I thought, in order to be price fixing, there must be cahoot. Who's the other party? Remember, the board has the right of first refusal. Buy it and resale it.

The main reason for a board to reject a low price offer on a coop unit happens to be value of the other units. When units are financed through a bank, there is a bank lender's questionnaire to fill to arrive to the right value of the unit (bank appraisal). If units have sold at a low price in a coop, banks will not be willng to lend money for a unit at a much higher value. Consequently, the price of the other units suffer. In a down or stagnant market, a low price may be rejected by some co-op boards in fear that the units will be devalued.

In a coop there is no right of first refusal. The Board just refuses for a reason or no reason at all. A low price is a common excuse in some co-ops.

AdC

You live in a co-op. Your apartment is in the same line as one for sale. You're about to put yours on the market, and suddenly the other guy drops his price substantially because he's desperate for an offer (maybe he used the wrong real estate agent who doesn't know the neighborhood and wasted 6 months of listing. Maybe the shareholder is selling it himself. Maybe he's in dire financial need and in danger of foreclosure). And suddenly, YOUR apartment is worth a lot less than it should be, because "the comps" reflect lowered pricing on his apartment. (This actually happened in our co-op; the second owner was denied more than $50K of sale price the very day before he was going to put his apartment on the market.)

Lowball prices can ruin a co-op's value really quickly. A board that's cognizant of its fiduciary responsibilities may feel it has no choice but to reject an offer it feels is too low. And yes, before allowing an offer that's too low to go through, I think the board might consider purchasing and holding on to it until the market's better if the co-op can afford it.

I agree with RLM. We had to do this in our coop and later found out the 'agent' wanted the unit for his own profit.

I don't think fiduciary responsiblity stretches to the point in which you will be protecting the market price of certain apartments when they are listed. There are many reasons why an apartment is listed and sold for less price:

1. You mentioned financial hardship of a particular individual.
2. The need to sell immediately to relocate rather than subletting or leaving an empty apartment.
3. You bought low years ago and have flexibility in the price you accept.
4. A handyman's apartment (i.e., unrenovated and in need or major work)on the same line v. a move-in, totally renovated apartment which commands greater price.

However, the main reason why Boards worry is the drop in appraisal value of apartments and the ability to obtain financing on units with higher prices.

Unfortunately, Boards do not worry nor have any power in forcing residents to improve their units and to keep them at a certain minimum statndard. This may be the cause of disparity in prices. The conditions of a unit are major considerations when selling a unit. I have seen units with the same layout and on the same line that require a minimum of $25K in basic updates and repairs. These units can only be sold at a low price so there is an incentive to renovate. As you may know, you cannot request a share loan above and beyond the asking price to conduct renovations. Consequently, unless you have the cash for renovations or you refinance the unit at a later time or request a personal loan at a higher interest, the unit may not be renovated.

I would say, Boards should be extremely happy when residents renovate and take pride in their units. Therefore, if the person buying the unit has the intention to renovate a neglected unit, tne purchaser will demand the market price at the time to sell. In the case of the shareholder who could not sell at a higher price, extra time will be necessary to find the ideal buyer or reduce the price if necessary if the wait becomes too long.

AdC

"...However, the main reason why Boards worry is the drop in appraisal value of apartments and the ability to obtain financing on units with higher prices...."

If I may add... that most of the time, it is a self serving concern as they feel the value of their own unit is being compromised, but as AdC pointed out, and I will plainly state, they may be too short sighted or narrow minded to make or draw an ingenuous assessment of the current situation and wind up doing more harm than good in the long run… Did that make sense!?

~AR

I agree with AdC, Right of First Refusal is in a Condo not in a Co-op.

If you have access to the Habitat article archive, read this:
http://www.habitatmag.com/archive/p_view_article.php?article_id=3803

An excerpt:

[A board member] asked, "Legally, can boards even set minimums?" In Manhattan and the Bronx, the courts have said, "Yes, you can." In Westchester, Queens, and Staten Island, it’s been, "No, you can’t." The logic in each case was contradictory. ... No higher court has ever reviewed the conflicting rulings.