New York's Cooperative and Condominium Community
Buyers of co-op and condo apartments in New York City buyers are contending with serious, nerve-wracking delays in getting questionnaires and closing documents and having their board applications reviewed, making the process of closing on an apartment even more of a white-knuckle experience than usual, Brick Underground reports.
Many brokers say the backlogs are occurring because building management companies are swamped by a sudden surge in sales. Adding to the logjam: Some firms may be understaffed as a result of cutbacks during the pandemic, or have staff working from home, where they lack high-speed printers necessary to generate the long documents that are still required in some transactions.
“What used to take a few days is now taking over a week," says Erin Wheelock, an agent at KWNYC. "It's not their fault. (Management companies] are doing what they can, but there just isn't the manpower to handle the rate at which things are coming in."
Due diligence is done by a buyer's lawyer to make sure a building is in good financial health. To do this, he or she needs the questionnaire — a form typically filled out by the property management company. For a condo building, for example, it would explain what the common charges are, whether there are plans to raise them, if there are any current assessments or renovations expected. Wheelock says that for a unit in a co-op building where it usually takes three days to get a questionnaire a buyer recently had to wait nine days, adding, "We couldn’t go into contract until the attorney reviewed the contract questionnaire.” The delay, she notes, leaves sellers open to entertaining new offers.
In other locales, once an offer is accepted by the seller, the deal is locked in. Here in New York City, even if the buyer signs a contract, the deal cannot close until the seller signs the contract. To the chagrin of buyers, sellers sometimes send out more than one contract in hopes of getting a better offer.
Wheelock has some advice for buyers: Consider apartments in buildings with smaller management companies that oversee only a few properties because they may be working quicker. Or look at new construction, where you are buying directly from the developer and can gain some control over your timeline. You won’t gain complete control, Wheelock notes, because financial institutions are also slammed by the surge in sales.
The delays have even threatened mortgage deals. For a client of Bianca Fields and Evan Osur, agents at Living NY, it took eight weeks to get a co-op application approved, instead of the usual few weeks, and almost cost their client. “The delay put a lot of risk and stress on our buyer because she was weeks away from her mortgage commitment deadline," Fields says. "If management didn't turn their approval around in time, our buyer would risk losing her lower mortgage interest rate and having to start the underwriting process all over again,” Fields says. That, fortunately didn't happen. But the possibility added stress to the process.
“The business has shot up while staffing is at Covid levels,” says Doreen Feuntes, a broker at Douglas Elliman. “I have never seen delays like this before.”
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