The New York luxury co-op board has long been the stuff of legend. For as long as they’ve existed, headlines of epic celebrity rejections have dotted the pages of city tabloids, giving the luxury co-op board an infamously choosy reputation.
Things may have changed in the New York luxury market — with an influx of new construction giving high-end buyers more options in a variety of neighborhoods, but that doesn’t mean getting board approval has become any less of an onerous part of the co-op buying process.
Inman spoke with seasoned New York City agents to get their takes on making the board approval process an easy one.
Check your ego at the door
Roberto Cabrera, an agent with Brown Harris Stevens in Manhattan, has dealt with some of the most notoriously difficult boards in the city throughout his 23-year career, mainly concentrated on the Upper East Side near Central Park.
He says that a common deal sinker is some board’s insistence on all-cash transactions, and that potential buyers have multiple times in liquidity what the apartment is worth.
“There are boards that ask for all cash for a $4 million or $5 million apartment,” he said. “But they also have these unwritten rules that you need to have 2 or 3 times the value of that apartment in liquid assets after you close!”
The irony is that often when these boards reject prospective buyers because of a lack of liquid assets, they shrink the pool so much that their next offer often ends up being smaller. “It’s happened so many times,” Cabrera said.
When dealing with stuffy boards, he advises his clients to be humble and keep their composure.
“I say ‘listen, when you get in front of the board, you’ve got to just be in a different gear,’” he said. “It’s not about you, it’s not about how smart you are, it’s not about the deals you’ve made. You’ve got to be super humble, don’t be someone who’s going to make any waves.”
He also recommends forming a good relationship with the managing agent, the employee who takes care of day-to-day operations for the building and can serve as an intermediary between the board and applicants.
“Those people are really the gatekeepers to the board,” he said.
Keep it formal
As a real estate professional and former member of two separate co-op boards, Gerard Splendore has the unique position of knowing the system from both sides of the equation.
An agent with Coldwell Banker Warburg with experience in the Brooklyn and Manhattan markets, Splendore says his experience serving on co-op boards has “most definitely” helped him coach his clients through the process.
Splendore says that for most buildings, approval hinges almost entirely on the buyer’s financial profile. As long as they meet the budgetary requirements the board is looking for, the interview shouldn’t be more than a formality to get out of the way.
“It all comes down to money,” Splendore said.
With that in mind, the interview process is still a formal occasion and buyers should take it seriously. He advises them to do their research on the building, dress professionally, rehearse ahead of time and respond to all questions but not ask any of their own.
“It’s not a time to be too jolly or make any jokes,” he said. “It is a formal situation.”
While your client may be confident in their ability to navigate the approval process, it’s best not to leave anything up to chance, according to Sandra Balan, a Brown Harris Stevens agent in Manhattan.
Balan advises agents to prepare with their clients ahead of time and be ready for whatever the board might throw at them.
“No matter how intelligent or well-spoken a buyer it, it is still vital to prep them for their interview as if you were preparing them for a job interview,” she said. “Review the most commonly asked questions with them and ask them to provide you with answers.”
Expecting the unexpected can prevent any deal from falling through, according to Balan.
“One reason deals die in my industry is because greener brokers are not accustomed to factoring in the human element, which comes into play in every transaction,” she said. “No two transactions are identical, and an experienced broker must be endlessly adaptable in order to effectively juggle all of the disparate personalities and moving parts.”
Leave no stone unturned
When preparing a client to go before a board, there’s no question that’s off-limits, said Kimberly Jay, a broker with Compass in Manhattan.
Jay cites the example of a client who was asked about a lawsuit against them to illustrate the importance of preparing for all possible angles. The client was prepared with a letter explaining their side of the lawsuit to the board, and the process went smoothly.
“Don’t leave it up to the board to guess,” she said.
Agents should aim to achieve a high level of trust between them and their clients for the process that entails picking apart their client’s financial history and identifying any red flags.
“The clients I work with, they trust me,” she said. “It can be an uncomfortable situation giving all of your financials and your history to strangers, and as agents, we need to make the client feel comfortable with us, that they trust us enough to reveal their information.”