New York based property management firm, All Area Realty Services blog. Find tips for Co-Op Boards & Residential Building Management.

Are Co-Ops A Thing Of The Past?

Posted by All Area Realty Services Team on Oct 16, 2018 3:03:36 PM

Although co-ops represent some of the most desired addresses in New York they are also known for a harsh history where prospective owners had to pass notoriously difficult boards, meet rigorous income standards, and abide by inflexible “house rules” when it came to renovations and resale. Due to this infamous history co-op sales have been dropping and more prospective buyers have been looking to buy condos. So the question is does this mean co-ops are becoming a thing of the past? 

Co-Op Sales Are DroppingiStock-179285229

In the prior year co-op sales priced $5 million and up fell nearly 20%, and in co-ops priced $20 million and up sales declined 25%. This is all despite the fact that co-ops compose 70% of Manhattan’s owned housing units. 

Condos Are Rising in Popularity 

There are a few pros to condos in comparison to co-ops that it is enticing to prospective buyers. These are:

  • Condos have a more immediate buying process.
  • They are generally full-service buildings with gyms, high-tech amenities, and on-site daycare services.
  • Condos allow more freedom to sell or rent the space.

Co-Ops are finding it hard to compete with these enticing pros condos have. 

The 5 Valuable Benefits Co-Ops Still Offer

  1. The bright side to the fall out in sales of co-ops is that there are great deals out there for qualifying patience buyers. 
  2. Co-ops, on average, are more affordable compared to their condo counterparts. 
  3. Co-ops still count for some of the most prized real estate in New York making them a better long-term investment. 
  4. There are never foreclosures in co-ops because everyone is in equal financial standing. 
  5. Co-ops have more tools to raise needed funds and to handle delinquent apartment owners. 

The truth is that real estate is cyclical. Even though sales have dropped recently for co-ops it does not mean it is the end. Co-ops still offer comparable benefits to condos, and they represent the most luxury housing in the city. Co-ops will never truly go out of fashion. 

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area. Contact us today if you're looking for a professional property management company. 

 

Topics: Co-Op Board, Co-Op Building, Buying a Co-Op, Buying a Condo

11 Mistakes to Avoid When Buying a New York City Co-op

Posted by All Area Realty Services Team on Sep 13, 2018 4:39:37 PM

Deciding to buy your first co-op in New York City can be overwhelming and scary. Seeking advice from other wannabe co-op buyers may induce even more anxiety when discussing their own bad experiences and frustrations. More often than not it isn’t you causing the complications it’s the real estate system itself. Below are 11 common key mistakes you should avoid in order to have a more successful co-op purchasing experience. 

Mistake #1: Apartment hunting without the help of a broker.

As a buyer, you pay your broker nothing to represent your interest. Yes, nothing! When apartments in Manhattan are sold the seller pays the broker for a job well done in finding a willing and able buyer. The seller pays a 5 to 6 percent commission, half of which goes to your broker.

Not having your own broker would require you to work directly with the seller’s broker. The seller’s broker has a responsibility to do everything they legally can to twist the deal in favor of the seller and against you.

A buyer’s broker will help you navigate through the complicated process of buying a co-op while protecting you from the other mistakes listed below. 

The only time your broker may be at a cost to you is if the co-op is For Sale By Owner or listings where the brokerage doesn’t take buyer’s commissions. It is better to be without a broker in these cases.

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Mistake #2: Failure to notify the seller’s broker that you have your own broker. 

Okay, now you have your broker to assist and protect you. The next step to keep in mind is to have your broker schedule all of your viewing appointments. At open houses clearly indicate that you have a broker on sign-in sheets. Failure to do this could easily lead to you losing professional representation.

Mistake #3: Inadequate mortgage pre-approval letter. 

To be taken seriously by any prospective seller you need a mortgage pre-approval letter. The mistake to avoid here is getting a pre-approval letter based on your budget. Make sure your letter is based on the maximum amount the bank will lend you.

Mistake #4: Believing it’s possible to lose a bidding war.

Believing it is possible to lose a bidding war is a false assumption. You will never lose a bidding war if you offer the maximum price that you are comfortable paying. This way if you’re outbid, then the apartment was too expensive for you; if your bid wins, you’ve paid a price you feel was appropriate for the apartment.

Low-balling never works in the most competitive real estate market in the world, New York City.

Mistake #5: Overestimating your financial strength.iStock-658242920

Co-op boards don’t only want to see that you are pre-approved for a mortgage. They need more assurance that you can still pay monthly maintenance even if you lose your job. You need to have enough liquid assets post-closing for 24 months of mortgage and maintenance expenses. If this isn’t possible you may have to be more realistic about your maximum purchase price. 

Mistake #6: You’re told your offer is accepted. You believe it.

Your offer isn’t officially accepted until the sales contract is executed. Without this contract executed the seller’s broker could still show the apartment searching for a better offer. Make sure you and your broker do everything you can to accelerate the execution of the sales contract.

Mistake #7: Choosing a friend or relative to be your real estate attorney.

The only time this is appropriate is if your friend or relative specializes in New York City real estate. No exceptions.

Mistake #8: Failing to ensure that the co-op is on your mortgage provider’s approved list.

Once the sales contract is executed you will have 30 days to obtain a mortgage commitment letter. If the co-op isn’t on the mortgage institution’s approval list you may not receive the mortgage.

In the case that you for some reason sign a contract that is non-mortgage contingent, you will be in breach of contract if you can’t find a willing mortgage lender. You could lose your deposit under these circumstances. 

Mistake #9: Assuming the co-op board will accept your perfect board application.

You could have perfect credit, solid financials, and impressive letters of support and still be rejected without a board interview. Reasons for this could be: 

  • They may not be investor friendly and believe that you’re trying to rent out the apartment.
  • They may be concerned that your purchase price is low enough to reduce property value.
  • They may not allow pied-à-terre, gifting, or co-purchases financed by family members.

To avoid this do your best to find out the board’s limitations before making an offer. Once rejected there isn’t much you can do but collect your deposit and move on.

Mistake #10: Failure to check if there is a lien against the unit.

A lien is a right someone may have to keep possession of the property belonging to the seller until he/she pays a debt owed to the them. In this situation, the lien holder has to be notified of the closing. This can lead to delays. These delays can lead to higher mortgage rates if the mortgage lock expires in that time frame.

Mistake #11: Buying an apartment to generate rental income. 

This works great in California and Arizona, but not in New York City with co-ops. Once you pay your mortgage and maintenance you’ll be lucky to make 4% a year on your investment. Professional renovators may do better. But passive investors will just gain stress at best, a money pit at worst. 

It may be shocking and overwhelming to discover how complicated and difficult it is to buy an apartment in New York. Keeping these 11 mistakes in mind should help make the process a lot smoother.

All Area Realty Services is New York City’s leading real estate management company specializing in full-service professional property management for cooperative and condominium boards in the Manhattan area

 

 

Topics: Buying a Co-Op, Selling a Co-Op

Possibly, the One Downside to Living in a Co-op

Posted by All Area Realty Services Team on Jun 18, 2018 2:49:16 PM

Living in a co-op building can be a great opportunity for many New Yorkers. The downside to living in a co-op is having to share building expenses regardless if the expense improves your way of living or not.

A recent example of this was for a New York City building in the West Village of Manhattan. The co-op board wanted to start a project that would put central air-conditioning in each apartment. The project was going to cost $300,000 – which would be split among all the homeowners.

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While it sounds like this would be a no-brainer “Yes” among all homeowners, what wasn’t put into consideration was some homeowners already paid for central air conditioning to be put in their individual units in previous years. In those instances, the homeowners who previously paid central air would now be chipping in for their neighbors central air. Some argued this wasn't fair.

When you become an owner of a co-op, you, along with all the owners, are expected to look after the entire building and plan for the building's future. In this case, the homeowners  who opposed this plan didn't see the value the central air-conditioning would bring to their individual units, especially if they had already paid to install it themselves previously.

The same could be true for co-ops who need to have elevators improved, common area maintenance, building repairs, etc. While these areas may not affect the individual apartment itself, the expenses do. Even if an owner doesn't use the elevator, let's say they prefer the stairs, they are still expected as this is considered maintaining, updating, and investing into the building - as it is an asset. 

If you are in the market for a co-op, the lesson here is to make sure you speak with you real estate agent so that you know what to expect. Ask your agent what is included and/or expected of you as an owner should you buy the unit. Ask about how situations like this were handled in past years, and if all owners were happy with the results.  

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area. Contact us today if you're looking for a professional property management company. 

 

Topics: Co-Op Board, Co-Op Building, Buying a Co-Op

Can You Work From Home If You Live in a Co-op?

Posted by All Area Realty Services Team on May 4, 2018 2:56:54 PM

With new home based businesses launching every 12 seconds, and statistically 80% of all businesses reportedly going virtual by 2020, how do you stay compliant regarding where you can conduct business, yet still make a living? This is becoming a common question many are facing. Without having a federal compliance, every state has different rules and regulations pertaining to the occupations allowed to operate from home based business.

If you are searching for a new home, and work from home, ask your real estate agent for your states regulations.  If you already live in a co-op and are thinking of starting a home based business, you should ask the property management company that services your building for guidance and advice. A professional property management company will be well-versed regarding these laws and regulations. 

As an expert property management company, All Area Realty Services we are going to share a basic overview when it comes to setting up shop in a co-op in New York. 

What Occupations Are Not Allowed to Have Home Offices In New York?

In New York City there are various laws and restrictions in place for people who want to operate their businesses from their homes. Here is a list of the occupations that are not allowed to have home based offices:

  • Public Relations (PR) Agencies
  • Barber Shops
  • Beauty Parlors
  • Commercial Stables or Kennels
  • Depilatory
  • Electrolysis
  • Interior Decorators Offices
  • Ophthalmic dispensing
  • Pharmacy
  • Real Estate
  • Insurance Office
  • Stockbrokers Offices
  • Veterinary Medicine
  • Daycare Businesses
  • Multiple Employee Businesses *check the law for how many employees as this will determine if you can have employees come to your home or not*
  • Businesses that require numerous deliveries

What Occupations Can Have Home Offices in New York?

With such a large list, you might be thinking, “Gees, what is allowed?” These are occupations that are compliant with the New York City laws:

  • Personal Consulting – computer based businesses
  • Copywriting
  • Journalist
  • Researcher
  • Therapy and Counseling Services *this is determined per building*

iStock-508291726Your co-op board cannot send you a cease and desist letter asking you to quit using your home for work unless you fail to comply with both building and city laws. An example of where a cease and desist letter would be appropriate - if you're teaching music lessons in your home and your students are loitering in the hallways, common areas, or lobby. This could be a violation of your building laws and the co-op board members have the right to ask you to conduct your services/business elsewhere.

Should You Tell A Co-Op Board During The Application Process That You Plan On Working From Home?

Yes. It is a good idea to be upfront about the type of work you will be conducting in your home. There are some buildings that promote a work/home balance and some that are very much against it. It all comes down to the building style and the foot traffic or noise you may be causing. Most boards do not want the extra foot traffic. It can cause concern and alter security measures for other co-op owners.

Some boards will let you get away with having a home based business if it does not become a distraction or inconvenience for other residents. Be friendly with your neighbors and let them know what you do. This will help them feel comfortable, keep an open dialogue, and hopefully mitigate complaints to co-op board members or the building's property management professionals.

All Area is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area. 

 

Topics: Co-Op Building, Buying a Co-Op, Co-Op Board

Common Co-op Board Interview Questions

Posted by All Area Realty Services Team on May 1, 2018 4:30:26 PM

Most applicants don’t make it in front of a co-op board due to a rejected application. But those who do have the opportunity to be interviewed by a co-op board should know what to expect, and go prepared. 

The interview is the last step of the application process and it’s really a meet and greet for the board and potential buyer. The boards job is to determine if the applicant is “normal” enough to fit the bill of “ideal buyer.” To help with questions, we're going to share a few common interview questions and recommendations for responses.

iStock-803192850Question: How do you like your job?

When you’re asked how do you like your job, this is not the time to go into great lengths about the current office drama, new manager you don’t like, or issues with your pay. Be short and to the point about how you enjoy your job and plan to stay there. 

Question: Are you planning a renovation?

Keep any renovation ideas to yourself and expose them after you’ve received your keys. It is aways better to make decisions about renovations and projects one you are an owner and have a good understanding of your building, co-op board, and the rules and regulations of renovations

Question: Do you plan to be a board member?

While you don’t want the board to feel you want someone else’s position, you also don’t want them to feel like you’re never interested in serving. Keep a neutral reply by simply stating, “If the opportunity arises and the board feels I am a great candidate, I’m open to discussing the opportunity when approached.”

Remember to be professional, polite and neutral. And if you are overly nervous, ask your real estate agent for a little coaching before the big day.

All Area is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area.

 

Topics: Co-Op Building, Buying a Co-Op, Co-Op Board

Illegal Questions: What Can't A Co-Op Board Ask?

Posted by All Area Realty Services Team on Apr 5, 2018 1:21:20 PM

When you apply for a job, you are often interviewed by the HR or hiring manager for that position. The same is true with a co-op application. In a co-op building there is a co-op board that will interview you for the property you are interested in purchasing. That co-op board, much like an HR person has regulations and laws they must abide by.

In most cases, the co-op board members will be familiar with the laws and regulations for the interview process. Occasionally, you may encounter a board member who slurs verbal vomit and forgets there are laws pertaining to the questions asked. When this happens, it is important that you know what is legal and not legal. General rule of thumb – if they can’t ask it during a job interview, they can’t ask it in a co-op interview.

iStock-843534164Illegal Topics of Discussion:

  • Age
  • Marital Status
  • Race
  • Color
  • Religion
  • National Origin
  • Citizenship/Green-card/Visa/Alienage
  • Sexual Orientation
  • Military Status
  • Disability
  • Occupation Choice

If any of these topics are brought up by the board, remember you have the right to omit an answer. If you are uncomfortable or feel you’ve been treated unfairly, speak with your real estate agent  regarding the situation. 

Examples of Questions a Co-Op Board Shouldn't Ask:

  • “Where are you from originally?” 
  • “Do you cook a lot of ethnic food, or food from your culture?”   
  •  “Will you be requiring any extra assistance from the building staff?”  (in reference to a disability)
  • “Do you plan to have kids?” or “Do you plan to have more kids?” 
  • To a single buyer: “Do you plan on having many guests?  Will you have overnight guests often? Will you be giving a key to anyone?”

If your interview has a few awkward moments due to invasive and/or illegal questions, your real estate agent may discuss this with the co-op board and get you a second interview where everyone can perhaps start with a clean slate. Your agent could smooth things over, but if not, your agent may recommend a new property all together. If this is the only property you were interested in, consider keeping your options open. Not all interviews mean you are going to get accepted. This is simply the last step of the application process. So even if things are clarified and a second interview goes well, you still may not be accepted. 

If you are a co-op board member and are looking for a good property management company to help you manage your building, contact All Area Realty Services. We'd love to hear from you. And please subscribe to this blog for more useful information and tips to help co-op boards. 

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area.

Topics: Buying a Co-Op, Co-Op Board

Co-op or Condominium – Which is Right for You?

Posted by All Area Realty Services Team on Mar 29, 2018 5:00:00 PM

Usually, homes in New York City are not large Victorian houses with white picket fences. Instead, your choices are between tall buildings which hold apartments and condominiums or an occasional townhome, brownstone, or loft. Roughly 85% of apartments for sale are co-op buildings. This means you don’t own your apartment. Instead, you’ve purchased shares of the co-op and the co-op owns the building.

If you weren’t born and raised in New York City, this can seem like a foreign concept, so we've decided to explain a little further...

Pros vs Cons of Buying a Co-op

Let’s discuss the pros first. With a co-op you do not actually own your apartment, which helps keep the prices lower than a condominium purchase. With a condominium purchase, the buyer owns the property and there is usually a property management company that handles the day-to-day maintenance (which co-ops do as well). In a co-op, you have a tax advantage of being able to write-off some maintenance fees.

iStock-589946802The cons of purchasing a co-op is you do not own your apartment and there is a rigorous application process that involves showing current and previous tax returns, bank statements, and every aspect of your financial life to strangers. And of course the often dreaded, co-op board interview. While a pro is that some of your maintenance fees can be tax-deductible, the con is maintenance fees tend to be higher than for those who purchase a condo. Another con is not having the ability to make extra revenue by subletting or renting out your apartment while you are out of town. Many co-ops have strict rules about if and when you can sublet your apartment.

Pros vs Cons of Buying a Condo

Years ago, condominiums were not common in New York City. But now in 2018, as new buildings are being built, more condos are popping up. A nice pro with buying a condo is the ability to have a mortgage payment. That’s right, it’s much easier to finance your purchase than it is to try and get approved from a co-op board. Forget board approval because in condo land, that’s not a requirement!

The cons of purchasing a condo is quite like the cons of purchasing a co-op, only the complete opposite. For instance, there are no maintenance fees that allow for a tax deduction, condo prices are more expensive, and there is a very small condo market available which increases sale prices.

All Area Realty Services is New York City’s leading real estate management company specializing in full-service property management for cooperative and condominium boards in the Manhattan area.

 

Topics: Buying a Co-Op, Buying a Condo