Buying a co-op in NYC may seem intimidating to homebuyers. Between the intense board package and the dreaded in-person interview, one may be tempted to avoid co-ops altogether.
However, because condos typically cost between 20-25% more than co-ops, prospective homeowners should not write them off altogether because they may miss out on a good deal. Plus, co-ops make up 75% of the NYC real estate market, so only considering condos may cause you to miss out on a selection of homes that match your criteria.
If you are interested in a co-op, it is important to truly understand how to get approved by a co-op board in New York City so that you can put your best foot forward when attempting to buy the apartment of your dreams.
What is a Co-op?
The first step toward ensuring you get approved is truly understanding what a co-op is.
When purchasing a co-op, also known as a “cooperative”, you don’t actually own the property. Instead, you own shares of a corporation that owns all of the units within the cooperative.
In turn, you end up being more like an investor than a property owner, where the amount of the corporation you own depends on the size of the apartment you are purchasing. For instance, the owner of a two-bedroom home would own more shares than the owner of a studio in the same building.
Triplemint Tip: Most pre-war units are co-ops, so if you’re 100% set on a pre-war apartment, a co-op is the way to go!
Understand the Co-op Board’s Goal
Because it is a “cooperative,” all building decisions and policies are voted on by the co-op board. These include:
- Maintenance fees
- Pets or no pets
- Ability to renovate
- Which applicants to accept or deny
Many of the board’s decisions are made in favor of what is going to maintain the value of the building as a whole.
Although the board can’t discriminate against race, age, gender, sexual orientation, or a number of other personal characteristics, they can reject you for other reasons that they do not have to disclose to you or your real estate agent.
Some of the most common reasons why a co-op board would reject an applicant are due to financial reasons, the home isn’t their primary residence, or the board package was sloppy.
This just further illustrates how important it is to ensure your board package meets their standards from the get-go.
Make Your Application a Winner
If you haven’t been through the process before, the co-op purchase application, also referred to as a “board package,” includes several sections such as:
- Credit report
- Financial statement
- Bank verification letters
- Personal and business reference letters
- Previous tax returns
- Landlord reference letter
When compiling everything you need for your application, it is important to make sure that all of your numbers are accurate down to the cent. If your stated income and the income on one of your documents don’t match, that could signal a bad sign to the co-op board.
Nail the Interview
Congratulations, the co-op board approved your application! Now it’s time for the interview. Treat this part of the process like a job interview.
Dress to impress, bring your personality, and know your board package from start to finish. That way, you’ll be prepared to answer any questions they may ask, which will give you a better chance of making a positive in-person impression.
“The buying process thus far may have been like running a marathon. But when you’re going into the board interview, disconnect any of the frustrations or annoyances that may have come up. Just focus on the fact that you’re about to own a great apartment in a city that you love,” says Lucas Callejas, licensed real estate salesperson at Triplemint.
Work with an Experienced Agent
The best thing you can do to ensure a co-op board approves you is to have a buyer’s agent in your corner.
An experienced real estate agent in NYC will help you prepare your board package and will typically have relationships with the co-op boards, so they will be able to tell you what they’re looking for specifically.
For example, one co-op board may focus heavily on your reference letters, so your agent will make sure that they are strong and personal enough to make an impact. In contrast, another co-op board may be sticklers for the financial part of the application, so your agent will recommend triple checking all of your numbers to make sure they all match up.
In addition, a great agent will guide you through the process and match you with co-op buildings that you’ll have a better chance of getting accepted by, which will save you both time and unnecessary stress in the long run.