Sample REBNY Financial Statement for NYC
What is a REBNY financial statement and where can I find help and instructions for completing a REBNY financial statement? Where can I see an example of a REBNY financial statement?
Whether you are buying or selling an apartment in NYC, it’s important you know what a REBNY financial statement is and how to either fill one out (if you are buying) or review one (if you are selling). In this blog post, we explain everything you need to know about a REBNY financial statement. You can download an Excel or PDF version here.
What is a REBNY financial statement used for?
A REBNY financial statement is used by listing agents and sellers to evaluate and compare the financial strength of potential buyers. The statement itself is effectively a personal ‘balance sheet’ or statement of net worth. It will ask a potential buyer to provide information about his or her assets (cash, stocks, property, etc.), liabilities (mortgages, student loans, etc.) as well as monthly income (salary, bonuses, dividends, etc.) and projected monthly expenses.
Given the strict financial requirements imposed by NYC co-ops during the board application process, REBNY financial statements are most often used when dealing with the purchase and sale of co-op apartments. Virtually all professional co-op NYC listing agents will ask buyers to submit a completed REBNY financial statement as part of the offer submission process.
Co-op board rejections happen frequently in NYC, and the last thing you want is for the rejection to perhaps be a result of the buyer not necessarily passing all of the board’s financial requirements. Therefore, despite the invasiveness of the REBNY financial statement it’s actually in the potential buyer’s best interest to complete and submit this document.
Working with an experienced buyer’s agent (who also offers you a buyer broker rebate to save you money on the purchase) will help ensure that you are fully informed about the nuances and different requirements for each co-op before you’ve invested too much time in something which may not be the right fit.
PRO TIP: If you understand the differences between a condo and a co-op in NYC and wish to buy a co-op but bypass the board application process, you can do this by purchasing a co-op ‘sponsor unit’.
In general, for co-op sponsor units, condos and for new construction you will not be required to include a REBNY financial statement when submitting an offer. For these situations, a pre-approval letter, proof of funds as well as your offer level (price, % down and contingencies) will suffice.
What are the instructions for completing a REBNY financial statement?
If you are buying a co-op in NYC, you will need to complete a REBNY financial statement. We always suggest that you prepare the statement at the beginning of your search so that when the time comes to submit an offer you don’t lose out to faster bidders who already prepared their offer documentation in advance.
Under the assets section you will be asked to itemize and list all liquid and non-liquid assets for both yourself and any co-applicant (spouse, significant other, etc.).
When a listing agent reviews the assets section of the REBNY financial statement, he or she will be looking to see if you have enough liquid assets to cover the following items:
- Down Payment (usually 20% for most co-ops, sometimes more)
- Closing Costs
- Post-Closing Liquidity
PRO TIP: What is post-closing liquidity?
Many co-ops have specific guidelines for the amount of post-closing liquidity a new shareholder (purchaser) should have after closing on the apartment. If you are buying all cash, ‘post-closing liquidity’ simply means the amount of liquid assets you have available to cover the monthly co-op maintenance. If you are financing the unit, ‘post-closing liquidity’ means the amount of liquid assets you have to cover both the monthly mortgage and maintenance bills.
Co-ops often look for anything between one to three years of post-closing liquidity. In some cases, the amount the board is looking for is also related to how strong your ‘debt to income’ ratio is (more on this below).
Under the liabilities section you will be asked to itemize any debt you currently hold including the following:
- Notes Payable
- Unpaid Taxes
- Installment Accounts (i.e. Auto Loans)
- Loans on Life Insurance Policies
Sources of Income / Monthly:
The income section of the REBNY financial is very important because it allows a listing agent to assess your monthly debt to income ratio.
Debt to Income Ratio (%) = Monthly Mortgage & Maintenance / Monthly Income
In most cases, co-ops will require this ratio to be below 30% and often under 25%.
In this section, please list all sources of income including base salary, bonuses, dividend income, real estate income and any other income (stipends, etc.)
Projected Expenses / Monthly:
The projected expenses section of the REBNY financial statement is where you will list your estimated monthly maintenance and mortgage amounts for the proposed purchase. You will also need to list here any other recurring monthly expenses.
Because your projected maintenance and mortgage bills will vary depending on which unit you are bidding on, you our your buyer’s agent will need to ensure that this section is updated for each apartment you submit an offer on.
The itemized schedules section (page 2 of the REBNY statement) is where you list out more specifics about the assets, liabilities and other income that you stated on the first page of the statement.
Once you’ve completed the REBNY financial statement, it’s important that you and your co-applicant (if applicable) sign and date the form.
What is an example of a REBNY financial statement?
Check out https://www.hauseit.com/sample-rebny-financial-statement/ for an example REBNY Financial Statement in original formatting.
If I am selling, how do I review a buyer’s REBNY financial statement?
As a co-op FSBO seller in NYC, you’ll want to be extra careful and thorough in reviewing the financials of prospective buyers. The last thing you want is to sign an contract with a buyer who doesn’t stand a chance of passing your board’s financial requirements.
When reviewing the REBNY financial statement of potential buyers, here are some of the things you should look out for:
Debt to Income Ratio — is the bidder’s ratio below 25% or 30%?
Income — what type of income does the buyer have? Is the income heavily weighted towards bonuses or some other form of unpredictable income?
Liquid Net Worth — does the buyer have enough liquid assets to pay for closing costs, the down payment and a provision for post-closing liquidity?
PRO TIP: Does the unit you are selling require renovations? If so, the board may ensure that the prospective purchaser has sufficient net worth in order to comfortably pay for these renovations. In a case like this, you’ll need to be much more conservative when determining whether or not the buyer can meet the financial requirements of the board.
Please note: this article is not intended to serve as legal or tax advice. You should consult your lawyer and tax attorney for all aspects of your real estate transaction.