Luxury Real Estate

Courtesy of Frederick Peters, President of Warburg Realty

Last week I wrote about the advantages of living in a co-op. This week I want to say more about the process of becoming a co-op owner. Buyers at every financial level feel trepidation about assembling a strong, coherent Board package which they must submit to the building’s Board of Directors for approval, and in my opinion many agents do not give enough guidance. So below I have put together a number of tips for making sure your Board package, whatever the specifics, is clear, concise, and doesn’t leave you tearing your hair out:

· Figure out up front if you really want to live in a co-op. Co-ops require FULL financial disclosure, a number of reference letters, and a willingness to adhere to the Board’s rules about renovation, carpeting etc. If this isn’t for you, buy a condo or a townhouse!

· Once you find the co-op of your dreams, make sure your attorney alters your purchase contract to give you at least 15 business days, not 10 as in the standard printed form, to prepare your Board submission. Two weeks is not an adequate amount of time to prepare a good package.

· Remember that the package is your calling card; it is introducing you and your family (if you have one) to a group of strangers. Try to make it as informative as possible.

· Most buildings are looking for at least four social letters of reference. Use those letters to let your friends really give some information about who you are and what you care about. What leisure activities do you enjoy? What sort of family background do you have? What are your philanthropic pursuits? If you have kids, what are they like? The more diverse information the social letters provide, the better. And the best letters come from other co-op dwellers, ideally members of their own Boards of Directors, ideally in the neighborhood of the property you are buying. Always get more letters than you need. At least one of them is bound to be only two sentences long and therefore not of much use.

· The business letters, of which two are usually requested, should be similar: as much career history as possible, combined with the traits which make you a successful and outstanding exemplar of the work you do.

· The most complex part of the Board package is always the financial statement. Most buyers do not keep a running tally of all their assets and liabilities, so assembling them all can be daunting. Here’s how to go about it:

1. Pick an “as of” date. All of your financial information will be compiled as of that date – it should usually be the end of the most recent month (so you can get back up bank and brokerage statements).

2. Begin to compile ALL your liquid assets and liabilities as of your chosen date. Make sure that EVERY number you enter onto the financial statement has a bank or brokerage statement to back it up. The numbers on the bank or brokerage statement must match EXACTLY the numbers you place on the financial statement.

3. Stock options or Restricted Stock Units MUST be vested to be counted.

4. All real estate assets should include either a broker’s letter or an appraisal confirming value.

5. Personal property, such as art, jewelry, or furniture, should be confirmed by insurance binders declaring the insured value.

These pointers, and a knowledgeable real estate agent, should have you well on your way to creating a seamless Board presentation. Every buyer is different, and creating your Board package is an opportunity to tell your story in the most flattering possible light!