You don't give them a reason why the Board denied their application, so why reconsider with conditions?.

Correct. However, when advised of their denial, instead of moving on, they respond with what if we did thid or that-rather that accept the decision and look for another unit. I don't understand why when the building is solid-yet there are better buildings out there.

We have had several such cases that I can recall. If they ask for reconsideration, without disclosing the reason for the rejection in the first place, we give them a few days to provide any further information they wish us to consider. If that further information is satisfactory to the board then we have reconsidered, otherwise we replied with a second denial letter, again making no comments and giving no reason.

Board Prez - As a board prez myself, I know that reasons for rejection aren't disclosed, but I think it's a waste of everyone's time to tell a buyer who wants to be reconsidered to submit any further info he wants. What if rejection was based on finances and he just submits more personal references? Or what if it was based on 4 factors and more info only satisfies 1 or 2 of them?

Unless you simply say, for example, you want 6 mos maintenance in escrow you can't tell a buyer you want better numbers. His finances are what they are. If you reject him again, he'd know it was because of finances. The same would be true if you asked for more info regarding any specific aspect of a buyer's application package.

Just asking for "any" further info is also confusing to the buyer. He doesn't know why you rejected him, so he doesn't know what you want or what to give you. Rejection is sometimes not very clear cut anyway and more info won't necessarily change that.

If a board has questions or key info isn't in an application package, a buyer should be informed of that before a decision about him is made. Otherwise, IMO, a package should stand on its own as submitted.

The original applicant was rejected for undisclosed reasons. However, the buyer REALLY wants the apt dispite our rejection. We did not ask for or require additional info, etc do to the d/i levels-realizing that there was nothing else that the applicant could offer to satisfy the requirements. The question is do we not acknowledge the reconsider request no matter what they offer or give in to the request which may occur everytime a rejection is made. There are many coop units out there, why don't they move on and find another?

Sometimes a buyer loves a specific apt, it's in the area he wants, it's close to family or work, etc. Some buyers have a hard time with rejection when they want an apt badly enough. Some people also have a problem with rejection, period. Or some may not be able to see their situation the way a board does.

We've had buyers and brokers call repeatedly (a couple times to the point of harassment) wanting to know reasons for rejection. It can be difficult especially if the seller wants to sell quickly or he's friendly with any board members. We just say we are not at liberty to discuss it and make it clear that it was a full-board decision. In fact, we stress to all owners that our board always acts as a team and no decisions are made by a board member independently of the others. This usually convinces a buyer to move on, at least it has for us, if they see they're up against the full board, not just trying to change the mind of 1 or 2 board members.

The only time we may think twice about a buyer is if he's acceptable in all other ways but his finances are borderline. In that case, we may ask for 6 months or 1 year maintenance in escrow. Btw, our policies also don't permit a buyer with a guarantor or parents or other relatives to buy an apt for an "adult child". To help avoid future problems for our coop, we expect all buyer packages and buyers to stand on their own.

Hear, hear! Board Prez makes eminent common sense.

If the applications are being processed correctly, a rejection for financial reasons will come before the board or admissions committee ever meets the applicant. Therefore even though the words are left unsaid, the reasons for rejection will usually be obvious.

By giving a borderline application an opportunity to "provide additional information", you are not disclosing the reason but you are giving them an opportunity to offer escrow funds or submit additional financial information that for any reason may have been missing from the original application.

I agree that applications should stand on their own and in most cases, rejected applicants will move on. However offering to accept any additional information softens the blow and makes it clear that unless they have something substantial to provide, such as a significant change in their financial circumstances, there is no point in pursuing the application.

What kind of conditions are they suggesting?

Are they offering to place 1-2 years of maintenance in escrow, for example?

If so, seems as though they're anxious to become residents of your building. I believe some co-ops set conditions such as that if an application looks good but there's concern over affordability.

I would say the decision is final. The worst thing that any co-op can do is accept individuals who may not be in position to pay a maintenance increase or an assessment if they were to take place. You do not want to have neighbors who are in chronic delinquency. You do not wish to take shareholders to legal all the time or have them "cry" they cannot afford anymore bare necessities or that they need to make decisions on essential services to survive and live in the co-op.

My take is always the same: If the picture does not look good or borderline promising to request an escrow, then WHY BOTHER?

I always feel that the Admission Committee may be making them a favor by rejecting them. Not the sweetest thing to do, but the best for the co-op and for them in the long run. The Admissions Committees of co-ops act in a financial evaluator capacity (not advisors), and this is the most important fiduciary responsibility that the Admissions Committee exercises.

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I'm thinking that this could be looked at slightly differently.

Everyone is looking for a home who's looking at co-ops. They're not looking for a rental, they're looking for something they can call their own.

Given the existing financial picture for home sales in the US, as well as the current employment picture, I'd say that potential Shareholders who are aware of their financial picture, willing to meet pre-conditions such as annual maintenance in escrow (and here, the Board has flexibility; it can require up to 5 years, for example, if any doubt exists on stability), and are still persistent and open to negotiation over terms (proof of liability insurance non-negotiable, as always)... may just be the kind of people you WANT in your building.

Co-ops are different than condos for a reason - their founding philosophy is vastly different. And that says - or should say - something about the "feel" of the building, and between its residents. I understand, and am all for, fiduciary responsibility first, second, and third - but let's not lose sight of the fact that the building as a whole is home to everyone in it. I think anyone would agree they'd much rather have residents who are interested in the building, interesting in its welfare, and interested in raising a family there, than having an empty apartment or one that's been on the market so long it makes the building look bad.

Another viewpoint heard from.

In my Co-op (111 units, 85% owner occupied and 10 corporation owned renters being phased out), we tend to encourage first time home buyers. We allow 10% down. We look more at home ownership costs as a percent of income. This also allows for unit transfers even in a down market. Our finances are in great shape therefore we don't need to assess for capital improvements. Therefore we don't necessarily need the extra financial cushion other than the emergency assessment coverage on home owners' policies which we require. We only have two units in legal for back payment for maintenance: one is a chronic un-occupied unit for a person who formerly needed city occupancy and the other involves a reverse mortgage. My opinion is while protecting the remaining shareholders – don’t also be a roadblock either.

I agree with all that you have stated. However, when you have an application in which your debt to income ratio is high, income is low and savings is similarly low for the current d/i, I would recommend that these individuals wait a year or two before taking a plunge OR look for a unit of lesser value that would satisfy their aspirations. Sometimes elimination or reduction of debt is better than looking for greater trouble.

I do not consider equity a problem: 0%, 10% 20% or 100% is not an issue if the mix is affordable to the individual at the end of the transaction. I had the experience of asking an escrow to a potential buyer who was giving 20% down. The person had a high d/i ratio,a good salary, no savings to speak of, and a high mortage+maintenance payment to make at the end of the transaction in spite of the 20% equity. The person was very upset with the escrow request and stated that 20% was sufficient to impress the Admission Committee. My response was as follows: ÿou could have given 10%, retain more cash in your savings for contingency or emergency and would have probably avoided the escrow.

Again, the mix and financial picture at end of the transaction is as important as the snap shot prior to purchase when dealing with these situations.

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