In the current real estate market, purchasing a co-op has been challenged by the rules and regulations that go hand in hand with completing the required board application and successfully passing the interview.
Acceptable income, credit, and debt-to-income ratios will go a long way in reaching that happy ending.
However, all boards in Nassau County have no outside oversight and accountability, as Suffolk County does. When a board turns down an applicant there, the board must respond within 45 days to explain to the respective applicant the reason or reasons why.
In Nassau, there aren’t regulations that provide feedback to the purchaser when they are turned down.
This allows those few who may indiscriminately decide not to allow a buyer to purchase. Discrimination does exist with some boards. However, I have no concrete statistics to back this up except for those that I have spoken to whose financials, debt/income ratios and credit seemed more than adequate to be accepted; but were not.
Buyers in Nassau County have no basis to go by as to the basic requirements. They are truly in the dark and there is no barometer or gauge to no what is necessary and expected.
Board members want excellent income, debt-to-income ratios, and high credit scores. However, there are always extenuating circumstances that would allow those with specific situations to pass a board. However, in those situations, there is no wiggle room with people that sit on a board.
I spoke in front of the Nassau County Legislature about five years ago conveying the amount of time it took for a board review and the discrimination issue. It was taking up to three months to get to a closing.
I explained that there was an excessive amount of time to facilitate our transactions. The legislators passed a law that gave management companies 45 days to review and expedite the buyer’s board package and set up a board review for the prospective purchaser.
This was predicated on management receiving all the required information on the application. If additional information is needed, then the additional time is provided to management.
If this isn’t done efficiently, the board receives a warning from Nassau County for the first infraction, the second time the regulations are not followed within the time constraints, then a $2000 fine is levied and $2000 for every infraction afterward.
To date, I have yet to determine if any coop board has been warned or even fined. New York City and its five boroughs have a different set of rules and regulations.
However, some co-ops in Bayside and other Queens towns, provide simple guidance to those prospective purchasers.
There is an income structure, whereby if you earn $60,000, you would qualify for a studio, $75,000 qualified for a 1 bedroom, and $100,000 qualified for a 2 bedroom.
However, credit and debt-to-income ratios also had an impact on whether or not a buyer will pass a board review. But at least there is a basic parameter to go by from the get-go. This makes it easier for brokers to ascertain who may qualify and who might not.
This would be an excellent starting point for all coops in Nassau County. Moreover, even providing some basic guidelines for minimum credit and debt-to-income ratios would benefit all parties. Less time would be wasted by brokers as well as management and coop boards. We would know who would be most qualified to pass a board.
More important less money would be lost by those who thought they would pass a board but did not. I realize this is another way managements earn some of their income by application fees; unfortunately, there is a “no refund” policy when purchasers do not pass the board review.
I think it’s time for the Nassau County Legislature to finally pass a law similar to Suffolk County, which would provide clandestine information and reasons why those buyers didn’t pass the board review. This also would minimize buyer discrimination that might be occurring and in turn would educate them as to what they would need to do going forward to meet the requirements to purchase.
This could minimize and maybe almost eliminate our wasted time, guessing whether or not our clients would pass the review. Having some basic guidelines would be a great help.
Right now it’s a guessing game to know what the coop board’s requirements are as each building has different parameters for purchasing. Having a basic template for all brokers to go by would simplify the process and enable management to process packages more efficiently and expeditiously. There would be more buyers to be able to pass the board review.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. For a 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] or via https://WWW.Li-RealEstate.Com
Some good stuff here!