Janet and I sell many co-ops especially in Great Neck. Many times our buyers tell us that they are reluctant to purchase a co-op because they have heard horror stories about Boards rejecting applicants without giving a reason. Although co-op Boards are not required to state their requirements for approval or rejection, we have found that most co-op boards base their decision primarily on an applicant's financials. Many Board's require that a buyer finance no more than 80% of the purchase price. Janet and I always qualify our buyers before beginning the application process. That way we are confident that the end result will be a closing. The way we qualify our buyers is to use a basic formula to ensure that the Debt to Income ratio does not exceed 35% of their gross annual income. That means the mortgage payment plus the maintenance plus any other debt that the buyer may have such as car loans, school loans, credit card debt, etc should not exceed 35% of their gross income. We have found that buyers that meet these qualifications easily obtain Board approval. Of course there are other factors but financial qualifications are the most important.
When submitting the completed application, we have found that a cover letter pointing out positive aspects about a buyer is also helpful. An example would be if a buyer has recently finished med school and is just starting out as a physician, they can write that they expect that their income will dramatically increase. Another example would be to include a letter of scheduled salary increases if one exists.
We are also frequently asked what to expect at the Board interview. Boards differ, but we advise applicants to dress as if they were going on a job interview and to bring all of their paperwork with them just in case a Board member requests clarification on an issue. We have found that in most cases, once a Board schedules an interview, they intend on approving the applicant barring any unforeseen information that may present itself at the interview.
Understanding the co-op process makes it much easier to navigate and much less daunting to a potential buyer.
Please visit our website at http://www.coopstocastles.com/