Q & A with Dottie Herman

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Q1 - When an offer is made to a seller in a co-op building, is it necessary at that time to provide the seller's broker with financial information? Twice after I provided a rather detailed financial statement upon my broker's request, the seller then came back and raised the price 10%. My broker assured me that my financials met the criteria for the building and, in both cases, I met what the seller asked for or what the broker told me the seller would take. I believe the disclosure has been a disadvantage to me, and that after the sellers have seen my financials, they have been led to believe I would offer more.

A - Demonstrating your financial qualifications is a recommended way to help the seller feel comfortable when evaluating your offer, as it lets them know whether or not you have the financial credentials that their co-op would look upon favorably. What a seller will accept is not for the broker to determine unless specifically acting under the seller's instruction. If your offers are based on current data (comparables), and have been rejected, perhaps the sellers are not working with the same information. An alternative strategy may be to stipulate that upon receipt of a Price Agreement between you and the seller, you will provide full financial disclosure.

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Q2 - I am thinking of closing an old credit card that I never use will this hurt my credit? I am planning on buying a property and don't want my score to drop.

A - This is a good question, and the answer is yes, this could damage your credit score. Since this is a credit card and falls into the revolving credit category, when it closes you will lose the utilization allowance that the limit on the card gives you. If the balance-to-limit ratio on your aggregate revolving accounts is high, it will drop scores. Here is a good example of a consumer who had 3 credit cards:

• Card 1: limit of $10,000; balance of $5,000
• Card 2: limit of $5,000; balance of $5,000
• Card 3: limit of $5,000; no balance

Once you close Card 3, which has a $5,000 limit, the aggregate balance-to-limit ratio changes from 50% to almost 70%. This could drop scores 20, 40, or more points, depending on the rest of your credit and your original credit score.