REBNY Financial Statement Instruction Guide

When you’re getting ready to make an offer on an NYC home, you need to be sure that your financials are rock solid. The usual way to accomplish this is by submitting a REBNY financial statement with your offer. This will be used by the sellers and the real estate agents to verify your financial ability to make the offer and close on a deal, i.e., that you can put your money where your mouth is. When purchasing a co-op, submitting a REBNY financial statement will be especially important for proceeding with your board application package.

For sellers, knowing how to read and evaluate a buyer’s REBNY financial statement will be crucial for deciding on whether to accept an offer, particularly when it comes to co-op sales. Below, you’ll find everything you need to know about what goes into this vital document and how you can prepare one.

What is a REBNY Financial Statement?

Don’t let the official-sounding name scare you off, REBNY financial statements are pretty straightforward. It’s essentially a balance sheet, no more than two pages long that acts as the industry standard for assessing a person’s income, expenses, assets, and liabilities. Every licensed real estate agent and broker in NYC can provide a copy of it through the Real Estate Board of New York.

Like any good balance sheet, the REBNY financial statement is broken down into multiple sections: assets, liabilities, monthly income, and projected monthly expenses. Each section is divided into two columns, one for the applicant and the co-applicant. The buyer’s spouse usually fills out the latter when making a joint purchase.

While condo transactions sometimes require the buyer to submit a REBNY financial statement, they’re more often seen in co-op transactions. Each co-op board will have its requirements on this. The co-op board must be 100% confident that a potential buyer has enough financial liquidity to cover their maintenance charges and mortgage-associated expenses post-closing. An experienced buyer’s agent will make sure to clue their client in on these requirements before proceeding with a transaction that might not be a good fit for them.

Failing to meet a co-op board’s financial requirements will result in your board package being rejected. This happens quite a lot in NYC, so it’s better to be prepared ahead of time by completing your REBNY financial statement in full.

How to Complete a REBNY Financial Statement

Desirable properties tend to sell pretty quickly in NYC. When you begin your home search, ask your agent for a REBNY financial statement that you can fill out. Having all your financial documents in order before searching can ensure competing buyers don’t outmaneuver you.

Below is a breakdown of each section in the REBNY financial statement and how you can complete it:

Assets

This is the first section. Carefully itemize and list out all your liquid and non-liquid assets. When the seller’s listing agent reviews this section, the key thing they’ll be looking for is to ensure you have enough liquid assets to cover the down payment, closing costs, and post-closing liquidity. Remember, each co-op board will have its requirements for post-closing liquidity that a shareholder (purchaser) will need after the closing. Most co-op boards want to see 1-3 years’ worth to cover their maintenance fees and other recurring expenses.

Liabilities

You will need to itemize all your outstanding debts and their corresponding monthly servicing payments for liabilities. This includes things such as:

Mortgage payments
Real estate taxes
Credit card payments
Any other loans owed to banks or others

Don’t try to hide anything here, as the building’s board will find out when they run a credit check.

Monthly Income

Carefully list all your sources of income, such as base salary, bonuses, dividend income, real estate income, and anything else like side-business income. If your income varies from year to year, you must seek clarification from the building’s board on how this will impact your application. Some boards use a two-year average when calculating a buyer’s debt-to-income ratio (DTI).

Your DTI will be the crucial information that the board will be looking at in this section. Most co-op boards look for a DTI of 30% or less when considering an application. However, it’s not unheard of for some boards to require a maximum DTI of 25% or even 20% in the most extreme cases.

Projected Monthly Expenses

This section must list all your monthly maintenance and mortgage costs for purchasing the apartment. Also included will be any other recurring monthly payments such as student loans, car payments, and other debts. Since your projected monthly housing expenses can change depending on which unit you are bidding on, it’s helpful to have your agent update this section as needed.

Itemized Schedules

Page two of your financial statement is where you will list additional information about your assets, liabilities, and other income that you stated on page one. For example, let’s say you have cash savings in multiple banks; you would need to list each bank and how much you have deposited in them. You will need to state the estimated fair market value, outstanding loan payments, maturity date, carrying costs, and rental income for real estate holdings. As for stocks and bonds, you must list the number of shares held, their description, and market value.

Do your best to depict values accurately. This can be more difficult with non-liquid assets, especially when investing in a private company. Retirement funds are relatively straightforward since co-ops don’t consider their liquid assets.

How to Review a REBNY Financial Statement as a Seller

For sellers who are reviewing a potential buyer’s REBNY financial statement, there are only really three things you need to focus on:

Debt-to-Income Ratio – Is the buyer’s DTI within the requirements of your co-op?
Income – Is there any unpredictability in it that would be a cause for concern?
Liquid Net Worth – Do they have enough liquid assets to cover the entire transaction and still have enough left over to meet post-closing liquidity requirements?

It’s well worth always taking the time to assess each buyer’s financial qualifications. Doing so will minimize the chances of a board rejection that will send you back to square one.

Final Thoughts

It’s understandable if you feel hesitant to share all the personal information you require when filling out a REBNY financial statement. Either way, it’s not something you can avoid when purchasing an NYC co-op. Even condo sales are starting to require them more often.

Sellers (and co-op boards) like to see well-prepared buyers and know the game’s rules. Submitting a fully completed REBNY financial statement as part of your initial offer is a great way to grab their attention and get the ball rolling. Instead of letting it discourage you, view it as a way to prove your financial qualifications right from the start.