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For condo, usually you just give them some bs pre-approval letter and that's the end of it. But it's pretty standard for coop to ask for everything before submitting the offer, most agents dont want to waste their time going through the motions if the buyer doesnt qualify, as coop board can have very strict rules regarding income etc..for approval of sale.
But it is up to the agent's discretion at this point, so i guess you can insist on qualify and dont provide the document, if the agent really wants to close the deal they will risk their time and submit the offer first on your behalf.
I am not sure if you understand what it means buying a coop. I will give you two examples. 1) A couple(my relative) used to live in a coop (1200 sqf 2br), their daughter came and visited them for 2 days during a long weekend and stayed in the apartment, that very first night one of the board member came and told them their daughter cannot stay as it's against the building rules to have overnight guest. Keep in mind, they were on very friendly terms with the board and doorman etc..always tipped during holidays. They had a long battle with the building even hired an attorney and got nowhere as the rules were clear. Ended up selling the place.
2) I was looking to buy a studio in a very nice luxury coop building a few years back, it was listed for $160k and $600 a month while similar condo unit is in mid 300s. Seems like a good deal, then came the board requirement: you need to have a $120k annual income. This pretty much means when it's time to sell, there will be no buyers. So even if you qualify, think about what happens when it's time to sell. Suffice to say, i walked away from the deal as it just made no sense.
I would take a look at the building rules very carefully, and talk to a few resident who already live there to get a feel how the board is like, how strict are they, do they have flip tax, and what's the buyer's qualification requirement for buying. If it's strict board/high annual income requirement, walk away it will be a nightmare. And most coop you cannot rent it out, so you will end up in a position that you cant sell or rent, which can only mean 1 thing - keep lowering the price...
good luck and do your own dd, dont let the cheap price blind you
I am not sure if you understand what it means buying a coop. I will give you two examples. 1) A couple(my relative) used to live in a coop (1200 sqf 2br), their daughter came and visited them for 2 days during a long weekend and stayed in the apartment, that very first night one of the board member came and told them their daughter cannot stay as it's against the building rules to have overnight guest. Keep in mind, they were on very friendly terms with the board and doorman etc..always tipped during holidays. They had a long battle with the building even hired an attorney and got nowhere as the rules were clear. Ended up selling the place.
2) I was looking to buy a studio in a very nice luxury coop building a few years back, it was listed for $160k and $600 a month while similar condo unit is in mid 300s. Seems like a good deal, then came the board requirement: you need to have a $120k annual income. This pretty much means when it's time to sell, there will be no buyers. So even if you qualify, think about what happens when it's time to sell. Suffice to sale, i walked away from the deal as it just made no sense.
I would take a look at the building rules very careful, and talk to a few resident who already live there to get a feel how the board is like, how strict are they, do they have flip tax, and what's the buyer's qualification requirement for buying. If it's strict board/high annual income requirement, walk away it will be a nightmare. And most coop you cannot rent it out, so you will end up in a position that you cant sell or rent, which can only mean 1 thing - keep lowering the price...
good luck.
Wow, great post . Very informative regarding coops. My last house was in a subdivision with a HOA and I thought they were bad enough. Thanks for sharing!
I made an offer through my realitor for a co-op. I filled out the paperwork and the listing agent wants to see my IRS tax returns for the past 2 years, last 3 paychecks, etc. This is very personal information and I don't understand why the seller's agent needs this before i even give the offer. They said it's because it's a co-op. I understand that the board needs this info but why does the seller's agent need this? She said it's to see if i pre-qualify but my agent already knows that I do.
I've never heard of an agent asking this and I would not comply. The most an agent ever asked for was to see a copy of my bank account, and even there I blocked out the bank number.
all co-ops are different. i haven't heard the overnight guest rule before, but they do typically limit the number of units in the building that can be rented out at any given time. i served on the admissions board of a very large co-op for several years. we would get a pack of documents for each candidate with tax returns, pay stubs, bank and investment accounts, credit reports and three letters of reference about a week before the interview. make sure you know the difference between a co-op and condo before purchase.
Thanks for all the information. It makes a lot of sense. Based on your suggestions, I asked my lender to give me a pre-qualification letter. I'll send that to the listing agent and nothing else at this point.
Now I have this question--i had to tell the lender what my maximum bid will be. I told her 15k more than what the offer is now. The seller will obviously say she'll sell it for the higher price. Did I make a mistake? Should I ask my lender to change the max to 3k hire than the original bid?
When I was making offers I always got a new letter for the exact amount of my offer. I have no idea if it mattered or not, but to put more on the letter seamed like I was giving away more information than I wanted to.
The seller should never see your pre-qualification letter, all they need to know is this buyer is pre-qualified. The seller agent must be completely clueless if he showed the letter with the exact amount approved to the actual seller. I would be very pissed if the seller agent did that.
To answer your question, it's not a big deal. Understanding the coop rules is more important, especially it's current financial situations because all you are buying is shares in a "company" not the actual property, make sure it's not lehman brothers jr...
The seller should never see your pre-qualification letter, all they need to know is this buyer is pre-qualified. The seller agent must be completely clueless if he showed the letter with the exact amount approved to the actual seller. I would be very pissed if the seller agent did that.
I have always seen a copy of the prequal letter when people made offers on my house. I think that is pretty standard. They aren't providing the letter to your agent. They are providing it to the seller.
I have always seen a copy of the prequal letter when people made offers on my house. I think that is pretty standard. They aren't providing the letter to your agent. They are providing it to the seller.
Not buyer agent, the letter should goto seller's agent but the seller agent should not show it to the seller unless they ask specifically to see it. I know seller agent is suppose to "help" the seller, but that's how it usually goes. of course if you are doing fsbo, then everything comes to you.
Not buyer agent, the letter should goto seller's agent but the seller agent should not show it to the seller unless they ask specifically to see it. I know seller agent is suppose to "help" the seller, but that's how it usually goes. of course if you are doing fsbo, then everything comes to you.
Buyer is providing the letter to the seller. Regardless of agents. And the seller has every right to view it.
The seller doesn't have to ask to see it. They should get it automatically from their agent once the buyer's agent sends it over. There is nothing at all wrong with that.
I don't know what kind of agents you have had in the past, but it doesn't sound like they were very good.
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. Very informative regarding coops. My last house was in a subdivision with a HOA and I thought they were bad enough. Thanks for sharing!
