To, after going through lord-knows how many open-houses you’ve finally found a co-op apartment that makes you happy. After a bit of negotiating, you’ve got an accepted offer and are now ready to move on to the next step, the co-op board application process. A rite of passage that every co-op buyer must go through, and it’s going to take more than a little preparation to get through. The ownership structure of co-ops makes this a necessary due diligence process for finding candidates that will contribute to the building’s financial wellbeing. To make sure you’re ready, here are ten easy steps you can take to make sure your board application goes smoothly.
Table of Contents
- Start Your Preparation Early
- Follow Directions
- Give Special Care to Preparing Your Financial Statements
- Include a Cover Letter and Table of Contents
- Flattery Can Go a Long Way (but only when it’s sincere)
- Don’t Leave Any Blanks
- Choose Your References Carefully
- Double and Triple Check Your Package Before Submitting
- Learn Whatever You Can About the Board Members
- Bring you’re A-Game to the Interview
Start Your Preparation Early
There’s a lot of paperwork involved in a board application, so the sooner you start prepping, the better. Your buyer’s broker can help you with this by informing you of all the documents you’ll need and ensuring that they’re well organized. There will be deadlines for submitting certain documents, so consult your attorney and doublecheck your contract to make sure you know what they are. The more organized you are, the less time you’ll waste between offer and closing.
It sounds obvious, but you’d be surprised how many board packages fail because the buyer couldn’t follow the instructions. Every co-op is different in how they handle their board application process, so make sure you carefully read whatever instructions they provide. Your agent’s brokerage should provide a general guide for the process. The buyer’s agent should explain any differences in how your co-op operates. Your agent can also help you by providing samples of application documents. The digital age means that a lot less needs to be printed than before, but not every board has gotten completely on board with this. Follow the guidelines and listen to your broker, they’ve walked buyers through this process countless times, so they know what they’re talking about.
Give Special Care to Preparing Your Financial Statements
The exact requirements of every co-op board will vary from one building to another. But one requirement you’ll always see are financial statements, specifically tax returns and bank statements. These are the bread-and-butter of every board package, so make sure you have yours in order. Most boards will want to see tax returns that go back at least two years, while your financial statement should be your most recent one. If you’re receiving financing, then you’ll need a commitment letter. Which you won’t get until you’ve passed the underwriting process of a mortgage application. The process can take 30-45 days in today’s lending environment. Remember, your commitment letter will come with an expiry date. Something that can become problematic if it lapses before you submit your application.
Include a Cover Letter and Table of Contents
Board members have to take time out of their day for reviewing applications. This is why they appreciate an application that’s well organized with a table of contents. It allows them to easily find what they need and get down to brass tacks. A cover letter that summarizes who you are, your income, your assets post-closing, and your debt-to-income ratio will also go a long way. The easier you make their job, the better the impression you’ll make.
Flattery Can Go a Long Way (but only when it’s sincere)
Don’t underestimate the effect a bit of flattery can have. Board membership is a voluntary position, so they obviously must care about the building and feel some pride in it. For your into-letter, add some lines about what you like most about the building and what living there would mean to you. Board members aren’t just assessing you on your financial qualifications; they’re also assessing you as a potential neighbor. A few kind words will add a human touch to your package and help them see the person behind it. Just don’t go overboard in your flattery and keep it sincere.
Don’t Leave Any Blanks
Nothing frustrates board members like incomplete information, so make sure you leave no blanks in your application. If they have to spend time going back-and-forth asking for more information, then it will stretch out your board application, make you look disorganized, and increase your chances of rejection. If something doesn’t apply to you on the application, then make sure you explain why that is. A common mistake all-cash buyers make is not including the required amount in their financial statement. It can leave board members wondering where the money is coming from. Another mistake is not explaining why your tax returns show you’re liable for people that won’t be occupying the apartment. In short, don’t leave anything unsaid.
Choose Your References Carefully
Reference letters are a crucial part of every application package, which is why they need to be rock solid. There’ll be an employee letter, which should come on company letterhead and state your compensation. A business letter from either a superior or colleague that gives detailed feedback on your attitude and performance in a work environment. Then there’s a personal reference letter from your current management company that will detail what you’re like as a tenant and whether you pay your bills on time. What makes a difference here is authentic references that give a real sense of who you are as a person. If your references read like boilerplate clichés that don’t say anything specific, then they’re doing you more harm than good. Chose references that know you personally and can give honest assessments of you. Your broker can provide examples of reference letters to help.
Double and Triple Check Your Package Before Submitting
Anyone who ever said perfection is a fool’s errand never submitted a co-op board package. Check and recheck everything before submitting because you only get one chance to make a first impression. Your broker will help with putting it together but have other qualified eyes give it a read over too. It can include the seller’s broker, the managing agent, and even your attorney.
Learn Whatever You Can About the Board Members
Any experienced broker will take the initiative with this one. But in case they don’t make sure they do some snooping. Co-op boards can be as varied as they come, so knowing a bit about them and how they run things can make a big difference when putting your package together. If you know anyone that already lives in the building, then try to arrange a meetup. That way, you can pick their brain about the board members and their own experience with the board application.
Bring you’re A-Game to the Interview
After you’ve submitted your board package comes the dreaded co-op interview. The thought of this might be causing you nausea, but if you’ve done your preparation, it should be a breeze. A lot of times, the board has already approved your application and just wants to meet you as a formality. All the same, you should be ready for anything. Arrive 15 minutes early, avoid being late. Dress appropriately, which usually means business casual. Make sure you know your entire board package back-to-front so you can answer any questions with confidence and firmness. Keep your answers short and to the point. It might be good to rehearse potential questions and answers with your broker before the big day.