A co-op board in the Upper East Side has a policy requiring 20% down payment and debt-to-income ratio not exceeding 25%. How does this board policy affect the property's marketability compared to condominiums?
Correct Answer
C) It decreases marketability by limiting the pool of eligible buyers
Strict co-op board financial requirements significantly reduce the pool of potential buyers who can qualify for purchase approval. The 25% debt-to-income ratio is much stricter than typical mortgage lending standards (usually 28-36%), and the 20% down payment requirement excludes buyers seeking high-leverage financing. This directly decreases marketability compared to condos, which don't have board approval requirements.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
More Valuation Market Analysis Questions
The best method to determine fair market value is:
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