I looked her in the eye and sized her up like an appraiser doing square footage. I knew her type. She was tired of renting, or living with her folks or her ex-whatever. Now she wanted a place to call her own. She thought it'd be easy — mooks from Maine to Montana buy houses every day. But an apartment in New York City? This dame was standin' on Staten Island without a clue she was gonna run the marathon.
"Co-op or condo?" I asked, offering her a chair. She didn't seem the townhouse type.
"Does it matter?" she said, leaning in so close I could see the hunger in her eyes. I tried to imagine how that would go over in a co-op admissions interview.
"It matters," I said. "A condo is real estate, see? Unless you're paying all-cash, that means you take out a mortgage just like buying a house. But a co-op? Here's where things get interesting." She leaned back. I was losing her. I had to talk quick.
"A co-op can reject you!" I yelled, cutting to the heart of it. "It's a corporation — a corporation that sells shares! It's like buying stock — stock that just happens to correspond to such-and-such apartment! And you don't take out a mortgage — you take out a loan!"
I knew that was mostly a technical difference; lenders and the IRS basically treat them the same. But I had bigger news to give her.
"These corporations are like private clubs, sweetheart. If they don't like your finances, your reputation or anything else that doesn't involve discrimination based on race, religion, or a dozen other 'protected classes,' they don't have to let you in. They don't even need to tell you why. But if a condo association doesn't like you, it doesn't have a lot of slugs in its gun — mostly just 'right of first refusal' to buy the apartment out from under you and sell it to someone else. Still interested?"
"I hear you, gumshoe," she said. "And I still don't care. Co-op or condo. It doesn't matter. Not after what I've been through."
That did it — I'm a sucker for a hard-luck story. I agreed to take her case. That meant calling on my usual contacts: a real-estate lawyer, co-op and condo board members, a broker or two, and even a seller. This wasn't going to be pretty. But if she was going to buy an apartment in New York, she had to come with me and learn this all for herself. There was no other way.
The Broker: Trouble Is My Business
"If you're a first-time buyer, there's a lot of hand-holding." That was Kate Burton talking; she's a licensed salesperson at Halstead Property. I wouldn't have minded holding the dame's hand, but I didn't want to distract Kate. "Even with people who have bought before, they take a lot of paying attention to, since it's such a big financial commitment. It can be a $300,000 place or $3 million. Either way, it's a lot of money for them."
"People aren't born with this information," chimed in Miriam Sirota, a senior VP at Brown Harris Stevens. Good old Miriam. She'd been around the block, and then the block had been around her. What two of my favorite ladies were doing at one of my favorite watering holes, I didn't ask. I had other questions — like, "What's the first step? Before the lawyers or the boards or the grifters or the cops all stick their noses in, what does she have to do?" I said, pointing my thumb at the dame.
Miriam had an answer. She always had an answer. "They come to me and say, 'This is what I want, these are my needs, this is what I know and don't know about the market and what I want to spend.' And I tell them, 'Look, this place is great for what you want. And you can afford it.' Or, 'For this amount of money, there's no way in hell you're going to get what you're looking for.' Or, 'You'll never pass a co-op board. You need a condo.'"
"The first thing a broker needs to know when they meet a buyer is [the buyer's] qualifications," said Kate, eyeing the dame up and down like she wanted to hand her a business card. "Do they have a pre-approval letter from a bank? And then the bank, nowadays, also has to approve the building." This was new, and I thought I'd heard it all.
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?