Getting past the entrance to cooperatives like River House hinges on a successful board interview.
As certain transactions show, prestigious prewar cooperatives on the Upper East Side and Upper West Side have not been forgotten in the wake of glittering new construction. Finance executive John Thain's penthouse at 740 Park Avenue had the top sale of last week; philanthropist Julia Koch's purchase of Microsoft co-founder Paul Allen's Upper East Side penthouse set a new price record; and athlete-turned-investor Alex Rodriguez reportedly lobbied hard for an apartment at The Beresford when he conceivably could have afforded any condo he wanted.
However, these deals stand out because, as the drastically reduced sales of former Ambassador Bruce Gelb, former U.S. Treasury Secretary Steven Mnuchin, and business executive Charles H. Dyson’s apartments on Park and Fifth Avenues show, cooperatives like these seem to be losing their luster. Most recently, Mr. Thain's Park Avenue apartment only went for $28 million, a 29% reduction from the $39.5 million he initially listed it for in April 2018.
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Curbed cites factors like newly hip downtown neighborhoods, an array of amenity-rich new condominiums, and apartments rich in historic details but in need of extensive renovation for the dip in co-ops' popularity. The article also mentioned the fact that condos and townhouses allow buyers to make a purchase without presenting practically their entire financial and employment history and appearing before a board for an interview.
Some co-op boards are relatively lenient, while others have become notorious for their strict scrutiny. Indeed, it should be noted that "tower of power" 740 Park Avenue has one of the most selective co-op boards in the city, which may have accounted for how long Mr. Thain's penthouse was on the market. We cannot say for certain because this board, like co-op boards all over the city, is not required to disclose why they rejected applicants.
Some co-op boards are relatively lenient, while others have become notorious for their strict scrutiny. Indeed, it should be noted that "tower of power" 740 Park Avenue has one of the most selective co-op boards in the city, which may have accounted for how long Mr. Thain's penthouse was on the market. We cannot say for certain because this board, like co-op boards all over the city, is not required to disclose why they rejected applicants.
At the state level, there is a bill in committee that would require co-ops to disclose why they rejected an applicant so as to protect from illegal discrimination. In the meantime, rejection by a co-op board happens to the best of us -- Academy Award-winning actress Diane Keaton, Grammy Award-winning singer Cher, and Related CEO Jeff Blau are among those who have been rejected in their bids to buy in some of New York's most prestigious cooperatives. This article outlines the best ways to woo any co-op board to close your next deal and keep from joining their company.
Why the Opinions of Co-op Boards Matter
In most housing scenarios, if you can convince a lender to give you a mortgage, you’re already well on your way to purchasing a home. In the case of New York City co-op purchases, finding a lender is just the first step. Local co-op boards also carefully vet all future shareholders, and unlike lenders, they aren’t just looking at financials. Depending on the board, co-ops will dig deep into your financials, work history, and personal life. This means you’ll need to do more than pay off any overdue bills. You’ll also need to be ready to respond to a host of questions about all aspects of your life (and your family’s life), and your intended future uses of the unit you wish to purchase.
Key Factors
1. Have your financials in order
Buying in a co-op typically means bringing at least 20 percent and often much more to the deal. 740 Park Avenue requires all purchasers to pay in cash, and they aren't the only one.Also, most co-ops will be looking at your remaining liquid assets. Many buildings will want you to still have considerable liquid assets after closing. In other co-ops, you may be asked to put two to three years of maintenance fees in an escrow upfront. This isn’t the only thing co-op boards will be scrutinizing. They will also be looking at your current and past income and credit history. The more solid your financials, the better off you’ll be.
2. Demonstrate a stable work history
Most co-op boards aren’t just interested in your current position and salary but also your entire work history. Prospective buyers with short or erratic work histories are bound to be a disadvantage. Co-op boards regularly turn down freelancers or buyers who have a history of changing jobs frequently. If you’re a foreign national, you may also run into obstacles, even if you’re a high-income earner in a professional field. A long, stable, U.S.-based job history will serve you best when you meet a co-op board.3. Be transparent about your intended use of the unit
Although some boards are open to buyers looking for a pied-a-terre or even an investment property that will be rented, many others are not. Likewise, many boards will not take well to a buyer whose real intent is to hand over the unit to a college-age child. In most cases, the best way to woo a New York City co-op board is to demonstrate a commitment to buying the unit with the intent to live in it for an extended period.4. Less is more in terms of family size
In New York City, it is not uncommon for families, even middle-class families, to stretch the capacity of apartments by flexing them (e.g., turning a large one-bedroom into a two-bedroom). While this is usually possible if you’re already a shareholder on good terms with the board, persuading a co-op board to let you move into a one-bedroom with your family of four will be challenging. Remember, from the perspective of the co-op board, larger families mean more wear-and-tear on the building and more use of services but for the same maintenance fees. As a result, when it comes to most co-op boards, the smaller your family unit, the better—unless, of course, you’ll actually be purchasing a combined apartment and paying double the maintenance fees.5. Avoid relying on a guarantor
In some co-op buildings, guarantors are permissible, but many buildings do not permit guarantors and few or no buildings prefer them. This largely reflects the fact that using a guarantor will create additional work for the board since most boards will want to scrutinize both the buyer’s and guarantor’s financials and work histories. In other words, a guarantor may not kill a deal, but it rarely works to any buyer’s advantage.6. Be pet-free
Some co-op boards love cats and dogs, but many are either pet-free or have restrictive policies (e.g., cats only, dogs under a certain weight, or certain dog breeds not allowed). Even if you’re proposing to buy in a genuinely pet-friendly building, avoid pushing the envelope. One or two cats may be welcome, but seven or eight likely won’t. Likewise, if your dog is large or loud, don’t lie. Some co-op boards even do “pet screenings” and others ask for pet reference letters. Ultimately, even in pet-friendly co-ops, it is often better to be pet-free. After all, without a pet, you’ll be giving co-op board members one fewer reason to scrutinize your application.7. Don’t show up looking like a rock star
It may be New York City, but in nearly all co-op buildings, showing up as a party girl or guy is a sure way to kill a potential deal. If you have any doubt, bear in mind that Mariah Carey ignored her broker's advice to "dress for a funeral," showed up to her board interview with a bared midriff, and was rejected in her bid for Barbra Streisand's former penthouse at The Ardsley. You don’t need to claim total sobriety. Still, with few exceptions, co-op boards will reject any buyers who appear at risk of blasting music regularly, using their unit as a rehearsal studio, or throwing one too many parties.
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With the help of the advice above, buyers have a much better chance of getting into their co-op of choice. However, there are two magic words to keep an eye out for: sponsor unit. These units are owned by the original owner of the building and coming to the market for the first time. While some are likely to be in estate condition, others have been spruced up in preparation to sell.
In either case, buying a sponsor unit allows co-op buyers to avoid the arduous process of preparing an application package and sitting for a board interview. Not only does this make for a more convenient buying process, but it also allows for a speedier closing.
In either case, buying a sponsor unit allows co-op buyers to avoid the arduous process of preparing an application package and sitting for a board interview. Not only does this make for a more convenient buying process, but it also allows for a speedier closing.
Origin Valentine, #5F (Corcoran Group)
Fort Tryon Gardens, #4C (LL Real Estate Services LLC)
Tudor Tower, #609 (Compass)
205 East 78th Street, #17D (Compass)
130 West 80th Street, #3F (Douglas Elliman Real Estate)
The Dearborn, #4N (Compass)
540 Ocean Parkway, #5I (Corcoran Group)
The Penny Lane, #120 (Elegran LLC)
419 East 57th Street, #9E (Brown Harris Stevens Residential Sales LLC)
458 West 20th Street, #4D (Coldwell Banker Warburg)
Westview, #1244 (THE DEVELOPMENT MARKETING TEAM)
111 North 9th Street, #2L (Living New York)
Park Towers, #3B (Corcoran Group)
433 West 24th Street, #1A (BALEN REAL ESTATE LLC)
The Creston, #7F
$1,699,000 (-6.9%)
Riverside Dr./West End Ave. | Cooperative | 4 Bedrooms, 2 Baths | 1,357 ft2
The Creston, #7F (Douglas Elliman Real Estate)
200 Central Park South, #20C (Compass)
130 East 75th Street, #10C
$3,150,000
Park/Fifth Ave. to 79th St. | Cooperative | 3 Bedrooms, 3 Baths
130 East 75th Street, #10C (Brown Harris Stevens Residential Sales LLC)
60 Gramercy Park North, #16A (Corcoran Group)
The Chatsworth, #303
$5,595,000 (-3.5%)
Riverside Dr./West End Ave. | Cooperative | 4 Bedrooms, 3 Baths | 2,800 ft2
The Chatsworth, #303 (Levy Carol E)
Would you like to tour any of these properties?
Just complete the info below.
Or call us at (212) 755-5544
Would you like to tour any of these properties?
Contributing Writer
Cait Etherington
Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.
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