|VIVIAN S. TOY|
EVEN as 2011 was a year of stable prices and steady sales in
Real estate brokers, lawyers and property managers all said boards had significantly stepped up their financial scrutiny of prospective buyers in the last year. Condo boards technically cannot reject prospective buyers, but brokers say some condo and co-op boards now use delaying tactics and requests for further documentation as a strategy to drive away certain buyers.
It was a year in which many real estate rules seemed to have been turned on their heads. Condos behaved like co-ops. Buyers with mortgages were looked at more favorably than all-cash buyers. Why? The reasoning goes that since mortgages are so hard to come by, anyone who gets one has been thoroughly vetted by the bank.
It also became much more common for buildings — co-ops and condos alike — to ask buyers to put large sums of money in escrow as a way of guaranteeing that they would not default on their monthly carrying charges.
Many buildings asked buyers to put six months' to two years' worth of maintenance into escrow. But brokers also said that in these uncertain financial times, some buildings had asked for escrow of as much as 10 years' worth of maintenance. ''That sounds to me like a nice way of saying goodbye,'' said
One such case was handled by
Ms. Cohen estimated that about a third of her deals last year involved an escrow request, so she now routinely mentions the possibility to all her buyers. ''It's better to let them know it's a possibility rather than have it come up as a surprise at the point of a board approval and risk having the deal fall apart,'' she said.
Brokers and property managers said that these days, deals that used to take a month can take two to three months, as boards request a second or third year's worth of tax returns and other financial documents or an escrow account. Boards have also become much more selective in other ways.
''People that would have passed boards two years ago, offering to pay all cash, aren't passing now,'' said
''Even if there isn't an outright rejection,'' Ms.
Although some high-priced exclusive buildings have sought buyers with liquid assets of two to three times the purchase price of an apartment, buildings have typically expected them to have about two years' worth of mortgage and maintenance in liquid assets, or
''He was a truly lovely young man, and he had a three-year job history,'' she said, ''but he had no liquidity.'' She decided to resubmit his board package after getting character references from his former neighbors, and the board eventually approved him. ''I knew he was the right candidate for the building,'' she said. ''I just had to educate people that he was the right candidate. It shows that if you go back with enough ammunition, you can turn it around.''
Condos as a rule cannot reject buyers, though they can exercise a ''right of first refusal,'' which means the condo board can block the sale by opting to buy the property. But since many don't have the financial reserves to buy apartments, they use stalling tactics more typically associated with co-ops.
''The way they flex their muscles is to ask for documentation,'' said
Property managers said that some co-ops and condos were turning down or holding off applicants not just on the substance of the application but on its presentation.
Brokers said they had mixed feelings about the heightened scrutiny and tougher standards being enforced by building boards.
''There's no question that the financial vigilance of co-op boards contributed to the stability of the
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|Source:||New York Times Digital|