See you in the New Year. . . Happy holidays!
When co-op buyers see the words “sponsor apartment” in a converted building, their eyes invariably light up with anticipation. In fact, some buyers will specify that they want both to live in a co-op and to buy only a sponsor apartment.
For readers who are not in the know, the reason is that sponsor apartments will allow buyers to avoid having to undergo the tedious, time-consuming task of assembling inches thick of a board package, the rigors of a board interview and all the attendant anxiety.
Virtually all that sponsor wants to know is that you have the cash for a deposit and the means, including certainty of lender approval, of having the funds to close.
In other words, purchasing a sponsor apartment is a lot like buying a condo – smooth sailing. (Buyers of both condos and co-ops would be well advised to get into the weeds by reading the advice that lawyer Ron Gitter provides.)
But . . . (There’s always a “but,” isn’t there?)
Buyers expecting to move into a co-op without the cost and hassle of renovating or otherwise upgrading their purchase may well be in for an unpleasant surprise if they become infatuated with the space without a close inspection of the quality of the sponsor’s work.
Consider the following two renovated sponsor apartments on West End Avenue on Manhattan’s Upper West Side:
The first is on the 14th floor of a 1927 pet-friendly building in the low 90s with almost no amenities. This fully renovated one-bedroom unit has been fluffed up with refinished floors, granite countertops, ceramic floor tiles and wine cooler in the large eat-in-kitchen, new windows and an upgraded bath. River views from the bedroom are only a little obstructed. In addition, there are some side views elsewhere from the corner co-op. Everything says “new” in this apartment.
A closer look tells another story. For one thing, although the appliances in the kitchen have all been replaced, they are far from high-end – more like “middle-end.” As for the windows, they are not of a type to block out all street sounds. Perhaps the biggest issue is the lack of adequate closet space.
But wait – there’s more! Because the sponsor still owns other apartments in the building, it behooves purchasers to learn how many are left, how much control the owner has of the board and, therefore, how secure are the building’s finances. If the residents want to add a doorman, will the budget allow for such a change? Will the sponsor? How much maintenance has been deferred and, if a serious amount, for how much longer?
Listed in early March for $725,000, the apartment has exorbitant monthly maintenance of $1,231. Between the maintenance and the extraordinarily low commission of 2 percent offered to buyers’ brokers, this place will be available for some time.
In the high 90s, the second sponsor co-op is on the eighth floor of a rundown 1912 building with a live-in super who seems to take his responsibilities lightly. Worse, there is not much else than his purported presence in the category of amenities.
This one-bedroom apartment also has fresh paint, newly refinished floors and a gut-renovated kitchen in addition to a dining room. But run your hands along the walls to discern how cheap is the paint. Look at the doors, and at least two of them are featureless hollow-core panels that never should darken a pre-war apartment, much less one that could be nice if tastefully improved.
Yes, the bath has been renovated, in a sense. Instead of replacing ugly tiles, the sponsor too obviously had them reglazed. There are smudges of construction materials everywhere in that room as well as an exhausted aspect that defies all the attempts at creating a new impression.
As for the kitchen, it’s an old story. The new cabinets are flimsy and bought off the shelf. The new appliances are stainless and probably work well enough, yet they don’t meet today’s higher standards.
The apartment went on the market at the end of January for $825,000 with maintenance per month of $866. And there it remains.
Even though purchasing a sponsor apartment has its advantages – and they shouldn’t be minimized – there is a price to be paid. As for price, sponsors such as the ones selling the units above tend to be overly optimistic and inflexible – or, is it avaricious? – so don’t expect a bargain.
If a sponsor apartment is in your sights, the wisest course would be to aim for one that is unrenovated, as Teri Karush Rogers of BrickUnderground suggests, and put up with construction hell. At least in that way, what you see at a glance is what you get.
Whether the sponsor and his or her property manager have taken to heart the best interests of the building’s residents is a whole ‘nother story.
(Originally published May, 21, 2010)
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022