What's up everyone. Email me at sargis@corenyc.com to book your Free 30-minute one-on-one consultation if you are looking to buy, sell or rent in New York City or if you just have questions regarding NYC Real Estate.
This is a good summation but a few important additions worth noting. 1. There a co-ops and then there are co-ops. What I mean by that is that there are a handful of buildings that the barrier to entry is quite high - both financially and socially. The strictest co-ops and the ones with the best addresses in the city are going to require very, very strong financials. So the post-closing liquidity is going to be something closer to 3 to 5 times the purchase price. This isn't publicly stated and no co-op will reveal it, but it is generally understood and known among the top agents. In that case if you want to by a 5 million dollar co-op, you had better have 15 to 25 million in assets. It varies by building, but it would raise eyebrows with a co-op board if you couldn't just write a check (even if they do allow a bit of financing - see #2) 2. Financing. You don't mention it, and it is getting rarer, but some of the fanciest co-ops still don't allow any financing at all, and the rest of the toughest ones have only recently begun allowing just 50%. So, cash only for some still. This is an intentional barrier in some buildings. 3. Although a co-op works like a corporation, it also works like a club. Meaning, you are buying membership into a private organization and association. For some elite co-ops that means you better have a certain profile. Although the days are mostly gone where this meant discriminating against people outside a certain social class, it still means that they will profile you to make sure you fit the bill economically and don't have any warts socially. It is unknown what a particularly board may want, but a good agent will gently steer you away from a building where you aren't likely to be let in. So it is worth working with an agent that has sold in that building before. While these higher end issues are typically limited to only a small number of buildings in a narrow geographic area (parts of 5th, CPW, Park, UES, Sutton and Beekman, etc..) it is worth stating that just because you have cash doesn't mean you can always buy. The upside to this is that in a co-op your asset is better protected in that your fellow shareholders have been vetted to prove that they have the means to pay their maintenance charges. Finally, it is worth noting, that you can usually NOT hide behind an LLC or other corporate entity when buying a co-op. Purchases must be made in your name and become part of the public record. Co-ops are more transparent in many respects, and despite the scrutiny to get in to them, once inside at least you know who your neighbors are and that you aren't living in the same building as a narco-billionaire. Condos, on the other hand, tend to be more popular with foreign buyers or those trying to hide assets as they don't have to list their names publicly on the purchase.
Generally, the question of whether to buy a co-op apartment with cash or finance has two parts. The 1st part of this question is no different when considering buying any home or any other asset all cash. It all comes down to your specific situation, your long-term goals, how much the cost of borrowing is (interest rates), and what is the opportunity cost of your money if you tie up to that property vs using it somewhere else. if someone decides to buy a co-op apartment all cash, they don't have to go through a mortgage application step, the process generally can be a lot faster, and the only housing expenses they'll have are just the monthly maintenance of the apartment and the homeowner's insurance. They won't pay any interest to a lender and will enjoy a mortgage-free life. But that means they'll tie up a lot of money into that home that could've been used elsewhere else to get a better return on the investment. This can be anything from starting a business, which can have the potential of growing and making a lot more money compared to the interest payments on the mortgage that they have to pay to things like investing in a stock market and anything else you can think of people can do with their money which involves different risk-vs-reward factor. So there is no one-size-fits-all approach. Everyone's situation and long-term goals are different. The second part of this question specific to co-ops is the source of the money. Just because someone has a lot of cash sitting in their bank account, doesn't mean that every co-op will allow them to purchase. If that money belongs to the individual, who has a stable source of income and has saved the money on their own and wants to purchase a home, it shouldn't be a problem but the co-op will still make sure that they qualify to carry the apartment. The risk of rejection is always there. But if that money is a gift, they need to make sure that the co-op they are trying to buy allows gifts or parents buying or whatever else their purchase structure is. If they don't meet the co-op's purchase structure and financial requirements, they will most likely be rejected even if it's an all-cash purchase. Hope I was able to answer your question. Thanks for watching the video.
This was very informative!!!. How long have you've been a real estate agent ? Also,during your video you mention NYC, we're referring to Manhattan specifically or does this information apply to all co-op's in the 5 boroughs of New York ?.I look forward to you hearing from you. Thanks again for the invaluable information !
Hi. I am glad the video was helpful. I've been a full-time real estate agent for just over 3 years now. The information in this video that describes the cooperative ownership structure apply to co-ops in general, not just NYC. There are co-ops in other states as well, but New York City is known for having a high number of co-operative housing buildings. In fact, co-ops make up a significant percentage of the city's housing stock. Every building's requirement is different and there are many co-ops in NYC that have pretty strict financial requirements. NYC I mean all 5 boroughs, but my service areas are Manhattan and Downtown Brooklyn. Feel free to reach out if you have any questions. Thanks for watching.
Hi. Co-ops can most certainly be very competitive to purchase. If the apartment is priced well considering the location, size, condition and the overall market, the sellers can receive multiple offers in a short period of time. Thanks for watching the video.
So what happens after you pay off the mortgage for a co-op? Will it then be only HOA fees and whenever there is an assessment cost? Thanks for your video, very informative.
Correct. When you pay off the mortgage, your housing payments for co-ops will be the monthly maintenance (aka HOA) and if there are any assessments, plus any other monthly expenses depending on the building, such as utilities, etc.
Hi Danielle You're right, trying to buy an investment property in some co-op buildings without doing any due diligence can be a bad financial mistake. Usually a lot of co-ops can be a great option if one is trying to buy a primary residence.
Co-op buildings are designed to be PRIMARY residences - NOT investment properties because they are NOT real estate. A co-op means you are buying shares of a restricted housing corporation stock that gives you a proprietary lease to live in a specific apartment. Condos are real estate and can be either a primary residence or an investment property depending on the HOA rules.
@@navdeepbains5562 if you have issues, like the co-op decides just to not do maintenance they are supposed to do, you will just have to fight them. They have the power, even though you put a bunch of money into your co-op and continue to pay maintenance dues. It’s BS. I’m sure some have good experiences, but the people on the co-op board can change at any time and you could get some awful people in charge. Also, what happens if some unethical people just decide they don’t like you? My father in law used to have to TIP the maintenance people to mow his lawn when it’s their job. Once he didn’t tip, they did not do anything to maintain the grounds except empty the garbage. Also, they get to deny buyers whenever you decide to sell the co-op unit. We advocated for fair treatment of my father in law when the unit upstairs flooded and damaged his unit, and they gave us such a hard time and did a shoddy “repair” job. Because they are a-holes and we advocated for his rights, now there is a rift there, and we will see how hard of a time they give us when we try to sell. Not looking forward to it. What a headache.
@@kathylakowitz Exactly! Yet you still end up sinking large amounts of money into the co-op-at the purchase time as well as every month thereafter. And what do you really get in return? I suppose it depends on the particular co-op and co-op management people, but if you put in so much money, you should have more control over what you get out of it. When I referenced “investing in a co-op,” I wasn’t talking about buying it as an investment property. Even your primary residence purchase is-or should be-an investment. You should not be pouring in $$ and getting nothing in return, which was our experience with a co-op.
Thanks, very informative. Just so I understand, I could spend money on an attorney and appraisal, and if the Board rejects me or the seller decides to pull out at any point before the contract is fully signed, I've just wasted that money with no recourse?
That is correct. Seller deciding not to sell anymore or deciding to go with another offer before having a fully signed and executed contract delivered to the buyer's representative attorney is a situation that can happen with any type of property whether it's a co-op, condo or a townhouse, but a board rejection situation is a co-op specific situation. And all the non-refundable fees that the buyers have already paid during the buying journey including the ones you mentioned and more (could be inspection, management processing fees, etc.) are gone. That's why it is very important to work with an agent who can first of all find the right buildings, so the buyer won't waste a valuable time in the buildings where they might not even be qualified to buy, then negotiate on your behalf, and after you are in contract, submit a correct and complete board package and prepare the buyer for a board interview. Doing everything correctly for most co-ops will not completely eliminate the risk of rejection, but working with the right agent and following the right step by step process will reduce the risk of rejection significantly.
Co-op buyers like you DON'T lose much money if the transaction falls apart because there are steps and co-op buyers are NOT allowed to pay for everything up front. Example: your attorney either gets paid at closing OR if you pay up front, ask for a signed document that if the transaction does not go thru, you should be entitled to a refund. As for the seller backing out, that is more difficult because their realtor will lose the commission and most real estate agents want a guarantee the seller will go thru the sale otherwise that agent will tell the seller, goodbye and good luck. Real estate agents can have a clause in the seller's contract that specifies if the seller backs out, that seller is required to pay their realtor some money for marketing costs.
Thanks for watching. I am glad it was helpful. Depending on the building, location and the condition, usually the price of a co-op apartment is less expensive compared to the same type of apartment in a condominium building. Condos are usually more expensive, because of available inventory and the fact that with condos people buy a real property. Condo is more flexible type of ownership.
Mr Sargis is the shareholder allowed to renovate his apartment the way he wants ? such as maybe making an extra bedroom inside or painting the wall the color he likes
Hi. Generally speaking all renovations must be approved by the co-op. Typically, co-ops don't really have any problems with painting the walls. If the renovation involves changing the floor plan, such as adding a wall, taking down a wall, or anything with plumbing, electric work, co-ops are usually more careful in their approvals. For most co-ops reasonable renovation plans shouldn't be a problem, but it all depends on the building, how the board runs the building, and how strict the rules are.
The issue is most co-op buildings in the NYC area do NOT have large apartment units with space to add an extra room or bathroom. Some owners with extra cash buy their next door neighbor’s apartment and convert both apartments into 1 large apartment. Example: you have a 1 bedroom/ 1 bath unit and your neighbor also has a 1 bedroom/ 1 bath. Combine both apartments and after renovations, you have a 2 bedroom / 2 bath apartment. This will also change your ownership because you will gain additional shares in the co-op and pay a higher monthly maintenance fee.
If the boards are not required to disclose why they reject an applicant, they can reject based on protected reasons- i.e, age, race, gender identity, etc... Who monitors the rejection reasons for these co-op boards in NYC? Especially in areas like Bay Ridge Brooklyn?
Thanks for watching the video. That is correct, in NYC (as of now) co-ops are not obligated to disclose the reason for rejection. There shouldn't be any discrimination against protected classes but there is no dedicated agency to specifically monitor co-op board decisions. Usually, the decision is made behind closed doors. I am not an attorney. Attorneys who specialize in litigations might have a better answer and past cases and can advise. nyc.gov also has resources, guides, and steps on what to do for people who believe they've been the victim of discrimination in housing in NYC. Hope this was helpful
how long should you plan to live in a co-op if you buy? I’m interested in buying a co-op but may move out in six years, unsure if it’s even worth it. Thanks for this video!
Hi. There isn't any specific timeline suggestion when it comes to buying a co-op for primary residence. Every co-op has its own rules and everyone's situation, financial profile, and goals are different. I am happy to discuss this question for your specific case whenever you are ready. My contact information is in my profile, so feel free to reach out anytime. Thanks for watching the video. I am glad it was helpful.
There is no guideline on length of time to live in a co-op. BUT you need to know with any type of real estate - house, condo, co-op or rental apartment, the guideline is the less time you intend to live there, the better decision is to rent. The longer you live there, the better decision is to buy. In most real estate purchases, it involves a mortgage, property taxes and time to sell. In rentals, you sign a lease and you're free to leave at the end of your lease without the hassle of selling.
It depends on the building. Some co-ops still require a Board approval for transferring the ownership between family members. You can check the co-ops proprietary lease.
Thanks for watching. Pet policy varies a lot from building to building. I have a video talking about down payments in general for condos, co-ops and townhouses, but I'll make one dedicated for co-ops only. ua-cam.com/video/H22GntECwrw/v-deo.html
ALL co-op videos on UA-cam are specific to Manhattan and some to the rest of NYC - which requires VERY high down payments of 25% and up. You need to look at the suburbs. Most co-ops in the suburbs only require a 10% down payment. The rest (a small number) require 20%. As for pets, many co-ops have a NO PET policy.
Hi Brook. This isn't really a yes or no question. You will need to carefully consider your closing costs as a seller. Generally speaking when you sell a home in NYC, you are going to pay NYC and NYS transfer taxes, broker commission (unless there is no broker involved in your transaction) and your co-op might also have a flip tax that you will need to take into a consideration. Plus add your attorney fees and other miscellaneous building fees. You can reach out to me at sargis@corenyc.com if you would like to talk about more details.
How does the selling price for a co-op get calculated? And if you are the seller, who gets the selling money, you or the board? I see a lot of co-ops being sold upstate New York, but I don't understand how the selling price is calculated? And who is selling the unit, the person living there or the board? Can the board sell your unit without consent?
The selling price of a co-op apartment is determined the same way as any other home. Find and analyze the most recent comparable sales in the area for the same type of apartment in a similar building and make an adjustment depending on what kind of features and advantages or drawbacks the subject property has. The task becomes more complicated if it is hard to find comps because the subject property may be unique or may have some additional features that might be hard to give a dollar value. But there are ways to determine the price for those cases as well. Also the overall condition of the market also needs to be taken into a consideration. Regarding selling the apartment. The unit is being sold and the proceeds go to the person who owns the shares that are allocated to that apartment. If the corporation itself owns those shares for that specific apartment, that means co-op is the one who is selling the apartment and will get the proceeds. Co-ops are not considered as a real property, which means the owner of a co-op doesn't own a real estate, they own shares in a corporation and the proprietary lease gives them a right to occupy that specific apartment. The new buyer is buying those shares and their proprietary lease will allow them to live in that apartment. The person who own those shares will get the selling money, but some co-ops might have a flip tax, part of the proceeds of the sale will go to the co-op. I hope I was able to clarify this for you. Thanks for watching. If you need any further assistance, you can reach out to me using the email in the description of the video.
@Sargis Mosyan thank you it helped. So technically speaking, if the co op appreciates in value, then if your selling it, you could sell at a profit as well? Another question, if a co op is not considered real property, does the person living in it still pay real estate tax?
@@marius666 That's correct. For free-market cooperatives, depending on how long one holds on to their property, if it appreciates over time they can sell it for higher price than they originally bought it. However selling at a higher price than the purchase price is different than selling at a profit. There are closing costs associated with every sale, broker commissions and possible flip taxes for certain buildings. Cost of sale also needs to be carefully considered. Also the appreciation doesn't work the same way if we are talking about income restricted co-ops (aka HDFC) or land lease coops. Those are different. Yes, co-op shareholders also pay real estate taxes, but it's a little bit different. The real estate taxes are included in the monthly maintenance payment. Every shareholder's monthly maintenance bill includes their portion of the total property tax bill for the whole building, according to the number of shares their apartment has in the corporation.
In terms of selling, how long should you plan to live in a co-op if you buy? I am interested in buying a co-op but may move out in six years, unsure if it’s even worth it. Thanks for this video!
I own a co-op in a "white gloves" building in New York City. Every day I ask myself if I was drunk or on drugs when I made this decision. The elevator operators are annoying as hell and serve no actual purpose. You constantly have to make small talk with them, with is an undue burden, and the conversation tends to be intrusive and gossipy. If there were an actual emergency in the elevator they would have no idea what to even do, and that's the one thing they get paid to know lol! Imagine it's 8 pm Wednesday, you're tired from working all day and you're greeted by a goofy elevator operator asking you what your plans are for the weekend, or where the women you left the building with last week went. If you actually want to put up with this nonsense, you are from another planet or crazy! These buildings are for people who are 80 years old and lunch at Tiffany's or for those who have given up on life.
If you get married , does your spouse inherit the shares automatically after you die even though you were the sole owner.? I've heard rumors that if a coop owner dies anyone not listed in the contract loses the right to live in the unit.
The law is the name on the shareholder certificate is the ONLY person who can legally sell the co-op. Typically if a married couple is purchasing a co-op together, your attorney will have both names on the shareholder certificate. If you are buying the co-op yourself, the best advice is to pay for an estate lawyer and have a will written out that gives an authorized person the legal right to sell your co-op in the event you die unexpectedly or become incapacitated.
A real estate agent In NYC typically does not handle sales contracts (unless they are also an attorney). You'll need to hire a lawyer, but for the most part, if you are working with an agent, almost all agents who are in this industry full time, can recommend an attorney who they've worked with in the past. Feel free to reach out to me directly if you need any further clarifications. sargis@corenyc.com
In NYC and the suburbs, co-op buyers are required to pay for a lawyer to represent them. The reason is many years ago, there was rampant real estate fraud and to stop it, having a lawyer involved ended the fraud.
What's up everyone. Email me at sargis@corenyc.com to book your Free 30-minute one-on-one consultation if you are looking to buy, sell or rent in New York City or if you just have questions regarding NYC Real Estate.
This is a good summation but a few important additions worth noting. 1. There a co-ops and then there are co-ops. What I mean by that is that there are a handful of buildings that the barrier to entry is quite high - both financially and socially. The strictest co-ops and the ones with the best addresses in the city are going to require very, very strong financials. So the post-closing liquidity is going to be something closer to 3 to 5 times the purchase price. This isn't publicly stated and no co-op will reveal it, but it is generally understood and known among the top agents. In that case if you want to by a 5 million dollar co-op, you had better have 15 to 25 million in assets. It varies by building, but it would raise eyebrows with a co-op board if you couldn't just write a check (even if they do allow a bit of financing - see #2) 2. Financing. You don't mention it, and it is getting rarer, but some of the fanciest co-ops still don't allow any financing at all, and the rest of the toughest ones have only recently begun allowing just 50%. So, cash only for some still. This is an intentional barrier in some buildings. 3. Although a co-op works like a corporation, it also works like a club. Meaning, you are buying membership into a private organization and association. For some elite co-ops that means you better have a certain profile. Although the days are mostly gone where this meant discriminating against people outside a certain social class, it still means that they will profile you to make sure you fit the bill economically and don't have any warts socially. It is unknown what a particularly board may want, but a good agent will gently steer you away from a building where you aren't likely to be let in. So it is worth working with an agent that has sold in that building before. While these higher end issues are typically limited to only a small number of buildings in a narrow geographic area (parts of 5th, CPW, Park, UES, Sutton and Beekman, etc..) it is worth stating that just because you have cash doesn't mean you can always buy. The upside to this is that in a co-op your asset is better protected in that your fellow shareholders have been vetted to prove that they have the means to pay their maintenance charges. Finally, it is worth noting, that you can usually NOT hide behind an LLC or other corporate entity when buying a co-op. Purchases must be made in your name and become part of the public record. Co-ops are more transparent in many respects, and despite the scrutiny to get in to them, once inside at least you know who your neighbors are and that you aren't living in the same building as a narco-billionaire. Condos, on the other hand, tend to be more popular with foreign buyers or those trying to hide assets as they don't have to list their names publicly on the purchase.
Wow what a great video full of useful information , purchasing a co-op soon in NYC found this video and your channel very helpful. Thank you!
Glad the video was helpful! Feel free to reach out anytime if there is anything I can help you with.
Looks like it's pretty complicated to go through a co-op buying process, but the video is great. I like the way you explained everything!
Thank you
Great job man! Very detailed!
I am glad the video was helpful.
Wow! Well explained! THANK YOU!
Glad it was helpful!
This is really so excellent! Well organized and clear. Thank you for sharing your expertise!
Glad it was helpful!
This is very helpful!
Thanks for watching
Very useful! Thanks
I am glad the video was helpful. Thanks for watching
Visuals are well done
Thank you
GREAT JOB!
Thank you.
I found the video quite good, I appreciate your video
Thank you
A lot of valuable information
Thank you. Glad I was able to help
I'll probably buy a coop when the time comes. Condos are too expensive
you are good at dissipating information
You should do a co op vs condo side by side video
That's a good ideal. I will
Is it best to buy a unit in a co-op, outright? And just pay the maintenance monthly fee?
Generally, the question of whether to buy a co-op apartment with cash or finance has two parts. The 1st part of this question is no different when considering buying any home or any other asset all cash. It all comes down to your specific situation, your long-term goals, how much the cost of borrowing is (interest rates), and what is the opportunity cost of your money if you tie up to that property vs using it somewhere else. if someone decides to buy a co-op apartment all cash, they don't have to go through a mortgage application step, the process generally can be a lot faster, and the only housing expenses they'll have are just the monthly maintenance of the apartment and the homeowner's insurance. They won't pay any interest to a lender and will enjoy a mortgage-free life. But that means they'll tie up a lot of money into that home that could've been used elsewhere else to get a better return on the investment. This can be anything from starting a business, which can have the potential of growing and making a lot more money compared to the interest payments on the mortgage that they have to pay to things like investing in a stock market and anything else you can think of people can do with their money which involves different risk-vs-reward factor. So there is no one-size-fits-all approach. Everyone's situation and long-term goals are different.
The second part of this question specific to co-ops is the source of the money. Just because someone has a lot of cash sitting in their bank account, doesn't mean that every co-op will allow them to purchase. If that money belongs to the individual, who has a stable source of income and has saved the money on their own and wants to purchase a home, it shouldn't be a problem but the co-op will still make sure that they qualify to carry the apartment. The risk of rejection is always there. But if that money is a gift, they need to make sure that the co-op they are trying to buy allows gifts or parents buying or whatever else their purchase structure is. If they don't meet the co-op's purchase structure and financial requirements, they will most likely be rejected even if it's an all-cash purchase.
Hope I was able to answer your question. Thanks for watching the video.
Great content
Thank you
This was very informative!!!. How long have you've been a real estate agent ? Also,during your video you mention NYC, we're referring to Manhattan specifically or does this information apply to all co-op's in the 5 boroughs of New York ?.I look forward to you hearing from you. Thanks again for the invaluable information !
Hi. I am glad the video was helpful. I've been a full-time real estate agent for just over 3 years now. The information in this video that describes the cooperative ownership structure apply to co-ops in general, not just NYC. There are co-ops in other states as well, but New York City is known for having a high number of co-operative housing buildings. In fact, co-ops make up a significant percentage of the city's housing stock. Every building's requirement is different and there are many co-ops in NYC that have pretty strict financial requirements. NYC I mean all 5 boroughs, but my service areas are Manhattan and Downtown Brooklyn. Feel free to reach out if you have any questions. Thanks for watching.
Hey! Are Coop's just as competitive in purchasing as condo's ?
Hi. Co-ops can most certainly be very competitive to purchase. If the apartment is priced well considering the location, size, condition and the overall market, the sellers can receive multiple offers in a short period of time.
Thanks for watching the video.
So what happens after you pay off the mortgage for a co-op? Will it then be only HOA fees and whenever there is an assessment cost? Thanks for your video, very informative.
Correct. When you pay off the mortgage, your housing payments for co-ops will be the monthly maintenance (aka HOA) and if there are any assessments, plus any other monthly expenses depending on the building, such as utilities, etc.
@@SargisMosyan 31:52 31:52 a
Do yourself a HUGE favor and AVOID the NIGHTMARES of investing in a Co-Op.
Hi Danielle
You're right, trying to buy an investment property in some co-op buildings without doing any due diligence can be a bad financial mistake. Usually a lot of co-ops can be a great option if one is trying to buy a primary residence.
Would move to know more if you’ve experienced issues with it! I’m thinking of buying a co-op but worried.
Co-op buildings are designed to be PRIMARY residences - NOT investment properties because they are NOT real estate. A co-op means you are buying shares of a restricted housing corporation stock that gives you a proprietary lease to live in a specific apartment. Condos are real estate and can be either a primary residence or an investment property depending on the HOA rules.
@@navdeepbains5562 if you have issues, like the co-op decides just to not do maintenance they are supposed to do, you will just have to fight them. They have the power, even though you put a bunch of money into your co-op and continue to pay maintenance dues. It’s BS. I’m sure some have good experiences, but the people on the co-op board can change at any time and you could get some awful people in charge. Also, what happens if some unethical people just decide they don’t like you? My father in law used to have to TIP the maintenance people to mow his lawn when it’s their job. Once he didn’t tip, they did not do anything to maintain the grounds except empty the garbage. Also, they get to deny buyers whenever you decide to sell the co-op unit. We advocated for fair treatment of my father in law when the unit upstairs flooded and damaged his unit, and they gave us such a hard time and did a shoddy “repair” job. Because they are a-holes and we advocated for his rights, now there is a rift there, and we will see how hard of a time they give us when we try to sell. Not looking forward to it. What a headache.
@@kathylakowitz Exactly! Yet you still end up sinking large amounts of money into the co-op-at the purchase time as well as every month thereafter. And what do you really get in return? I suppose it depends on the particular co-op and co-op management people, but if you put in so much money, you should have more control over what you get out of it. When I referenced “investing in a co-op,” I wasn’t talking about buying it as an investment property. Even your primary residence purchase is-or should be-an investment. You should not be pouring in $$ and getting nothing in return, which was our experience with a co-op.
Very informative. I will most likely buy a coop.
Glad the video was helpful
Thanks
Thanks, very informative. Just so I understand, I could spend money on an attorney and appraisal, and if the Board rejects me or the seller decides to pull out at any point before the contract is fully signed, I've just wasted that money with no recourse?
That is correct. Seller deciding not to sell anymore or deciding to go with another offer before having a fully signed and executed contract delivered to the buyer's representative attorney is a situation that can happen with any type of property whether it's a co-op, condo or a townhouse, but a board rejection situation is a co-op specific situation. And all the non-refundable fees that the buyers have already paid during the buying journey including the ones you mentioned and more (could be inspection, management processing fees, etc.) are gone.
That's why it is very important to work with an agent who can first of all find the right buildings, so the buyer won't waste a valuable time in the buildings where they might not even be qualified to buy, then negotiate on your behalf, and after you are in contract, submit a correct and complete board package and prepare the buyer for a board interview. Doing everything correctly for most co-ops will not completely eliminate the risk of rejection, but working with the right agent and following the right step by step process will reduce the risk of rejection significantly.
Co-op buyers like you DON'T lose much money if the transaction falls apart because there are steps and co-op buyers are NOT allowed to pay for everything up front. Example: your attorney either gets paid at closing OR if you pay up front, ask for a signed document that if the transaction does not go thru, you should be entitled to a refund. As for the seller backing out, that is more difficult because their realtor will lose the commission and most real estate agents want a guarantee the seller will go thru the sale otherwise that agent will tell the seller, goodbye and good luck. Real estate agents can have a clause in the seller's contract that specifies if the seller backs out, that seller is required to pay their realtor some money for marketing costs.
I like this video
Glad it was helpful
Thank you for such a useful video! Do the price of shares (for a unit) correspond to the price of a similar apartment in a similar condo?
Thanks for watching. I am glad it was helpful. Depending on the building, location and the condition, usually the price of a co-op apartment is less expensive compared to the same type of apartment in a condominium building. Condos are usually more expensive, because of available inventory and the fact that with condos people buy a real property. Condo is more flexible type of ownership.
Mr Sargis is the shareholder allowed to renovate his apartment the way he wants ? such as maybe making an extra bedroom inside or painting the wall the color he likes
Hi. Generally speaking all renovations must be approved by the co-op. Typically, co-ops don't really have any problems with painting the walls. If the renovation involves changing the floor plan, such as adding a wall, taking down a wall, or anything with plumbing, electric work, co-ops are usually more careful in their approvals. For most co-ops reasonable renovation plans shouldn't be a problem, but it all depends on the building, how the board runs the building, and how strict the rules are.
The issue is most co-op buildings in the NYC area do NOT have large apartment units with space to add an extra room or bathroom. Some owners with extra cash buy their next door neighbor’s apartment and convert both apartments into 1 large apartment. Example: you have a 1 bedroom/ 1 bath unit and your neighbor also has a 1 bedroom/ 1 bath. Combine both apartments and after renovations, you have a 2 bedroom / 2 bath apartment. This will also change your ownership because you will gain additional shares in the co-op and pay a higher monthly maintenance fee.
If the boards are not required to disclose why they reject an applicant, they can reject based on protected reasons- i.e, age, race, gender identity, etc... Who monitors the rejection reasons for these co-op boards in NYC? Especially in areas like Bay Ridge Brooklyn?
Thanks for watching the video. That is correct, in NYC (as of now) co-ops are not obligated to disclose the reason for rejection. There shouldn't be any discrimination against protected classes but there is no dedicated agency to specifically monitor co-op board decisions. Usually, the decision is made behind closed doors. I am not an attorney. Attorneys who specialize in litigations might have a better answer and past cases and can advise. nyc.gov also has resources, guides, and steps on what to do for people who believe they've been the victim of discrimination in housing in NYC. Hope this was helpful
Thank you so much for this🙏🏼
I am glad the video was helpful
how long should you plan to live in a co-op if you buy? I’m interested in buying a co-op but may move out in six years, unsure if it’s even worth it. Thanks for this video!
Hi. There isn't any specific timeline suggestion when it comes to buying a co-op for primary residence. Every co-op has its own rules and everyone's situation, financial profile, and goals are different. I am happy to discuss this question for your specific case whenever you are ready. My contact information is in my profile, so feel free to reach out anytime. Thanks for watching the video. I am glad it was helpful.
There is no guideline on length of time to live in a co-op. BUT you need to know with any type of real estate - house, condo, co-op or rental apartment, the guideline is the less time you intend to live there, the better decision is to rent. The longer you live there, the better decision is to buy. In most real estate purchases, it involves a mortgage, property taxes and time to sell. In rentals, you sign a lease and you're free to leave at the end of your lease without the hassle of selling.
@@kathylakowitzthank you!!
My Aunt has a Co op my question is if she wanted to leave that for a family member can that be done?
It depends on the building. Some co-ops still require a Board approval for transferring the ownership between family members. You can check the co-ops proprietary lease.
Thanks talk about down %...or if pets allowed
Thanks for watching. Pet policy varies a lot from building to building. I have a video talking about down payments in general for condos, co-ops and townhouses, but I'll make one dedicated for co-ops only.
ua-cam.com/video/H22GntECwrw/v-deo.html
ALL co-op videos on UA-cam are specific to Manhattan and some to the rest of NYC - which requires VERY high down payments of 25% and up. You need to look at the suburbs. Most co-ops in the suburbs only require a 10% down payment. The rest (a small number) require 20%. As for pets, many co-ops have a NO PET policy.
If we buy a co op for example 300k and in 5 years sell it. Will we get the equity if it sells for say 350k? Thank you
Hi Brook. This isn't really a yes or no question. You will need to carefully consider your closing costs as a seller. Generally speaking when you sell a home in NYC, you are going to pay NYC and NYS transfer taxes, broker commission (unless there is no broker involved in your transaction) and your co-op might also have a flip tax that you will need to take into a consideration. Plus add your attorney fees and other miscellaneous building fees. You can reach out to me at sargis@corenyc.com if you would like to talk about more details.
How does the selling price for a co-op get calculated? And if you are the seller, who gets the selling money, you or the board?
I see a lot of co-ops being sold upstate New York, but I don't understand how the selling price is calculated? And who is selling the unit, the person living there or the board? Can the board sell your unit without consent?
The selling price of a co-op apartment is determined the same way as any other home. Find and analyze the most recent comparable sales in the area for the same type of apartment in a similar building and make an adjustment depending on what kind of features and advantages or drawbacks the subject property has. The task becomes more complicated if it is hard to find comps because the subject property may be unique or may have some additional features that might be hard to give a dollar value. But there are ways to determine the price for those cases as well. Also the overall condition of the market also needs to be taken into a consideration.
Regarding selling the apartment. The unit is being sold and the proceeds go to the person who owns the shares that are allocated to that apartment. If the corporation itself owns those shares for that specific apartment, that means co-op is the one who is selling the apartment and will get the proceeds.
Co-ops are not considered as a real property, which means the owner of a co-op doesn't own a real estate, they own shares in a corporation and the proprietary lease gives them a right to occupy that specific apartment. The new buyer is buying those shares and their proprietary lease will allow them to live in that apartment.
The person who own those shares will get the selling money, but some co-ops might have a flip tax, part of the proceeds of the sale will go to the co-op.
I hope I was able to clarify this for you. Thanks for watching. If you need any further assistance, you can reach out to me using the email in the description of the video.
@Sargis Mosyan thank you it helped. So technically speaking, if the co op appreciates in value, then if your selling it, you could sell at a profit as well?
Another question, if a co op is not considered real property, does the person living in it still pay real estate tax?
@@marius666 That's correct. For free-market cooperatives, depending on how long one holds on to their property, if it appreciates over time they can sell it for higher price than they originally bought it.
However selling at a higher price than the purchase price is different than selling at a profit. There are closing costs associated with every sale, broker commissions and possible flip taxes for certain buildings. Cost of sale also needs to be carefully considered.
Also the appreciation doesn't work the same way if we are talking about income restricted co-ops (aka HDFC) or land lease coops. Those are different.
Yes, co-op shareholders also pay real estate taxes, but it's a little bit different. The real estate taxes are included in the monthly maintenance payment. Every shareholder's monthly maintenance bill includes their portion of the total property tax bill for the whole building, according to the number of shares their apartment has in the corporation.
In terms of selling, how long should you plan to live in a co-op if you buy? I am interested in buying a co-op but may move out in six years, unsure if it’s even worth it. Thanks for this video!
I own a co-op in a "white gloves" building in New York City. Every day I ask myself if I was drunk or on drugs when I made this decision. The elevator operators are annoying as hell and serve no actual purpose. You constantly have to make small talk with them, with is an undue burden, and the conversation tends to be intrusive and gossipy. If there were an actual emergency in the elevator they would have no idea what to even do, and that's the one thing they get paid to know lol! Imagine it's 8 pm Wednesday, you're tired from working all day and you're greeted by a goofy elevator operator asking you what your plans are for the weekend, or where the women you left the building with last week went. If you actually want to put up with this nonsense, you are from another planet or crazy! These buildings are for people who are 80 years old and lunch at Tiffany's or for those who have given up on life.
oh wow. I am sorry to hear that the building didn't meet your expectations. If there is anything I can help you with, feel free to reach out anytime.
Lemme get that white glove building and you can get my 2 master bedroom in Miami FL, I know you NYers love the 305 😂😉
@@Propofol001 Can you meet the board requirements? If you're serious let me know.
😂😂😂😂😂 :::
If you get married , does your spouse inherit the shares automatically after you die even though you were the sole owner.?
I've heard rumors that if a coop owner dies anyone not listed in the contract loses the right to live in the unit.
I believe a legal expert or attorney would be better suited to answer that question. Thanks for watching the video.
The law is the name on the shareholder certificate is the ONLY person who can legally sell the co-op. Typically if a married couple is purchasing a co-op together, your attorney will have both names on the shareholder certificate. If you are buying the co-op yourself, the best advice is to pay for an estate lawyer and have a will written out that gives an authorized person the legal right to sell your co-op in the event you die unexpectedly or become incapacitated.
Always recommended to transfer stock certificate to a revoccable trust
If purchasing a coop , do you have to hire your own lawyer or is that the real estate agent ?
A real estate agent In NYC typically does not handle sales contracts (unless they are also an attorney). You'll need to hire a lawyer, but for the most part, if you are working with an agent, almost all agents who are in this industry full time, can recommend an attorney who they've worked with in the past. Feel free to reach out to me directly if you need any further clarifications. sargis@corenyc.com
In NYC and the suburbs, co-op buyers are required to pay for a lawyer to represent them. The reason is many years ago, there was rampant real estate fraud and to stop it, having a lawyer involved ended the fraud.