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October 5, 2009
CoOp Offer Subject to Financing?
Forgive me if this is the dumbest question ever but I'm a complete babe in the woods...In making an offer on a co-op apartment, I wanted to make the offer subject to securing financing. I'm preapproved and have the requisite downpayment so I don't expect any difficulties but I don't want to lose any deposit should I not receive financing. The Prudential Elliman realtor insists that an offer contingent on financing is not standard and is not acceptable. Is she right?
Comments
In my experience, a financing contingency is quite standard, though all-cash offers are certainly an advantage in negotiations. You should speak to a lawyer who you will use for the contract and the closing, who can advise you. This lawyer should and could give you specific advice for nothing, as part of the arrangement for the contract and closing. DO NOT pick your lawyer through the RE agent; get your referrals via other means. Hanley & Goble in Manhattan, on Broadway, is a very good firm (small partnership, been my lawyers for years); not the cheapest, but reliable, excellent and honest. They can quote you a flat price for a standard contract, etc.
Posted by: eFortGreene at October 5, 2009 10:51 AM
That goes in the contract, not the offer. Agree to price, then your lawyer forwards a contract that includes a mortgage contingency clause. Sellers sometimes balk, but not much leverage for sellers on this one in the current market. The realtor isn't balking at the contingency, but the fact that you are putting it in the offer.
Get a lawyer lined up so you are ready to go if you get an offer accepted. Do not accept referrals from the realtor for lawyers, mortgage brokers or inspectors.
Posted by: slopefarm at October 5, 2009 10:51 AM
Anyone who tells you financing contingency is not standard or acceptable is flat out lying to you. I wouldn't believe another thing that person said. Also, if they are telling you that, I would start being suspicious that there is something wrong with the property they are trying to hide that might be uncovered by the mortgage review.
My advice is to never make an all cash offer if at all possible. Weird things happen -- tenants don't leave, problems with the building or neighbors -- and having a mortgage contingency makes it alot easier to back out of a deal gone bad.
Posted by: slopenick at October 5, 2009 10:59 AM
Thank you SO much for your responses.
eFortGreene, thanks for the lawyer recco. I didn't want to use the attorney the agent referred me to but have been at a loss as to how to find someone.
Slopefarm, I really appreciate your distinction between including contingencies with the offer and with the contract because I honestly didn't know the difference. Just to be clear, an offer isn't binding, only a contract, correct?
Slopenick, let's just say I knew I was dealing with a snake after she told me that I wouldn't meed a mortgage contingency at all --not just in the offer but in the contract-- because there was 'no reason' I wouldn't be approved and that I 'couldn't believe everything people said' about how difficult it is to get financing.
Posted by: bitterlikehoney at October 5, 2009 11:36 AM
Believe that's correct - contingency in contract, not offer. NEVER take RE agent's lawyer recommendation.
Good luck. Stressful process but prices and rates are low. Good will come from all of the heartache!
Posted by: Johnny at October 5, 2009 11:56 AM
I assume it is 80 Winthrop again. You can tell what's her name at Prudential that she doesn't know what she's talking about. It would sheer lunacy to not have a financing contingency in a NYS sales contract. THIS IS WHERE YOUR LAWYER HAS TO EARN THEIR FEE.
Posted by: Crownlfc at October 5, 2009 12:04 PM
Right, blh. Either can back out before contract, but talk to your lawyer frist if you are thinking of doing so. Contract is binding and has specififed provisions governing default.
Everyone else -- you are reading this as a seller's rejection of a mortgage contingency. That is not what is happening here, at least not yet. Chill out and don't confuse the OP. It goes in the contract, not the offer. The realtor is not involved.
Posted by: slopefarm at October 5, 2009 12:12 PM
Actually after reading your comments again, The agent is right - An OFFER contingent on financing is a waste of time, just make sure it's in the contract.
Posted by: Crownlfc at October 5, 2009 12:17 PM
Thanks again everyone. I see where communication broke down now. Crowlfc, I'll just put it this way. I won't say what building I'm referring to, in order to avoid potentially upsetting the rather thin-skinned agent but more explanation and less pressure would have been a better tactic in speaking to me.
Posted by: bitterlikehoney at October 5, 2009 2:01 PM
sorry, I disagree with the majority. Your offer should contain any number of things, including mortgage contingency, board approval contingency, amount of down payment, etc. you don,t want to waste atty time if the seller really won,t provide a mortgage contingency. What do the think it is, 2007? lol...
And then tell the effin broker to stfu and present your offer to the buyer.
Posted by: denton at October 5, 2009 7:14 PM
Denton,
You have a point. I think this is where I was confused too--I don't want to waste anyone's time. If in the end, the seller won't agree to waiting for mortgage approval and all that stuff, wouldn't it be better to hash all of this out in the beginning?
Apparently not.
Posted by: bitterlikehoney at October 5, 2009 11:10 PM
In my layman's terms, I believe you make the offer for $X, and then you write the contract with the conditions of the purchase, which includes the contingencies on things like financing, inspection, etc. If you do a little Googling, you can find a survival guide to buying NYC Coops/Condos from a few years ago, which I thought was pretty helpful. Get the lawyer ASAP!
Posted by: meerkatz at October 5, 2009 11:53 PM
Obviously whatever Denton is smoking is also affecting his penmanship. Credit to slopefarm for actually reading the question, an offer is not binding to either party and since it seems as though you don't have a buyer’s broker, it's up to the owner, especially a seller's agent to vet the obvious: are you pre-qualified for a mortgage, (esp. for Co-op boards) your assets/liabilities, income, do you have the min 20% to put down etc.
She may even want you to put it in writing with the offer but a financing contingency is in your interest to have, however, it goes into the contract. Unless you can manipulate time and space, it is impossible to finance an apt without an accepted offer to begin with.
Posted by: Crownlfc at October 6, 2009 12:21 AM
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