… And why other co-op boards are loosening their restrictions

Some co-op boards may be beginning to loosen their standards in this market, increasing by a tad the ever growing competition for buyer attention.  For those of you limiting your search to condos due to notoriously strict co-op restrictions, might a small light be appearing at the end of the tunnel?

Yesterday you read Mitchel Askinas’ post on how some co-ops are tightening their reigns on the financial requirements to accept buyers, and the increasing underlying costs driving this trend.  Today, we thought we would address the other side of the equation and look at how other boards are bringing their guard down, so to speak.  For some time now, we’ve read about pleas to co-op boards to loosen their restrictions.  It seems that this may be slowly taking root.  Several agents we interviewed have noted a new flexibility, particularly when it comes to smaller buildings.

Here are some ways in which boards may be starting to bend:

• Sublets:  several small buildings in prime UES have been reported as now allowing expanded or unlimited subletting allowances, opening the door for investment-oriented buyers to enter the fray.
• Pets: on a case-by-case-basis, dogs are being accepted or policies are being altered altogether to allow pets
• Renovations: buildings have expanded the renovation window from merely a few Summer months to including Spring and Fall
• Foreign buyers: previously shunned by many boards due to the limited capacity to conduct background or credit checks, now they are slowly being allowed to trickle in, particularly if they bring more cash to the table
• Pied-a-terres:  now grudgingly allowed by some boards that previously did not accept them

These observations are not altogether contradicting the pattern of stricter financial requirements.  In an effort to speed up sales and demand top dollar, boards may be compromising on building policies in the trade-off for greater financial stability.  Such conciliations may indeed be quite reasonable in exchange for avoiding the declining shareholder value that would come along with having to accept lower pricing.

While we won’t call this a full-out trend just yet, it is a reminder to not rule out co-ops altogether based on their perceived limitations.  Keep in mind that each building and board is different.  Also remember that they do have a 65% market share in Manhattan.  If you’re frustrated with the inventory you’re seeing on the condo side and don’t mind the lengthier board approval process, you may wish to opportunistically include some co-ops in your mix.