June 20th 2010
The New York Times
IN an age when people reflexively turn to the Web to screen everyone from blind dates to baby-sitters, the Internet search has become a part of one of the most opaque and arcane screening processes of all: the New York co-op board review.
It is by no means a universal practice. Many co-ops, and the management companies that oversee them, say they do not routinely use the Web to dig for dirt on prospective buyers. They say the standard co-op application package — tax returns, bank statements, salary verification, credit check, reference letters and board interview — gives a complete and reliable picture of the applicant.
Information gleaned from Facebook, blogs or other Internet postings “is not pure data,” said Beth Markowitz, the president of Merlot Management, a company that manages about 32 co-ops and condominiums throughout Manhattan. Therefore, she said, it is not necessarily “true, accurate or unbiased.”
But as more and more buyers and brokers are learning, there is nothing to stop an inquisitive board member from typing a name into a search engine — and using what turns up to derail a deal.
That is what happened to Larry Silverman, a criminal defense lawyer, when he sold the apartment in a Manhattan co-op where he had lived as an upstanding shareholder for 17 years, and made an offer on a new one. He was already in contract to sell the old place, and his offer was all cash. Board approval seemed a sure thing, said Barbara Good, his broker, an executive vice president of Halstead Property.
Weeks went by, and the board did not schedule an interview. Mr. Silverman could not get anyone to tell him why. “I finally said: ‘Listen, there couldn’t be anything in my finances. I’m a licensed attorney so I have no criminal record. I told the board president that if I don’t get an interview, I’m going to withdraw my application.”
It turned out that a board member had done a search and pulled up news articles about a court case in the early 1980s. The defendant, Mr. Silverman’s client, was charged with insurance fraud and racketeering. The board member was convinced that Mr. Silverman had represented a mobster.
When the board interviewed Mr. Silverman, the member confronted him with a pile of information she had found online about that case and others. “How do we know one of your former clients isn’t going to come to the building and kill the children?” he recalls her asking.
Mr. Silverman says that he kept his cool, as one must do in board interviews. He explained that the case involved financial fraud, not murder, and that the charges against his client had been dismissed.
Eventually, he said, the board approved his application, but not before he had spent more than $25,000 on rent for a temporary place in an inconvenient neighborhood and put his furniture and possessions in storage.
Luigi Rosabianca, a real estate lawyer who serves as counsel to co-op and condo boards in New York and who has represented boards as well as buyers, said it was perfectly legal for a board to raise questions based on information from the Internet. However, he said, such information should supplement, not replace, the information gathered in the traditional applicant package.
Still, Mr. Rosabianca said, “there are benefits to availing yourself of online resources like Facebook and other social networks to conduct due diligence.”
He recalled a prospective buyer in an Upper East Side co-op who listed his occupation as gemologist on his application. A quick Google search found that he was, more precisely, a diamond dealer and that he had been involved in an incident concerning diamonds of questionable origin. The board approved him, but the information led to questions in the interview about his professional activities.
“I think the board did its job,” Mr. Rosabianca said.
Often the information that board members pull up has nothing to do with professional matters. Burke J. Smith, the founder of Your Net Coach, a company that helps real estate professionals use social media effectively, said that he had clients who had lost commissions that “they thought were in the bag” because of their clients’ photos or other postings on Facebook and other social media.
One broker he works with told him that she had represented a buyer who made an offer on a multimillion-dollar co-op. But, the broker said, the board blackballed the application because of online photos of the prospective buyer partying with friends.
Steven O. Goldschmidt says social networks provide his co-op with applicant information, pro and con.
But never mind photos of adults posing triumphantly with empty beer bottles or wearing underpants as hats: Brokers say some of the most eyebrow-raising online tidbits can involve children.
“Kids are really where you find a lot of the information that can cause some concerns,” said Steven O. Goldschmidt, a senior vice president of the Warburg Marketing Group of Warburg Realty, and a member of his Morningside Heights co-op board. “There have been one or two incidents when we looked at an application and then looked at the children. They were wild to the nth degree.”
In one case, he said, the applicants had a 16-year-old son. An online search found photos of him in full Goth regalia. That didn’t go over well with the board. Worse, the page contained “some language and referred to parties and to drug use in a manner that caused some concern,” Mr. Goldschmidt said. After the board raised questions, the family pulled its application.
Sometimes Internet sleuthing can work in the buyer’s favor. Shari Bornstein and Bryan Meccariello of Southington, Conn., recently sought to buy a one-bedroom in a small Upper West Side co-op building. Their plan was to turn it into a pied-à-terre.
The board was worried: No one in the building had ever used an apartment as an occasional residence. And the couple had a teenage son, Garrett. Would he be coming there — by himself?
When the couple showed up for their interview, the member who served as a spokeswoman for the board took them aside and told them not to worry, she had checked out the boy online and thought he was terrific, said Ms. Bornstein and the two agents who represented her, Holly Palance and Jennifer Roberts of Halstead.
Indeed, a Google search of young Garrett’s name yielded, among other things, a Facebook page for a hot-dog stand he runs and a local news report about a pedicab business he started. In the segment, he said he wasn’t in it for the money, but to provide a service for Southington residents.
Based on that impressive snapshot, the 15-year-old entrepreneur went from deal breaker to deal maker. “Anyone who could raise such a wonderful son would be a wonderful addition to our building,” Ms. Bornstein recalled two board members saying.
Mr. Goldschmidt’s co-op was also swayed in a positive direction by online intelligence. The prospective buyer in this case was a single mother with a teenage daughter. The apartment had one bedroom. Because of the close quarters, it didn’t sound like a great situation, but a Facebook search turned up “wonderful photos” of trips the mother and daughter had taken together. “It appeared they were very close and had a heartfelt relationship,” Mr. Goldschmidt said. The application was approved.
So what are boards looking for when they go surfing?
Mr. Goldschmidt said he refers to the professional networking site LinkedIn to round out an applicant’s picture. Among other things, résumés can be found there, and the recommendations from peers are useful, he said.
That, and the ubiquitous Google search, can turn up charities and political causes in which the person is involved. Usually the information doesn’t affect an application either way, he said, but it helps present a more complete portrait.
Of course, many people have privacy settings that prevent those not in friend networks from viewing the full contents of their profiles. But even with these barriers in place, Facebook informs members of “mutual friends.” Mr. Goldschmidt says board members sometimes call those mutual friends and ask for their impressions of the applicant. (He said he would not, however, ask a mutual friend to sneak him onto another person’s page.)
Brokers routinely scour the Web to head off potential problems. For example, if a client is seeking an apartment in a pet-free building, she shouldn’t have photos of a dog on her Facebook page. A prospective buyer who posts enthusiastic comments about, say, a secessionist rally, could cause a board composed of liberal members to wonder whether he would be a good fit. (Co-ops don’t have to give the reason for their rejections.)
Landlords, too, find the Internet immensely useful. Victoria Shtainer, a senior vice president of Prudential Douglas Elliman, and her husband were seeking a tenant to rent their luxury Midtown apartment. A young man described by his broker, a colleague of Ms. Shtainer’s, as “an Internet genius” wanted to do a deal.
As a precaution, the couple looked up the prospective tenant on Google. Strangely, given the fact that he was supposed to be very successful, they turned up nothing. Then they did an image search.
What they found, Ms. Shtainer said, “made my hair stand on end.”
There, staring back at her on her computer screen, was a photo from a Florida newspaper of her prospective tenant, along with an article recounting his arrest for threatening to cut off another man’s hands and genitalia if the man didn’t give him $200,000.
“Needless to say, we did not rent to him,” Ms. Shtainer said.