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What Coops Boards Can Do To Increase Sales- VIDEO
Powered by OpenReelHappy Summer!
I’m Scott Harris from Brown Harris Stevens, your New York City residential real estate thought leader for over 15 years.
My favorite part of this video, besides the content, is how the lighting makes my hair look like I dyed it blonde.
This is not actually a new ‘do, just lighting.
But if we can’t laugh at ourselves, then we don’t get to laugh at anyone else…
This month, I wanted to talk about cooperative apartments, because buyers seem to be having trouble enough with the market- layer onto that rules coops are imposing on buyers!
In a challenging real estate market, will coop boards figure out ways to loosen their policies to accommodate qualified buyers who are currently staying away?
What do I mean?
Just that buyers are avoiding anything that smells risky.
High monthlies, high bar to pass over, challenges to renovation, etc.
While there is a very sensible desire to protect value for a building’s shareholders, buyers remain wary of tough coop boards.
While foreclosures are almost non-existent in New York City in part because of strict policies, sales at the high end in some buildings can be non-existent as a result.
What I mean is that buildings that require all-cash, with 3-4x purchase price in liquid assets function completely outside of the realm of reality.
And most buyers, unfortunately, do not.
High earners don’t want to be bothered by these rules in many cases.
Think about your life, everything is on demand: Netflix, Amazon, Internet Delivery, etc.
Then, reinsert the “old world” of the cooperative purchase.
I would argue that in many ways these rules keep community together and are a throwback to quieter, more genteel days.
But mostly people are annoyed by it.
I propose some ways that boards may want to update their policies:
Easy one first! Boards could allow washer/dryers to be installed in apartments if not
permitted.
That alone may create massive demand in a building that wasn’t there!
In all seriousness, a building’s not allowing a washer/dryer can subtract hundreds of thousands of dollars from an apartment’s value.
Technology has made these appliances safer, more efficient, and perfectly fine for apartments.
Coops can permit a higher amount of mortgage financing allowed.
Perhaps allow 70 or 75% instead of 50%, or less.
Given the purchase prices, I don’t see allowing 70-75% LTV mortgages to be risky.
Also, coops can be slightly more lenient about the assets after closing that buyers need.
Instead of requiring multiples of the purchase price in liquid assets after closing, this could be reduced.
Most importantly, boards can be aware of changes in market values, and allow sales to take place, even if they are at prices that are lower than expected.
Rejecting buyers when the market is not cooperating, isn’t very
cooperative, is it?
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If you know someone looking to buy or sell, please be in touch!