TOWNHOUSES

Mortgage Contingency

When sellers have a choice of buyers, they are likely to choose the one who offers the most straightforward contract. A contract that is not contingent on the buyer obtaining financing is particularly attractive. If you plan on taking out a mortgage for your purchase and offer a nofinancing contingency, it is wise to not only obtain a pre-approval for financing, but forward the building’s financial documents to the bank as well for approval. Buyers also have the option of waiving their appraisal contingency, protecting themselves if the building is ultimately deemed not financeable by lenders, while allowing the seller to protect themselves from an inaccurate appraisal.

Financial Statement

When your candidacy is being evaluated, cooperative and condominium boards will scrutinize both your offer and your financial condition. Therefore, during the bidding process you will be asked to submit your financial statement to the seller’s broker. Your broker will advise you to prepare this in advance and should give you a format to follow that includes your assets, liabilities, and sources of income.

Other Documents to Prepare

Co-op and condo boards require that the buyer have both business and personal reference letters. After having gone into contract, we’ll talk more about how to specifically tailor these to the building in question. You’ll also draft a cover letter to the board of directors, giving some introductory, background information on yourself and / or your family. Sellers may ask for verification of income and assets along with any offer as well. Lastly, establish a relationship with a real estate attorney and have their contact information ready when you submit your bid.

Multiple Offers

A bidding war can ensue with multiple offers when two or more buyers compete for the same property. This process sometimes drives the price beyond the seller’s original asking price before one buyer emerges victorious. I’ll help you devise strategies for handling these situations when they occur. *Gazumping is a term used in the UK and Australia when a seller (especially of property) accepts a verbal offer of the asking price from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price at the last minute, after previously verbally agreeing to a lower one. In either case, the original buyer has to either offer a higher price or lose the purchase. There is a common misconception that you are 'gazumped' if you agree to buy a property for less than the asking price and then another buyer agrees to pay more than your lower offer.