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Sellers Make Co-op Boards Happy With Quiet Buyer Refunds

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We've heard stories since the downturn began of co-op boards refusing buyers when the board perceived the agreed-on sales price to be below a co-op's market value. But what about pretending a co-op is selling for more than it really is to make the board happy? That happens too! Brick Underground reports that one out of 10 co-op sales "are recorded at misleadingly high prices to appease boards defending their property values." So how's this work? Seller and buyer settle on one contract price, which is approved by the board and recorded by the city when the deal closes, and then arrange refunds or "decorator's allowances" to the buyer. The board and bank are aware of the goings-on, so everybody's happy! Except future buyers, who won't have any idea how much their apartments sold for last time around.
· 1 in 10 co-op sales inflated to pass board [Brick Underground]
· Co-op Turns Down Buyer's Bargain [Curbed]