Happy New Year!

Wishing you all a happy and healthy 2014!

I wanted to thank all of our wonderful clients who we worked with this past year.  I'm looking forward to helping many more of you purchase your homes in the year the come.

All the best,

Christian

Our new addition

Luca Hudson Bari - 10/18/13 - 7lbs 3oz

"The soul is healed by being with children"

-English Proverb

The Hunt - our client in the NY Times

Read about Allison's story in this weekend's Real Estate section.

Resources - Renovations

Some of the more common questions we are asked concern renovations.  While some buyers have experienced a renovation in the past, many are at a loss where to start; does this project require an architect? Do I need an interior designer? and the like.

I want to share this piece with you from Gail Green of Gail Green Interiors.  She imparts her years of experience and breaks it down...

Defining Differences: Decorators, Designers, Architects

The real satisfying part of this work is receiving these...

Christian,

I want to thank you again - for your patience, your support and guidance.

the whole procedure was easier because you were at my side.

I also thank you for the check ( which is very welcome with my expenses!).

neshikot  ("kisses" in Hebrew)

R

_______________________

Keith and Christian,

We want to thank both of you so much for all of your help, support, and endless patience, as we finally succeeded in acquiring a new home. We look forward before long to moving in and being able to have our West Side friends visit easily. We also believe our new address is a friendly place and we look forward to that as well.

Thank you also very, very much for your check, and Christian, for your nice note. You're right, it definitely beats a bottle of champagne! You two are consummate professionals and wonderful to work with. We'll be looking for any opportunity to recommend you to friends and acquaintances.

All the best,

H and R

_____________________

Keith and Christian -

We never got the chance to thank the two of you right after the closing as we started dealing with the contractors to get the apartment ready as quickly as possible.  We just moved in last week and wanted to take this opportunity to thank the both of you for your assistance in closing on our new apartment.  We could not have done it without your help and both of you were great in terms of getting us through the process.  Thank you and we will be sure to recommend the two of you to any of our friends that are looking to buy a new apartment.

D and L

Board Package Prep - Reference Letters

"How many letters do they want?!"

Adding to the long list of items required for a co-op (and sometimes condo) board application, reference letters, both professional and personal, can sometimes cause the most stress.  For sure, the reference letters are one of the most important parts of the board application.   After the financial statement and employment information, the letters will garner the most attention from the board members.  It is important to choose the authors carefully.   Consider those who will take the time to write a “glowing recommendation.”  For personal letters, friends, neighbors, and mentors are best (no family members).  Choosing references who also happen to be co-op owners is a bonus.  For professional letters, authors should be current or past colleagues or superiors.

FORMAT

The letters, both professional and personal, MUST be on letterhead.  For professional references, company letterhead should be used.  In the case that the company does not allow letterhead used for this purpose, the letter should be on the personal letterhead of the author.  Most people do not have pre-printed letterhead anymore, so the letter should just have a “header” including their name, address, and phone number.  The letters MUST be addressed to the Co-op board of directors, and start with “Dear Members of the Board,”  Example:

Board of Directors

99 East 99 Owners Corp, Inc.

Dear Members of the Board,

***All reference letters MUST be signed by the author!

CONTENT

Personal letters should tell a story about how the author knows the applicant and what are the qualities that would make them a good neighbor.  The more personal and in-depth the better, this is the chance for the board members to get a good sense of who the applicant is.  

Professional letters should say in what capacity the author and applicant work(ed) together and discuss the working relationship; highlighting the qualities in the applicant that make them successful and a dependable and trustworthy colleague.

ORIGINALS/SCANS

It is best to include the original letter in the package, but good quality color scans will suffice in most cases.

MARRIED COUPLES

In many cases combined personal letters can be used for married couples.  This is specific to each board application.

LISTING BROKER REVIEW

The Listing agent always has final say on the package before it goes to the board.  The theory here is that they have the “pulse” of the board members, and are also just another set of eyes to check for errors/omissions/additions.  *Keep an open mind for suggestions and feedback on the letters.  Sometimes changes or tweaks will be recommended!

Whereas much of a typical board application requires filling in basic information, and collecting forms/statements/etc, the letters are one area that require this careful personal attention.  If you are not sure who will write the best letters, get a few extra and pick and choose.  This is a great opportunity to impress the board through your references' kind words.  Take full advantage!

For sample letters, please email me.

Coming soon:

Letters of Introducion

Don't say the "B" word

Here's a pretty solid article from this week's NY Magazine which poses the question, are we entering another bubble in the NYC Market?

Real Estate Déjà Vu

It's a little wacky out there...

In the span of one week we had a client miss out on two apartments.  The first after offering $100,000 over the asking price (over 10% in this case) and the second was well over the asking price as well, in Gowanus!

Seller's and their agents are taking advantage of the limited inventory as buyers are scrambling for what is out there, especially in the 2+ bedroom market.  When quality, fairly priced apartments are coming to market the sharks are circling and cash (or non-contingent offers) have been king.  A recent NY Times article did nothing to calm the waters...

We are hoping that more inventory hits the market as it traditionally does in the spring, and things cool off, bringing some more logic and rational thinking into play.  For now, take this market with a grain of salt.

Board Packages Revealed - Part 2

(click here in case you missed Part 1)

How to Complete, and Support, a Co-op Financial Statement:

The Financial Statement (FS) set forth in the Co-op application, usually a standard REBNY form, is basically the personal balance sheet of the applicant.  It requires one to list assets and liabilities to determine net worth, and will usually have a section on income and monthly housing expenses to help the board members easily determine Debt to Income Ratio (DTI), a key metric*.  Customarily, this form is filled out in a more "rounded" fashion to a accompany an offer for a co-op in order to "vet" the potential buyer.  For purposes of the board package, there is no fudging or rounding, a to-the-dollar financial picture must be presented, and each balance/figure for each asset/liability/income stream must be supported by a current statement.

Some packages will specify how much/what type of supporting documentation they want (ie 3 months or 6 months statements, letter from bank branch, etc).  At minimum, the last statement for each balance should be provided (all pages of the full monthly/quarterly statements, even if they are superfluous, should be included).  A web "snapshot" will not suffice as a substitute for a statement.  Since the point of this exercise is to "back up" the balances on the FS, highlighting or circling the exact amount on the statement is a great idea.  We like to make it easy for them!  

Now, it does not matter if this number does not represent "today's actual current balance," it only matters that the numbers on the FS match the statement.  We run into this issue with quarterly versus monthly statements.  What if the last quarterly statement was from a month ago?  Should not matter, we just provide the last statement available and use that balance.

Regarding income, most packages require a letter from the current employer stating salary, position and how long with the company.  If any bonuses, deferred compensation, stock options, etc. are going to be listed here, it is necessary they be verified in that letter or other statement from the employer.  Bonuses can be tricky since they are often not yet determined.  In this case, listing the prior years bonus as an example is an option.  Applicants will most likely be providing two years of tax returns so for bonus-heavy positions past income will be certainly be scrutinized. 

It goes without saying that double and triple checking the math is important.  One thing to note is that the listing agent gets the final word on a package before submission (they have a great handle on the board and what they are looking for), so between the applicant and the two brokers, that is quite a few sets of eyes to make sure all the i's are dotted and t's crossed.  

The numbers are what they are, the Financial Statement is the opportunity to present them clearly, accurately, and in the best light to make the board's review, and ultimately their decision, an easy one!

*25% DTI and 2 years of Mortgage + Maintenance liquid Post-Closing are standard guidelines for what Co-op boards look for, although of course this varies.

Other FS line items that often elicit questions:

-Contract Deposit: Your 10% deposit you gave at contract signing is part of your assets.  It is good, and sometimes required, to show the proof of deposit in the form of a copy of the deposited check, or the line on your bank account showing the debit.  Obviously your bank balance should be net of this deposit amount.

-Credit Card Balances: If you have a credit card or Amex that you use and always pay monthly it is not essential to list the current balance (unless it shows up on a combined statement from your bank).  If you are carrying a balance of some kind, a statement should be provided.

-Personal Property: This is one item that usually does not require supporting documentation (sometimes the package will specifically state a threshold balance where you might have to itemize), so usually a nice round number is fine here.  If you have renter's/homeowner's insurance and your property has an insured value, that is a great number to use.  

-Auto: Provide a printout of the Blue Book or NADA printout to show the value.  If you have an auto loan, provide a statement.

Outside the Lines; what they don't ask for that you might need:

Other documents are often required, but not specifically asked for, on a situational basis.  Keep in mind, a lot of putting together a package is subjective.  The opinions of the listing broker are important as it relates to the specific building.  Experience as well as it relates to similar situations really helps in knowing what extra items might be asked for.

-Letter of Introduction:  a requirement of some packages, this serves to, well, introduce the applicant to the board.  What attracted you to this building/apartment/neighborhood?  Do you have a history with the area?  Short and sweet (of course addressed to the board, on letterhead and signed!), this a "love letter" to the co-op and would be placed after the title page of the board application (before the first requirement).

-Visas/Green Cards: for non-US citizens it is essential to prove you are legal to work/live in this country.  A copy of a Permanent Resident (Green) Card, or work visa can be inserted after the application forms section of the package.  The more the better here, if a green card application is in process, include the application.  A letter from an immigration attorney could also be helpful.

-Appraisal: another occasional package requirement (when financing), the bank's appraisal report may need to be included to accompany a conditional Loan Commitment.  The commitment usually has conditions that need to be met before there is a "clear to close."  If the commitment that is being included includes the appraisal as one of the conditions, that should be submitted as well.

Summing up:

Just as every person is unique, so are their applications.  It is not a perfect science, but by carefully following the guidelines, being thorough & organized, presenting the package properly, and understanding what both the managing agent and the board members are looking for, we give the applicant the best chance of an approval.  An incomplete package can cause real delays, especially when there are deadlines for monthly board meetings, contract timelines, and mortgage rate-locks dates that are all trying to be met.  

While the process is not enjoyable for most (pulling teeth and hot coals are often mentioned), it is a fact of life in the world of co-ops.  At The Burkhardt Group we do our best to make it as smooth as possible.  Sending the client a breakdown of the package requirements to get them started, being available for even the silliest of questions, and using technology to reduce the back and forth of paperwork makes the process more efficient and less painful :-)


Coming soon:
-Recommendation Letters
-Interview Prep

From UrbanDigs: 2012 Wrap and What to Expect in 2013

as always, great info from Noah...

Ringing in the Manhattan New Year / Rates to Surge??

A: Manhattan rings in 2013 with 4,495 active listings marketed for sale by brokers in the Rebny Listing Service, and 2,334 units in contract awaiting closing. I would look back at 2012 for Manhattan residential real estate and call the year 'the strongest since 2007'. The story is really all about the sustained decline of inventory with strengthening levels of new deal volume. Add it all up, and Q4 market reports from the big firms are all confirming what the real-time UrbanDigs tools have been saying all year long. Lets discuss the year in review and touch on the recent surge in 10YR treasury yields and whether that may ultimately drive lending rates higher.

So, 2012 saw Manhattan inventory drop from 6,319 units on market Jan 1st, 2012 to 4,495 units active on the market right now. We also saw the number of deals 'in contract - awaiting closing' jump from 1,936 to 2,334 that we see today.

With inventory so tight and demand not only holding up, but strengthening, its no doubt that leverage is in favor of the sell side for quality property that is priced correctly. In all real estate markets, its all about pricing. An ask is just an ask, and if a high quality product hits the market at an inflated asking price then the sell side won't experience the traffic or demand that the data seem to be conveying to us. Thats why its extremely important for brokers and their seller clients to be cognizant of building trends and pricing the apt based on relevant comparable sales. Otherwise, the sell side will be disappointed. Price right, price realistic and the market should produce traffic/bids. If it doesn't, re-check your pricing and marketing efforts.

On a neighborhood level below 96th, here is a list of the top performing neighborhoods by Pending Sales Performance in 2012 (strongest to lowest):

1. Tribeca --> pending sales up 54.2% in 2012
2. SoHo --> pending sales up 25% in 2012
3. Lower East Side / Union Square --> pending sales up 24.8% in 2012
4. Upper East Side --> pending sales up 24.1% in 2012
5. Midtown West --> pending sales up 22% in 2012
6. Upper West Side --> pending sales up 16.4% in 2012
7. Midtown East --> pending sales up 16% in 2012
8. Battery Park City --> pending sales up 13.3% in 2012
9. Murray Hill / Kips Bay --> pending sales up 3.7% in 2012
10. Chelsea --> pending sales up 1.1% in 2012
11. Gramercy --> pending sales down 8.2% in 2012
12. FiDi --> pending sales down 21.4% in 2012

Manhattan is in desperate need of inventory so I hope this message is getting out to potential sellers as we head into the 2013 'active season'. I can't think of a better time to list a Manhattan property for sale since the 2007 peak. 

Fears of a EU breakdown, an Asian slowdown, Fiscal cliff, etc., still exist but clearly are not impacting Manhattan real estate the way some thought it would. The reason is because there has been no selloffs yet! Nothing has gotten in the way of stopping demand for Manhattan property. Its been a progressive 4-year reflation now and we are sitting close to the highs of that long move. Two macro events that would disrupt this trend are:

a) a stock market selloff -- excluding unexpected disasters, a stock market selloff of say 20% or more is guaranteed to push potential buyers of Manhattan real estate to the sidelines. Serious buyers tend to either re-think how to price in the 'uncertainty' of the future into their bids or move to the sidelines altogether. Sellers dont want to make rash decisions so they either say no to these lower bids or remove their listing from the marketplace until things calm down. The combination drives pending sales lower and off-market trends higher -- exactly what happened in mid/late 2008.

b) a surge in lending rates --10YR treasury yields jumped from 1.59% to 1.94% over the last 30 days. We really dont know how our markets will react if/when rates rise noticeably, but there are new warning signs that this may start happening sooner rather than later. While lending rates are derived from movements in the mortgage bond markets, in low credit stress environments there is also a relationship between 10yr treasuries and lending rates; albeit at a lag. Right now I see yields on both 10yr treasuries and mortgage bonds surging.

Bloomberg is reporting, "Mortgage-Bond Yields Soar to Highest in Four Months on QE Doubt":

Yields on mortgage securities that guide U.S. home-loan rates jumped to the highest in almost four months as the minutes of a Federal Reserve meeting signaled the central bank's bond buying may end this year. A Bloomberg index of yields on Fannie Mae-guaranteed mortgage bonds trading closest to face value rose 0.07 percentage point to 2.34 percent as of 3 p.m. in New York, the highest since Sept. 12.

If history is any guide, lending rates will rise at a slight lag to these two market forces. So it begs me to ask the question, what happens when the conforming 30yr rate is 4.5% instead of the current 3.5%? What happens when the jumbo rate is 5% compared to the current 3.875%? We all knew rates couldnt possibly stay at record lows forever; yet the sustained surge in rates that many predicted is yet to come to pass. Time will tell, but for those that are in contract and expecting to close within 60 days, I would re-check those rates with your lender now and hope they haven't moved too much higher on you!

Timing any market event is a fool's game, so for now lets just stick to what the real-time data is showing. The demand is there, the inventory is very tight, and buyers are bidding up for views & full renovations. If anything changes with real-time production, I will report about it here on UrbanDigs.com. 

Cheers and wishing everyone a happy, healthy and successful 2013!

FOR THE FULL POST ON URBAN DIGS CLICK HERE

Board Packages Revealed: Part 1

I recently got a call from someone who read about us on StreetEasy.

"Are you the board package expert?" she asked.

"Well, I don't think I'm an expert, but I certainly do a lot of them." I replied.



It turns out she was purchasing a co-op studio, was unrepresented, and was up against the deadline for submitting her package.  I was able to offer a few pointers on preparing the financial statement, and on the assembly and presentation of the package.  I was happy to provide a little free advice, and while I don't know the outcome, I hope I got her going in the right direction.

What struck me was the anxiety in her voice.  It was like the process of providing the intimate details of her finances, and quite a bit of information about her personal life, to a group of strangers (who held the fate of the most important purchase of her life in their hands) was putting her to the test, and rightfully so.  While the prospects of this drive many to buy condos (which for re-sale still require a package!), getting the home they want requires that they participate in this nerve-wracking endeavor.  With close to 80% of Manhattan's residences being in co-op buildings, it's hard to avoid.

Ultimately, your financial picture, credit, job/income, and sometimes even your references (the parts that will most scrutinized by the board members) will be what determines an acceptance or turn-down.  There are other reasons for a turn-down, a sale price that is too low for the building's liking for example, but the majority of the time it boils down to the basics (debt to income ratio, post closing liquidity, employment history).  So how important is it to present a nice package? and what does this even mean?

I always look at preparing the package for a client as a test, a test that has to pass the first line of defense in this process, the managing agent.  The managing agent is the gatekeeper so to speak, checking that all the requirements set forth by the building are met before the package can go to the co-op board of directors.  This is where following specific instructions, double and triple checking the math, organizing the package properly, and completing every detail "as asked for," is key.  The board members ultimately will look at the meat and potatoes, and not care if the lead paint form was not filled out correctly; but all the little minutiae must be attended to, lest they delay the process by causing a package to be "kicked back" by the managing agent.

Presentation is very important.  The original copy of the package should have a cover letter, addressed to the co-op c/o the managing agent, and outlining exactly what is included; a table of contents basically.  The table of contents essentially is a translation of the list of requirements laid out in the co-op's board application; use dividers or tabs matching the table of contents to separate each section.  Lastly, never bind or staple the thing.  The managing agent most likely will scan the entire document, and be quite annoyed if they have to pull it apart.  A simple binder clip holding the stack together will suffice.

It goes without saying that it should be typed.   Don't have a typewriter anymore?  We use Adobe Pro to type info on scanned PDF's.  There are some free apps that you can use if you don't have the right software that allow you to create fillable PDF's from a scanned document.  Some managing agents have actually begun providing applications in fillable PDF format; imagine that!  The look of the application, not just the content, will represent the applicant.  Be neat!  Don't leave blank spaces, use "N/A" for lines you don't need to fill out, or a simple dash for unused lines of financial statement.  The devil is the details!

Part 2 coming soon...  including:

-How to complete and support a co-op financial statement
-Outside the Lines; what you might need to include that don't ask you for

Go to Part 2

Happy 2013!

Wishing you all a very healthy, happy, and prosperous year!

It's been a while since the last post as it's been a very busy year at The Burkhardt Group.  We wrapped up a year that saw over 30 deals closed, with 16 more in contract for 2013 and over $1,000,000 in rebates handed back to our buyers!

Personally it's been a year of tremendous growth and I've gained valuable knowledge.  Looking forward to sharing more of my experience here on this blog in the year to come...