Bad Bad Board!
Owning a home in New York City is a privilege; I’m both a cooperative shareholder and a sitting board member. At times this can be tedious and challenging - I’ll be the first to admit that. But as a broker, I’ve learned that a well-run board can often equate to a direct influence on apartment value.
Let's take two real cooperatives in which I’ve just transacted, call them building A and building B. Both are similar: pre-war elevator coops in the same downtown neighborhood.
Building A has a stable, attentive, and caring board. As a result they have some of the “must have” requirements for a healthy building: strong financials, responsive management, and reasonable maintenance fees (for condos this would be common charges). From the upkeep of the building, to the added bonus of a great roof deck, buying a home there feels like a good investment. Getting financing is reasonably easy, helping the building to be liquid, and ultimately making it more valuable and easy to sell. As a result, the last three transactions in the building have all sold very quickly and all over ask. Case in point, healthy building equals healthy sales.
Building B has a rigid “set in their ways” board. While nothing jumps out at you on first glance, upon closer inspection, there are real issues at play. Firstly, the board refuses to adopt basic policies that would appeal to standard lending guidelines. As a result, the building is restricted to certain banks. This immediately invites doubt, suspicion, and of course limitations which all lead to capped value –more restrictions mean fewer buyers. Secondly, the board employs a management firm that is so like the board itself – inflexible – that communicating with them is nearly impossible and leads to delays, more doubt, and suspicion. On paper this building should sell really well: it offers an amazing location, cute apartments, and an opportunity to buy at a reasonable price point. Yet, a poorly functioning board handicaps prices which is a shame.
The major irony in all of this is that the sole purpose of the board is to act on behalf of the buildings’ best interests. Isn’t helping resale values without sacrificing integrity and community doing just that? While I understand not everyone is looking to sell their apartment, for many of us, it’s our greatest asset, and we should be doing everything we can to protect its value.
The lesson: optimize the board’s behavior to optimize the price.