Here’s an excerpt of what you’ll hear in the latest episode of the TrueGotham podcast, in which Douglas Heddings explains some of the ways the Manhattan real estate market is different from the rest of the nation:
85 percent of the property you can own in New York City is cooperative housing. Which you know, is a saving grace for real estate brokers, because in the rest of the country where the real estate broker is in danger of extinction, in Manhattan, they have not figured out a way to streamline the co-op board process. Nine times out of ten, when a buyer tries to do it on their own, they get a board rejection. Because they just don’t know what to look for and how to present things to a board.
We spend a lot of time doing co-op board packages. It’s a big deal. You know, it basically is the most gross invasion of someone’s privacy that they’ll ever go through; complete financial disclosure, complete financial statement including assets, liabilities, income, expenses; all of the bank statements and brokerage statements to back up everything that you put on that financial statement; personal reference letters; business reference letters; employer reference letters; your great-grandmother’s uncle’s reference letter…
Co-op boards are getting even more strict where they’ve gotten wise to adjustable rate mortgages and they’re really looking more closely at people’s income and their assets, as opposed to what type of mortgage they’re actually applying for. If someone’s doing a one month LIBOR loan at like, two and a half percent interes, they may be borrowing a million dollars, and they only have to pay say, three-thousand dollars a month on that loan. Boards have figured out that that three-thousand dollar payment could very quickly be eight-thousand dollars if rates go up dramatically. So they’re looking at that worst-case scenario and they’re taking that into consideration.