How to Analyze an Offer on a Co-op as a Seller in NYC

Save 6% When Selling in NYC: https://www.hauseit.com/agent-assisted-fsbo/
1% Full Service in NYC: https://www.hauseit.com/agent-managed-listing/

How to analyze an offer on a co-op as a seller in New York City? We will demystify this topic in the following video. I'm Nick at Hauseit. We are the largest For Sale by Owner and Buyer Agent Commission Rebate company based here in New York City established in 2014. Visit our website, https://www.hauseit.com to learn about ways to save money when buying and selling here in New York City.

So you've received an offer on a coop apartment, congratulations! Now the hard part begins: how do you analyze an offer? There are many more considerations beyond the price and the contingencies particularly in the case of a coop. More specifically, your analysis of an offer of a coop must include an evaluation of the purchasers Debt-to-Income Ratio, a look at the post-closing liquidity as well as an analysis of any unique purchasing structure to ensure that all three of these factors are in compliance with your cooperative board's policies. Let's start with Debt-to-Income Ratio as this is objectively the most important. Your typical coop in the city is looking for Debt-to-Income Ratio around low mid-20's maximum low-30's. So, a typical Debt-to-Income Ratio of say 28% is okay for most buildings.

Stricter buildings will like 25% or less and your less flexible coop building maybe okay in the low 30's perhaps 32% or 33%. So if you haven't already it's essential that you figure out what your coop is okay with as it relates to Debt-to-Income Ratios. You can always find this in the purchase application and that should also said the board's minimum down payment for example as well as any post-closing liquidity requirement. But what if you're coop doesn't state a Debt-to-Income Ratio? This is very common in New York and in particular the purchase application might not make any reference to any restrictions on the type of income or the Debt-to-Income Ratio that maybe required. So if you don't have clarification here, you should proceed with caution.

You certainly can check with your managing agent. If you know board member you can informally reach out to them as well. Under the assumption that we don't know what your building is okay with, you probably want to operate what a strong degree of caution and try to find somebody who is below 25%. If you're purchaser has a large component of income from a bonus or overtime, it's important to check with your coop to figure out how they will allow you to utilize this in your calculations. Many co-ops will not allow you to use bonus or overtime income unless that income has a track record of at least 3 years. This is particularly challenging if your applicant is slowly ascending in the corporate hierarchy and let's say their bonus this year is considerably higher than in the years prior.

Now, this might be all good and well and actually a very good sign about your buyer, but for the purposes of the Debt-to-Income Ratio, the coop might not allow you to include all of this bonus income, certainly the amount that is much higher than the previous 2 years, you might have to exclude this from your calculation. Some coops will also have restrictions on passive income. In these buildings, the only income that maybe used is active wage income. This is designed to deter purchasers who many not have a real job who may simply be living off of investments or other sort of passive income streams so it's important to check with your coop as to the rules around this type of income.

No analysis of the Debt-to-Income Ratio would be complete without also thoroughly investigating the inputs on the expense inside of the equation. In particular, you'll want to double check that the monthly mortgage and maintenance payments used to calculate Debt-to-Income Ratio are accurate. Specifically, for the mortgage you want to make sure that the mortgage interest rate is realistic and that also they've used a particular interest rate figure and the correct offer price when calculating a down payment and the consequential amount of the monthly mortgage payment.

It's also important to double check as to whether or not a purchaser has any sort of recurring monthly liabilities such as a car lease or student loans. Anything that shows up on a credit report must be included for the purposes of a calculating the Debt-to-Income Ratio. So, even if your purchaser has a 25% Deb-to-Income Ratio excluding perhaps student loans is will not necessarily guarantee that they will qualify for the coop because if you add the student loans, that Debt-to-Income Ratio could hit 30% or as a minimum it will just go up more than what the board may permit.

NYC Seller Closing Cost Calculator: https://www.hauseit.com/closing-cost-estimator-for-seller-nyc/
.
.
Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
_
#hauseit #hauseitnyc