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Ten Steps To Approval

1. Get It Right the First Time: Remember college days? Pretend you’re applying for early decision.  You only get one shot at the brass ring.  Ace it, and you can sit back and relax.  Blow it and your application goes back in the hopper and you could be in for a rough ride. It’s the same thing applying to buy an apartment. Get it complete and accurate the first go-round so the board has no choice but to say yes, and no reason to unleash a deeper probe that can only mean trouble. I know this sounds inanely simple, but from my experience it is the exception rather than the norm.

2. Set a Realistic Closing Date: By the time you’ve submitted your application, you’ve probably spent months looking, then months more negotiating contract and mortgage so  it’s like an overdue baby that you want delivered — yesterday. But remember the board hasn’t even laid eyes on your creation, and usually has at least 30 days to act, and arguably longer because most also have the to right to ask for additional information.

If there are really exigent circumstances, like an imminent rate-lock expiration or the need for kids to start school on time, your best bet is to explain in a cover letter why you need special consideration, rather than seeming to truncate board power by unilaterally setting a shortened closing date.  Some boards offer expedited review for an additional fee, not a practice I favor, but if it’s available a relatively painless solution.

3. Be Certain the Money is Real: This sounds too ridiculous to mention, but based on lots of applications I’ve seen, it’s not. If you are relying on the proceeds from selling your current apartment to pay for the new one, the money has to exist. Yet I’ve seen applications to buy million dollar plus apartments for ALL CASH when there’s only several hundred thousand dollars in the bank and a representation that the would-be buyer’s apartment is on the market. Come on folks.  You can’t blame the board for saying, SHOW ME THE MONEY.  If this is your situation, at the very least, most boards will demand you provide an executed sales contract as proof that the cash will be on hand at the time of closing.

4. Make Sure the Numbers Mesh: The key numbers that boards look for are INCOME and LIQUID ASSETS. Ordinarily, they don’t change in the time it takes to prepare an application. Yet not infrequently I’ve seen applications that give one set of numbers on the loan application, another on the net worth affidavit, and a third on the financial statement, or three different incomes listed in three different places or documentation that gives still another batch of numbers. Sometimes there may be a logical explanation for the disparity: year-end vs. anticipated next year’s income, salary including or separately listing bonus, pre vs. post-retirement income. The problem is the board usually has no way of knowing and will get agita at this kind of numerical hodgepodge, and the last thing you want is for them to have to run for a bottle of Pepto Bismol while they’re reviewing your application. So make sure the numbers are consistent throughout.

5. Provide Back-up Documentation that Supports the Listed Income and Assets: Forget the honor system.  Boards take nothing on faith, which is why they require buyers to submit bank and brokerage statements to prove that they actually have the money they say they do. Yet lots of times the documentation refutes the listed numbers or at least creates unnecessary confusion.  It could be something simple, like it’s unclear whether the contract deposit listed in the application is included in, or in addition to, the statement amounts. Lots of times the problem is that the statements lay out amounts differently from the way they have to be listed in the application so that whereas applications typically require that retirement and not-retirement accounts or cash and stocks be set out separately, statements may combine these amounts. If you’re smart, you won’t leave it to the board to wade through the pile and piece together the puzzle, but will make a tally sheet that recaps the statement amounts to comport with application Then all board members have to do is check off  the list.  

6. Don’t Mix Money: The only money that matters is how much the buyer has — and the guarantor, if there is one. Including assets of other family members or presenting the combined assets of husband and wife when only one is purchasing will only confuse the picture and delay the process because the board will likely require you to redo the application presenting stand alone assets of the buyer. For the same reason, if you are buying in one name, do not present assets in another name or entity.  Money is not fungible in this context because only the assets of the person on the contractual hook are reachable.

7. Don’t Stretch the Truth: Your mother told you this in kindergarten and it remains good advice. So don’t say you’re employed where you’re not, or earn more than you do or add a few extra zeroes to your assets or let the board know that you’re cheating the IRS. I promise you at least one person on the board will figure it out, and make you rue the transgression. Just as important, don’t lie about who’s going to live in the apartment. If you’re a couple buying the place for an adult child, say so.  If you’re moving in with your dog, say so. Co-ops have provisions in their proprietary leases and house rules about who can occupy apartments – and they will enforce them. Yes, I know all about the Pet Law that may allow you to sneak in a dog (see, Just Visiting) but honesty is still the best policy here.

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