The problem with co-op boards trying to maintain price floors is not a new one. But it is a nasty one.
The New York Daily News underscored the point in chronicling the plights a while back of one Tom McClusky, who inherited a three-bedroom co-op in Bayside, Queens, as well as other apartment owners.
McClusky had listed the unit at $223,000 to meet the building’s minimum. When he tried to lower the price, his broker told him the board wouldn’t approve, and they didn’t, for a month.
A year and 20 prospective buyers later, according to the News article, the apartment remained empty at an asking price of $213,000. (From what I can determine, the co-op may at last have been sold.)
None of the other owners could unload their apartments because their boards were refusing to permit a transaction in which the price was lower than they demanded. McClusky board president, Ronald Kaye, was quoted as defending the policy this way:
We’re very sympathetic to the plight of the people who can’t sell, but the board has as much if not more of a responsibility to the ones who remain. The harsh reality is that what my neighbor sells for affects what I can sell for, and that’s something every co-op owner has to take into account
Countering Kaye’s and other boards’ position, Mary Ann Rothman, executive director of the Council of New York Cooperatives and Condominiums, told the news:
It’s counter-productive to both the co-op and the seller. Especially now, boards need to be more flexible with shareholders who need to be able to sell in order to move on. No one wants to sell at a price lower than they absolutely have to, plus the fact that a co-op that repeatedly rejects buyers will find that both the values will go down and that brokers will be more reluctant to bring in purchasers.
Of course, Rothman couldn’t be more correct.
Tomorrow: Weekly Roundup
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