Co-op Boards Making (Small) Compromises

Co-op boards are starting to become slightly more flexible in light of the market. It looks like 2010 is going to be another challenging year for the real estate industry, and a growing number of brokers urging co-op boards to consider broadening their pool of acceptable buyers—and it appears to be working. Some of the boards are actually starting to bend, and this could help boost co-op sales in 2010.

With sales volume so far down from the peak of the market, sellers often have to waiting for months to find a buyer, only to see that buyer rejected. Boards are starting to believe that to enable shareholders to get the maximum price for their apartments they have to be a little more flexible with regard to the buyers. The current economic climate has made boards more wary of the financial situation of buyers, so in return some brokers have convinced boards to ease up on allowing compromises on pet policies and pied-à-terres.

Boards are, of course, still insisting that potential shareholders have steady jobs and plenty of cash. In addition, they are less likely to accept residents who are self-employed or whose incomes fluctuate from year to year. Even with more willingness to compromise, boards will only make exceptions for extremely well-qualified candidates.

Contact Alfred Real Estate today.

The Buyer's Guide to Preparing a Board Package

When purchasing a co-op apartment, you will be required to complete a purchase application and assembling a board package—a comprehensive presentation of financial documents and references. The main purpose of the board package is to guarantee the corporation of your financial ability to support the apartment and to give them confidence that you will be a “cooperative” shareholder and welcomed member of their community.

Each co-op has its own set of requirements and application forms, which Alfred Real Estate will obtain for you from the managing agent of the building. The package will most likely consist of:
Purchase Application: This should be typed. Fill in all blanks and answer all questions (fill in “not applicable” when necessary).

Credit Release Form: This allows the managing agent to obtain a credit check for each applicant.

Financial Statement: This is a statement of all assets and liabilities and supporting documents. The sums on the statement must reconcile with the attached supporting documents. Every item on the statement (except personal property) must be documented. Don't forget to add earnest money (deposit on contract) in the asset column.

Reference Letters: You will be asked to provide a combination of personal and business reference letters. It is through these letters that the board will attempt to get to know you. Have your friends and associates write positive things about you-but also include some basics: How long have they known you? How did you meet? Why do they think you will make a great addition to the community? If they live in a co-op or have served on the board at their building, it is a good thing to mention. Letters should be addressed to the Board of Directors, on letterhead and with their contact information.

Tax Returns: Most co-ops require two years' worth of tax returns including all schedules and W-2 forms.

Landlord Reference: This verifies your prompt payment of rental or maintenance charges.

Bank Reference Letter: Just ask a banker at your local branch. They do this all the time and will know what you are talking about.

After you've gathered together all your documents, your agent at Alfred will have them copied and submitted to the managing agent for you. As a rule, if you are applying for a mortgage, managing agents do not accept any papers without a written commitment letter from the bank.

Mortgage Rates in U.S. Drop to Record Low

Mortgage rates for fixed 30-year loans in the U.S. dropped to a record low of 4.71 percent for the week ended today, the lowest since Freddie Mac began compiling the data in 1971. Rates on 15-year fixed-rate mortgages were 4.27%, down from last week's prior low of 4.29% and 5.77% a year earlier. This comes amid signs that the housing market is beginning to emerge from the worst slump since the 1930s.

Five-year adjustable-rate mortgages averaged 4.19%, up from last week's record low of 4.18% but were down from 5.77% a year earlier. One-year ARMs were 4.25%, its lowest level since June 2005, down from 4.35% last week and 5.02% a year earlier.

Economists at Huntington National Bank in Columbus, Ohio speculate that rates probably won’t go any lower, and that they’re at the lowest point they are going to achieve in a long time.

The index of signed purchase agreements, or pending home sales, climbed 3.7 percent to 114.1 after rising 6 percent in September, the National Association of Realtors said on December 1st.

The low mortgage costs, in addition to the recent extension of the new homebuyer tax credit, have increased the demand for property. In October the demand for contracts to buy previously owned homes increased and the demand for applications for mortgages continue to increase.

With prices and rates this low, there has never been a better time to invest in Manhattan real estate. Contact Alfred Real Estate today!

The Debate on the State of the Market Rages On as Third Quarter Stats are Released

Today’s Headlines

Taken from:
The New York Times Manhattan Apartment Sales Bounced Back Over the Summer, but Not All the Way by Josh Barbanel
Published October 2, 2009

It’s the question that has been on the minds of many New Yorkers: Has the real estate market reached a bottom yet? After a year of declines in Manhattan co-op and condominium sales, the residential market has recovered enough to finally have real estate appraisers and brokers approach this debate. Here, some statistics from the third quarter market reports released today (Friday, October 02, 2009):

• From July through September sales rose sharply from the second quarter, up 45.6 percent, but are down 16 percent from the levels they were at a year ago.
• For the most part, sale prices moved sideways this quarter although prices of apartments and new condominiums continued to fall. The average co-op and condo apartment sale price is now at $1.32 million, off 10.6 percent from the same quarter in 2008, but up 0.8 percent from the second quarter.
• Co-op prices are down 5.9 percent from the previous quarter, while condominium prices are up 3 percent.
• Average sale price on Upper East Side townhouses is still 50 percent below the price in the first quarter of last year.
  

With all of this exciting new data, the debate on the market has sparked speculation from multiple New York real estate firms:

• A spokesman from Miller Samuel Inc. said that while the Manhattan housing market may be getting better in some ways, it has “not yet found a bottom.” The company attributed the current situation of the market to high local unemployment and tight credit.
• Many firms are more optimistic and are reporting that they had experience their busiest summer in years because buyers who had been scared of pulling the trigger in the spring had more confidence in the market. Dorothy Herman, the president of Prudential Douglas Elliman says, “We see the market as stabilizing. It has hit bottom.”
• Hall F. Willkie, president of Brown Harris Stevens, believes that with the rebound in the stock market and slowing job losses buyers are becoming more comfortable and that “confidence is returning to the marketplace.”
• Pamela Liebman of the Corcoran Group believes that “if we are not at a bottom, we are close to it.” However, she also says that despite the increase in sales, there is little evidence that prices will rise significantly in the near future.
  

Those who believe the market has yet to hit bottom attribute the sharp rise in sales to a shift in the busy season due to economic conditions. Usually, the spring is the busiest season for apartment sales in Manhattan. This year sales were halted due to the struggling economy and therefore the surge happened later. The spring market, in effect, occurred this summer.

Despite all of the hearsay, the new market has yet to take shape. But one thing is for certain—people are buying, and New Yorkers can’t ignore that sneaking suspicion that it is time, once again, to feel comfortable in the marketplace.


News Flash

Update from Alfred Real Estate

For those of you who think the real estate market is still dead, it is time to think again! The market is alive and property is selling. Don’t let anyone tell you otherwise. Sellers—the time has come to once again feel comfortable putting your property up for sale. Buyers—now is as good a time as ever to invest in a new home.

One of Alfred Real Estate’s principal brokers recently decided to invest in property and submitted a bid that was 10% less than the asking price. A few months ago she may have had it in the bag, but as it turns out she was one of three bids, and not even the highest at that! In fact, encouraged by the demand on his property the seller decided to have another open house to solicit more potential buyers. At the open house he plans to have a highest-and-best-bid closed auction. People are back in the market, and if the price is right, they are buying!