Getting Through a Co-Op Board
High Income - Low Net Worth - Short on Liquid Assets
Many first-time buyers fall into this category. Since co-op boards are looking for assurances that a buyer has back-up reserves - assets over and above what is needed for the purchase, a buyer in this situation has several choices.
Often a parent can act as a guarantor, and employer can indicate the upward earning potential (including a bonus prediction) of the candidate and/or personal and business references can detail a history of successes. References that refer to accomplishments in school, obtaining a good job, or that highlight other achievements provide confidence for the Board.
Bad Credit History of Too Much Debt
A bad credit history is one of the hardest dilemmas to overcome. If the situation is serious, a condominium may be a better choice. However, if credit cards are all paid off prior to applying to the co-op, and credible explanations are offered to explain other problems, (such as a reduction of assets due to a divorce), a board may be accepting. In such cases, a purchaser may be asked to provide more information.
High Net Worth - Low Income
Many wealthy individuals have enviable holdings, but little income. In these cases, a board is going to be most concerned about the applicant's ability to handle future maintenance increases - which, like death and taxes, are inevitable. A common solution to this problem is for the purchaser to put up to twelve months' maintenance in escrow, in an interest bearing account.
However, the best advice we recommend is to be forthright and provide all the information requested in an organized and cohesive manner. The problem, though, for some purchasers, is that full disclosure could reveal a situation with which the Board may not be happy, and may therefore lead to a rejection of the applicant.
The Patrick Lilly Group is specially trained and experienced to assist buyers in preparing co-op board applications. We assemble great board packages and work together with the property management people who are the liaisons to the Boards. We offer counseling at the beginning of the process, progress reports along the way, and final review of the completed application by the managers. The Patrick Lilly Group works with everyone to make the process easy. Over the years, we have received many "Thank You" letters from our buyers for helping them through this very important aspect of buying a co-op.
