Judging by the amount of qualified buyers turned away by condo boards in 2011, it might be time to stop thinking of them as less stringent than their co-op counterparts. When it comes to purchasing a luxury apartment, the two are increasingly similar, and the experience of buyers and brokers last year attests to that. More people were turned down than ever, although not in the way that you might think; condo boards don't really reject people, they just use stall-tactics until buyers give up. Condo boards do this because the only way they can formally reject buyers is to buy the condo themselves - not exactly the most desirable option - so much to the consternation of well-qualified buyers, run-around tactics have emerged as the next best thing. While some of these tactics border on the absurd, savvy buyers of Manhattan luxury condos should come prepared to meet all the potential hurdles, no matter how unnecessary they may seem. In order to be prepared, here is an outline of the standards of many condo boards have changed.
First off, if you attempt to buy a luxury condo in Manhattan, don't be surprised if you have to collect an excessive amount of paperwork; brokers say that the main way that condo boards exert power is by asking for documentation, and their requirements for specific documentation now more closely resembles the high standards of co-op boards. For example, whereas in the past most condo boards required only the former year’s tax returns, now many ask for returns from the past 2 or 3 years. Furthermore, condo boards have become increasingly particular about presentation. Brokers say that some boards require colored dividers, for instance, and that if their criteria for presentation isn’t met, some applicants are actually getting rejected.
Speaking of new standards, monetary requirements have also reached new heights: In the past, most condo buyers were required to have approximately $50,000 - $100,000 in liquidity; now the number has been raised to the range of several hundred thousand dollars. And prospective buyers will need it. Condo boards now routinely ask for large amounts of money to be put into escrow accounts - one client of a broker who spoke to the New York Times was asked to put in more than $100,000 into such an account. It’s not uncommon for a condo board to ask for an escrow account to cover up to 10 years of maintenance fees, something which many brokers regard as an attempt to show potential buyers the door. Similarly, condo boards that formerly approved purchases involving parental guarantors now are no longer doing so.
Overall, if you’re planning to buy a luxury condo in Manhattan, be ready to jump through some hoops. More specifically, be prepared for the approval process to take 2 to 3 months. While condo boards have become increasingly picky in the current seller’s market, finding a great luxury condo in Manhattan is still well worth your while, even if it may require some frustrating steps to get there. But no matter what you do, don’t give up.