I just had my first closing of 2009 today, I am very happy for the buyer who I have worked with for more than 6 months and had a Co-Op deal fell through, we got back on the market and found them a condominium.
As 85% or more of the Manhattan housing market is Co-Op, without knowing the market, it is hard to imagine how a co-op operates and how it can control/scrutinize the potential shareholder's financials and personal information.
In this current market, everyone is trying to save, downsize or consolidate, including many property owners are looking to sell their second homes, or properties to free up some equity. Those sellers who own Co-Ops, it may not be as simple! All the buyers must be closely examined and financially approved by each Co-Op board...!!!
As recent New York Times article "Co-Op board gets Tough and Tougher", Co-Ops boards are requiring much more from the buyer to prove their financial worthiness, and "that boards are not likely anytime soon to relax rules on who can buy into their buildings. "A co-op board tends to see itself as a guardian of the shareholders who remain in a building," ..."not as a facilitator of sellers."
This boggles me quite a bit as an agent that represents Co-Op seller that had the Co-Op board application turned down... If a seller absolutely has to sell because he or she has a serious financial hardship, by denying the potential sale ( a cash out opportunity for the seller), is putting Co-Op itself in financial risk. The seller can default on his or her monthly maintenance payment... default on the mortgage... perhaps have to lower the sales price once again to generate interest, hence it brings down the building comparables...
(photo source: New York Times)
( Below is an Sample list of Co-Op purchase package agreement)
Does Co-Op boards realize this? As to my buyer who closed on her new condominium today, she had a bad taste in her mouth because of one Co-Op turned down... I suspect that she would not recommend anyone buying into a Co-Op anytime soon.