Market Closed for Financial Professionals

Many of the people who, a year ago, would have been considered the most qualified in the city are having trouble finding co-ops that will let them in. Many Co-Op boards and mortgage companies and adjusting how the treat bonus money, no longer allowing the financial pros to count their 6 and 7 figure bonuses as income.

Just a few short months ago, most realtors in New York City would have given their eye teeth to land a banker or a stockbroker. Now, amid a less than stellar housing market, many of these same clients are being turned away as buyers. What would cause this shift in social and economic buying power?

The answer, it seems, is bonuses. As financial companies tighten their belts during the credit-crunch, co-op boards and many mortgage companies are reluctant to allow members of the banking clan to move in next door. Co-op boards are concerned primarily with the payment of maintenance fees, which often top 3,000 a month for the most sought after co-ops in the city. Without being able to guarantee that their income won't decrease, co-op boards just aren't letting brokers and bankers count their often six-figure bonus checks as income.

This leaves financial service professionals in a bit of a sticky situation. Many of them have already contracted for co-ops, and the co-op boards just aren't letting them continue with the purchase. Because of this, mortgage companies are also tightening their respective belts. A year ago, it wasn't unusual for a financial service pro to be permitted to count a high six-figure bonus amount into their annual income. This was a fast way for prospective buyers to increase their income, at least on paper, from 250,000 dollars a year to, in some cases, well over a million!

In addition to this, many finance companies are requiring that buyers pay a staggering 25 percent down payment. In some areas of the country, that's easily achievable, but in New York City, where co-ops in a good neighborhood can routinely run 2-4 million dollars, this becomes a bit of a stretch. You've got rather a perfect storm of circumstances causing these professionals to lose buying power. With mortgage companies requiring higher down payments, and co-op boards often requiring 6-8 months of maintenance payments up-front, it may be as late as 2010 when we see the financial service professional once again become Kings and Queens of the real estate market.