Q. From a resale perspective, is it better to buy into a building with a liberal co-op board or a strict one?
A. While there is no clear answer to your question, our experts put forward several persuasive theories:
- Liberal. "Given the choice between a liberal and a strict co-op board in general from a market perspective, it is better to have the liberal board," says Roberta Axelrod, a real estate broker and asset manager at Time Equities. "Purchasers want to be approved and sellers want their buyers approved. Owners want to be allowed maximum freedom to live in their units as they choose to and are wary of buildings that are overly restrictive. On the other hand, no one wants to buy into a building where owners can't pay their maintenance so there needs to be a balance between no review and a building that gets a reputation for being overly strict. It is always best to have a board which is in line with the norms of the market."
- It depends. "If you are selling a studio or a one bedroom to the first time home buyer or someone wishing to use the property as a pied a terre, it is best if you don't have an overly strict co-op board," says Doug Heddings, president of The Heddings Property Group. "On the other hand, it is imperative to mention that strict co-op boards were the primary reason that NYC wasn't as drastically affected by the subprime mortgage crisis, as co-op board requirements are frequently more strict than those of the banks. In the high end market, many believe that a strict co-op board is an asset to the building community."
- Strict. "Strict implies fiscally conservative, so you're better off buying into a corporation--which is what a co-op is--that's run like a tight ship," says real estate broker Gordon Roberts of Warburg Realty. "However, you can only join a club that will have you as a member. I'd strongly recommend working with a broker experienced with co-ops so your financial qualifications are matched to the building you're interested in. That, and a real estate attorney who will scrutinized the board meeting minutes and financial reports and look out for your best interests. You want a building that is well-managed and offers a good quality of life, and that's usually a good investment."
- Neither. "Your real estate investment is most protected when the co-op board is made up of reasonable people who make sound decisions," says real estate broker Shirely Hackel of Warburg Realty. "You don’t want to live in a co-op where the board is either too lax or too strict. If a board is loosey-goosey and fails to set guidelines for renovations for example, or doesn’t put limits on the ability to sublease, then your investment could be in jeopardy down the road. On the flip side, if a board is deemed excessively demanding in its review of candidates and has strict summer work rules, both you and the person you sell to will need to have very deep pockets."
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