First time home buying is stressful, and I say that from my own experience. You have so many steps to go through, so many papers to sign, so many checks to write, so many familial opinions, and of course so many questions! After everything is said and done, the feeling of accomplishment supersedes the anxiety and stress leading up to the moment, but the reality is you have to go through the hassle of the process to get to the finish line.
Now, imagine your first home was in a private neighborhood consisting of a mafia family. They would want to “sit down” with you and know your intentions for wanting to live in that specific neighborhood. You would be sitting down with the heads of the families and well they’d interrogate you, get to know what your finances look like, know what kind of family you come from, your family and children’s names, and well, you get the picture.
Why am I using the mafia analogy? Frankly, I often tell buyers in NYC that buying in a co-op in Manhattan is just like dealing with mafia. You submit your offer with a financial statement that will detail your monthly expenses, you bank account balances, your investments, basically everything but your social security number; this helps paint a financial picture of the buyer. Why do you need that? Simple, most co-ops would frown upon buyers with a DTI (debt-to-income ratio) of 35% or more. Most sellers won’t entertain buyers with a high DTI bc they are determined to sell and don’t want to waste their time.
Let’s be optimistic and say you’ve gone through these initial steps, get an accepted offer and you’ve moved on to completing the dreaded board package. What does this entail? Oh, you know reference letters from employers, friends, family, everyone but your shrink (maybe your shrink), tax returns, more detailed financial statements, K2’s if you have your own company, credit card bills (so if your using your Amex for pornhub cut that shit out now), just a slew of very invasive information you wouldn’t normally provide to strangers. Alright, so you’ve completed and submitted your board package, you now have to wait up to 30 days for a response. If you get a “no” bummer, BUT if you get a call to schedule your “interview” then you’re almost at the finish line! Let’s just break down a few things I tell clients to prepare for their interview:
- Dress as if you were heading to a job interview.
- Memorize your board package; your financial statements, who wrote you letters, etc.
- Do not offer more information then what’s asked. “Is this sky blue” you respond “yes” and that’s it. Don’t embellish the answer with things like “it’s a beautiful light blue with white clouds” just “YES”.
- Be calm, cool and collected.
- If you have a pet, don’t be surprised if you’re asked to bring them.
- If you have a needy significant other who practically lives with you, the board prob already knows about them and will ask to meet them too, ha.
Interview complete? Now you’re almost done! Don’t be surprised, say, if your financials were weak or you accepted “gift” money, (will discuss this in a later post) for the board to come back asking for you to place some money in an escrow account equivalent of up to 2-years in maintenance (common charges + taxes make up your maintenance)!
Sooooooooo, how’s your anxiety doing after reading all of this? This is literally just a microcosm of the co-op buying process in NYC. I haven’t even touched on the financing, communication with management, attorneys, and brokers, and so forth. Imagine buying your first home in co-op? Would you be able to pass the interview? I go through this on a regular basis with clients and I sometimes get nervous for my clients. They stand on pins and needles through the judgement process and for those first timers, they’re dealing with knowing they are now responsible adults that will have a mortgage to pay for the first time in their lives!
… I need a drink. Cheers!