 72 hours of signed acceptance by the seller. The money is deposited into your broker’s escrow account.
Inspections:
Inspections usually scheduled within 7-9 business days of signed offer. You will want to schedule this ASAP to avoid paying application fees (see below) if you decide not to proceed with purchase. Applications:
Fill out co-op application and be prepared to write out two checks to Bridgeport Garden Apartments, Inc.: $75 for application fee, $23.50 for credit check, and $25 for criminal check. You will need two years of tax returns and current pay stubs. The Board wants a mortgage commitment letter, but you cannot obtain that until the Board approves you, so you will need a Good Faith estimate from your mortgage broker instead.
Go to your local police department and ask for a background check on yourself. Obtain printout and submit with your application (this is in addition to the criminal check the co-op will do). Application must be complete or it will not be reviewed by the Board. Ask for leaseholder number from your real estate agent.
The Board meets 1-2 times a month to review the applications and then will schedule a brief interview to ask you questions about your application. At the end of the interview they will provide you with a resale packet. Be sure to read through all the by-laws and regulations to make sure that you can live with the restrictions. For example, you can have a pet, but the by-laws and regulations will describe the kinds of pets and size of pets that are acceptable. Contract:
Ten days after accepted offer (a few days after the inspection), you will need to put down the remaining money for escrow (4% if you are putting 5% in escrow, 9% if you are putting 10% in escrow). This money is deposited into your attorney’s escrow account and remains there until closing when it is transferred to the Seller. (The 1%, escrow money is transferred from your Broker’s office to the seller attorney’s office.) Appraisal
Mortgage company will send out appraiser. It is not necessary for you to be there, real estate agent will let appraiser in and give appraiser comps that support your purchase price.
Mortgage Commitment
Once the mortgage commitment letter is received, send it to the Board so the Board can put it in their files. Resale Certificate
Your attorney will obtain a Resale Certificate from the Seller which contains all the financials as well as the bylaws, rules & regulations, and pending Board resolutions. It is important for you to review this in detail as well as your attorney. You will have five calendar days during this period to back out of the purchase and your escrow money will be refunded to you. You do not need to give a reason. (Recently the resale certificate has been handed out by one BGA Board at the end of the Board interview.) Final Walk-Through
Either the morning of the closing (or the day before) you and your real estate agent will walk through the unit to make sure it is in the same condition as when you had the inspection. Closing
Closing is always held at the Co-op Board office at the corner of Fairfield Avenue and Brewster Street (first floor, on the left). Assume that you will need to come up with about $2,000 – 2,500 for closing costs, your attorney will tell exactly how much. You will bring that amount in a certified check to closing and also bring your checkbook in case there is a small miscellaneous amount that has not been settled, so as not to hold up the closing.
Keys to the unit and your leaseholder certificate will be handed over at that time.
Miscellaneous
You will want to obtain a parking sticker from the property management company, in case you ever park in the parking lot. This cannot be obtained until after closing as you need to change your address with the DMV and your car insurance first.
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