10 steps to creating a stellar co-op or condo board application
- Preempt any questions about your finances by providing necessary details
- Provide talking points or samples of great letters to your reference letter writers
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If you’re considering buying an apartment in New York City, you'll need to clear other hurdles beyond coughing up the down payment and securing a mortgage. Welcome to the labyrinthine board approval process that's an essential step when purchasing in a co-op or condo building.
And that process begins with the board package, which is designed to show the board you are a qualified buyer—and notoriously described as invasive. The scrutiny of your tax returns and financial statements, as well as the need to provide personal and professional recommendations, can feel downright excessive.
However, if you consider it from a different angle, all that scrutiny is ultimately for your own benefit. The ownership structure of a co-op means you are becoming a tenant shareholder of a corporation and the due diligence is all part of screening for candidates who will contribute to the building’s financial wellbeing. Increasingly, the application package for the purchase of a condo require similar amounts of documentation and in some cases, even an interview.
[Editor's note: An earlier version of this post was published in January 2021. We are presenting it again with updated information for February 2023.]
That said, co-ops have a lot more discretion and are able to reject board packages for pretty much any reason they choose. Condos, on the other hand, have to exercise their right of first refusal when they receive an application—meaning if they reject a potential buyer they have to purchase the unit at the contract price.
"Fundamentally, you are checking off the boxes," says Kirsten Jordan, a broker at Douglas Elliman. So unlike a co-op, a condo is not likely to turn you down because they don't like your cover letter. "I've sent letters back to co-op buyers and asked them to fix them. That's never happened in a condo package."
For tips on how to assemble your application package most efficiently, and to put your best foot forward to seal the deal, read on.
1. Start prepping early
It’s your job to get all the documentation together but a broker will help you with the filing and make sure there are no omissions.
Usually, there are one or two rounds of back-and-forths between the broker and the buyer, says Ari Harkov, an agent at Brown Harris Stevens. You can cut down on time between offer and closing if you are well organized.
“Most contracts require packages to be submitted within a certain time frame. Be sure to check your contract and consult with your attorney so you know what dates and deadlines you need to meet,” Harkov says.
Now that applications are largely being prepared online, Harkov says the process of compiling and submitting board packages has become both simpler and more complicated. “Digital packages help streamline the process and save paper, but they are also fraught with pitfalls and challenges,” he says.
A comprehensive review of a package is more difficult when it’s online and Harkov says software glitches or unfamiliarity with the system have resulted in incomplete packages being accidentally submitted.
2. Follow the checklist and don’t leave gaps
Know what to include—and what not to include. A management company or brokerage will send you a guide explaining exactly what you need to have in your package.
Your broker can provide samples of application documents and starting early gives you time to request any necessary statements.
You should also have your broker reach out to the seller’s agent to find out exactly how the board wants the package delivered, what software is being used and who it will be sent to. You can get organized by scanning documents and having them ready to upload.
The bottom line: Include everything asked for and don't put in more than you need. A big no-no: pictures. "We don't care about what your house in the Hamptons looks like and we don't really care what you look like," says one Upper East Side co-op board treasurer.
3. If you're financing, you'll need a commitment letter
Co-op board requirements vary from building to building but there are some nuts-and-bolts requirements: Financial statements that show assets and income, specifically tax returns and bank statements. "Those are the heart and soul of the package in broad strokes," Harkov says.
“In today’s lending environment, many banks are taking at least 45 days to issue commitment letters,” he points out. And remember to stay on top of the letter’s expiry date—this kind of oversight could become a sticking point for a seller.
Usually, the board will want two years of tax returns and your most recent bank statement. When it comes to stocks and retirement account reports, the most recent paperwork is usually fine.
4. Include a cover letter and table of contents
A cover letter and table of contents let board members easily find what they need.
Harkov makes a point of supplying two cover letters: “One is the table of contents and the other explains who you are, where you put your income, your assets post-closing, and your debt-to-income ratio. So if a board member doesn't want to read the whole package, they can get everything they need from these two parts," he says.
For more granular advice, Jordan talks about the "dos" and "don'ts" of cover letters. Do present your narrative in a well-written, digestible format, introducing yourself or your family: This is who we are, how long we've been looking, why we love this building and the neighborhood, how excited we are to be part of the community, and anything else that parlays into being a neighbor—like being president of the board of your previous co-op. Start with a nice little salutation and then they can start reading all about you.
As for the don'ts, as in most aspects of life, you are wise to steer clear of politics and religion. Clearly, you have to pick what's appropriate for that particular building. Stick to your professional and charitable impacts.
5. Don't leave any blanks
Co-op board members are volunteers (with jobs and families in many cases) and they don't want to spend a lot of time going back and forth asking for more information—plus the longer it takes for them to approve you, the longer it'll take to close on your apartment.
One mistake for buyers paying cash is not showing that amount of cash on the financial statement, leaving the board to wonder where you’re getting the money from.
The idea is to preempt any questions. For example, if you're recently divorced, be prepared to give detailed information about alimony payments, whether you give or receive.
In a similar vein, Jordan says sometimes it pays to go beyond merely providing bank statements in the interest of full transparency.
"The revenue/financial statement is a great place to start, but if your situation is more complicated because of carried interest or debt, there's nothing wrong with making a schedule that breaks things down further and even going into detail about why you've made certain financial decisions—like not paying down educational loans because the interest rate is so low and you view it as smart debt, or you have assets with valuations that you'd like to include," she says.
6. Choose references wisely
According to Jordan, common knowledge is that a board member will open the package and go straight to the finances and then the reference letters. "They want to know you can afford it and who you are," she says, adding they typically skip looking at the credit check form and all the rest that the managing agent would have vetted already.
Harkov explains these letters fall into several categories: An employee letter, which comes on company letterhead and verifies your compensation; a business reference letter from a superior or colleague, which offers substantive feedback about you in a work environment, including details on how responsible you are; a personal reference letter; and a letter from your current management company confirming that you pay rent or monthlies on time.
Of those, the personal reference letter can seal—or break—the deal. One Yorkville co-op board member puts it this way: "What separates one applicant from the next is the personal aspect—specifically, the recommendation letters. Because when it comes down to it, once we are all in agreement that the applicants have the financial capacity to purchase, we really just want to see if they will make nice neighbors. Who are they asking to recommend them? Do they read like boilerplate or do they really tell me that these are good, nice people?"
So who should write those all-important personal reference letters?
References should be from colleagues or friends who can speak honestly about you. If they are NYC co-op owners themselves, so much the better. “The idea is to use someone who gets how important it is to have good neighbors and can vouch for the fact that you would make one," Harkov says. If you know someone who’s a board member in a NYC co-op or already lives in the building—even better.
Indeed, Jordan says that if you are trying to get into a Park Avenue co-op, ideally your friend will be in another Park Avenue co-op; the same if you are applying to a storied co-op on the UWS. "If you are looking at more simple buildings, you still need to know your audience. Take guidance from your broker or the seller's agent on what kind of vibe you should be aiming for."
8. Aim for sincerity and specificity in personal references
Now that you've chosen who will write your recommendations, you'll want to ensure those letters are all they should be.
Jordan advises her clients to be prepared to get creative.
"The best letters are the ones that are genuine and actually written by someone else, but sometimes people need inspiration," she says.
That can include giving them a sample stellar reference letter with the names blackened out, or reminding them of things like the time you planned that charity event together or took a weekend trip with the families in tow. "Not a lot of people think about doing this to help their references get started," she adds.
Harkov agrees that specificity is key. "You want your recommendations to include details like, 'she helped me when my kids were sick,’" he explains.
Two high school teachers who bought a co-op in Forest Hills, Queens, told us they were certain their “Disney-style” letters of recommendation were what clinched the deal for them.
For more tips, we have samples of reference letters addressed to co-op boards.
9. Double and triple-check the package
"Multiple qualified eyeballs are always a good thing," Harkov says. The buyer's broker pulls the package together, but the seller's broker, the managing agent, and even the lawyer should review it. Check for typos and see if anything stands out that needs a correction.
10. Bring your A-game to the interview
Dress appropriately, be respectful, and keep it friendly. If you’ve spent the time preparing the application you should know your package inside out so you won’t get tripped up by any questions about it during the interview.
Jordan emphasizes that this is the opportunity for them to ask you questions, not for you to ask them a bunch of questions about the building, which you should know from doing your due diligence.
"This is also not a good time to go into any elaborate details about the massive amount of work you plan to do in the apartment," she says. You shouldn't lie if asked outright but there's no need to freely offer statements that convey you're eager to embark on a two-year construction project.
Earlier versions of this article contained reporting and writing by Lucy Cohen Blatter.
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