From Elsewhere, With Love
Can foreigners buy co-ops? The conventional wisdom in New York is that they cannot. Exclusive agents show their co-op properties to foreign residents only reluctantly, and they will frequently insist that sales to non-citizens don’t conform to the standards of co-op Board requirements. Sometimes, of course, they’re right. Certain buildings do incline against accepting anyone as a new resident whose profile falls outside the narrow parameters of what they expect. But I find that more and more co-ops display openness to the notion of foreign purchasers and, interestingly enough, the higher the price point, the more flexible the Board tends to be.
A number of years ago, Warburg represented the seller of an Upper East Side penthouse in an intimate building with a notoriously fussy Board. Our first buyer, a very successful executive with a somewhat complex financial statement, was rejected by the Board without ever being met. When we placed the property back on the market, two enthusiastic buyers competed to buy the property (which did have wonderful views and a terrace) and drove the price up a million dollars over the deal which we had accepted the first time. One of these buyers, the ultimate winner, was a Dutch national, a green card holder but not an American citizen, with adequate assets here but the bulk of his net worth still in Belgium. We were able to secure him outstanding letters from a variety of well-respected people on both sides of the Atlantic, and he sailed into the building without a hitch.
Throughout Manhattan, buyers both foreign and domestic perceive the value in co-op purchases relative to their condominium cousins. Both the prices per square foot and monthly costs, especially where the condo does not have a tax abatement, are considerably lower in co-ops, and they are the only option for those who want the solid plaster construction and craftsmanship of the prewar era, not to mention the coveted locations on Park and Fifth Avenues or Central Park West.
Since many foreign buyers have multiple residences, the buildings in which they purchase must be agreeable to having part-time homeowners. As I mentioned above, the more expensive the unit, and fancier the building, the more likely it is that MOST of the residents have several homes and may well have chosen domicile in a more tax-advantaged state. Fifth Avenue is filled with owners who spend 184 days a year in Florida! In recent years, an increasing number of big Fifth and Park Avenue apartments have sold to European and South American buyers who have substantial assets in this country but own first homes elsewhere. Warburg and its exclusive global affiliate Barnes International
are beginning to focus more on the co-op marketplace as an option for overseas buyers looking for a home in our city. And with more and more banks being multinational, the difference between having your HSBC or J.P. Morgan assets in New York, London, Paris, or Hong Kong is really nothing more than the touch of a few keystrokes.
An entire generation of highly successful agents, especially in the downtown markets, has grown up knowing almost nothing about the intricacies of the co-op process, which requires skills and finesse which can only be learned in the doing. As a result, many buyers who would be reasonable co-op candidates are steered away from them by brokers who don’t fully understand how to manage the process. It’s a shame. Co-ops can offer value, beauty, and location to buyers from any part of the world. It just takes the right building, adequate assets in this country, credible references, and most importantly, an expert agent to orchestrate the process.