Sponsor Sales in Your Neighborhood?
A: Looking for no board approval but can't afford the premium that condo's get in NYC? Then you need a sponsor sale! In short, a sponsor unit is a leftover unit from the developer that was held for whatever reason, and is now being sold. Since you are buying from the developer there is no board approval process.
According to Wallfly.com's Glossary: Sponsor Unit: Apartments that are held as an investment by the sponsor - the original developer who built the building or converted the the building to a co-op. Sponsor apartments are usually exempt from board approval.
In a co-op, sponsor units are called "unsold shares" and they can be marketed by the sponsor until they are all sold. This process can take many years in a co-op or condo when a converted building has rent-regulated tenants who are not required to vacate.
Typically, in a Sponsor sale there is:
Needless to say, you should discuss any sponsor sale purchase with your hired attorney to make sure you fully understand all aspects of the transaction, especially the fees that might be passed down to you!
Here are a few sponsor sales that might be in your neighborhood:
Price: $789,000
Size: 1,400 sft
Maint: $2,128
PPSF: $564
# Beds: 3
# Baths: 2
Price: $695,000
Size: 800 sft
Maint: $1,835
PPSF: $869
# Beds: 1
# Baths: 1
Price: $699,000
Size: 762 sft
Maint: $836
PPSF: $917
# Beds: 1
# Baths: 1
Price: $2,100,000
Size: 1,628 sft
Maint: $966
RE Taxes: $747
PPSF: $1,289
# Beds: Conv 2
# Baths: 1
Price: $1,175,000
Size: N/A
Maint: N/A
RE Taxes: $747
PPSF: $1,121
# Beds: 2
# Baths: 2
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Comments (5)
Hey Noah - what's the deal with sponsor sale co-op's being used as investment vehicles? I know that boards often won't give approval for a long term letting on a co-op apartment, but is this any different for sponsor sale apartments or do you fall under the usual "rules" of the board once you have bought the place from the sponsor?
Cheers!
Posted by Dave | October 25, 2006 4:33 PM
Great question Dave. I believe that the purchaser from the sponser unit gets exempt from the usual board process and min down payment requirements that existing sales in the co-op have to go through.
However, when the purchaser goes to resell, he/she must go through the same board requirements as any other existing shareholder in the corporation; that is, fin requirements, salary requirements, subletting rules, etc..
So, buying from a sponsor should NOT be used as an investment vehicle unless the board is already liberal to these types of policies!
Posted by Noah | October 26, 2006 9:33 PM
I'm in the midst of renovating and flipping a 'sponsor unit'. I purchased it about a year ago and have learned that my worst fear is a board imposed, flip tax, during renovation. This unbelieveable, yet legal, imposition of a tax that goes directly into the buildings coffers can get ya from behind at any moment. Also, check out how many units still remain unsold, which, as in my case, tend to be occupied by rent-stabilized tenants who can really live up to their bad name.
Posted by joshua | October 27, 2006 7:30 PM
Question: If you are buying a sponsor unit, can you do a piggyback loan and get away with putting no money down? (I know it is risky, but was curious).
Thanks,
-Dave
Posted by Dave | November 27, 2006 4:07 PM
Hi
I am interested in a condo that is being sold by a sponsor. My (buyer) broker has been very unhelpful, and I want to go with another broker. However, the sponsor has signed an agreement to protect the buyer broker for 90 days. The sponsor will also not pay the other broker that I use. Obviously its quite unfair for me as a buyer, and I doubt the credibility of a sponsor who will sign on such buyer brokers. Anyway, I guess you would know the terms of similar agreements, and I am wondering if there would be any clause that may divert the old broker's commission to the new one.
Posted by Pearl | April 13, 2007 5:03 PM