The disclosure dance

Editor's note: This article is republished with permission from The Real Deal. Click here to view the original article.

By CANDACE TAYLOR

NEW YORK -- The days of dropping by a Sunday open house on a whim may be numbered. Sellers, frustrated by lowball offers and by buyers who are "just looking," want to make sure they're dealing with serious apartment-hunters. As a result, more and more potential buyers are being asked to provide detailed financial information -- from their employer and salary to their debt ratio and savings -- before they're even allowed a peep at an apartment for sale.

"The listing brokers are scrutinizing the potential buyer before they even get to the building," said Michael Signet, executive director of sales at Bond New York. "It's a preventative measure [to keep sellers] from wasting their time with people who are just shopping around."

Other buyers might be serious but may not realize the apartment in question is too expensive, brokers said, thanks to the difficulties of getting a mortgage now.

However, the demand for earlier and tighter prequalification leaves buyers' brokers walking a tightrope between gaining their clients' trust and extracting the sensitive personal information sellers require.

"It's a difficult thing to ask for bank statements when you first meet someone," said Jorden Tepper, an executive vice president at Century 21 NY Metro. "But it's a necessary thing to explain."

Edith Nanazia, a sales agent at Bond New York, has recently encountered several different sellers who have asked her to fax or e-mail them her client's financial information -- including income and net worth -- before showing their apartments.

One client was barred from viewing an apartment until he gave the sellers not only his financial information, but the date he'd be prepared to close.

"They want to make sure they are not wasting their time by showing the apartments to anybody who is not qualified," Nanazia said. "Having a preapproval for a mortgage doesn't mean much."

Nanazia said she first received these requests several months ago, but they are now so frequent that she asks her buyers to fill out the Real Estate Board of New York's financial disclosure form -- a signed document that states a buyer's income, assets and liabilities -- and keeps it on hand in case sellers request it.

"It's becoming the norm," she said.

Sellers' heightened scrutiny reflects a growing wariness of buyers who are waiting for prices to fall further before buying, or merely looking for rock-bottom deals. Moreover, sellers may not trust other brokers to do a good job vetting their clients. ...CONTINUED

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