Home Buying in Chicago>Question Details

Danielle, Home Buyer in Chicago, IL

is it a good idea to go with a co-op?

Asked by Danielle, Chicago, IL Fri Apr 4, 2008

am a first time buyer. am looking at condos, but there are some co-ops, too. is it a good idea to "buy" a co-op in chicago or should i stick with a condo?

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6
Danielle,

This is very much a case of "beauty is in the eye of the beholder." Co-ops tend to be spacious homes in older buildings with sizable monthly assessments that often include real estate taxes. What I urge you to consider as you move forward toward your purchase is to contemplate what it will be like to sell a co-op. There will be very many fewer prospective buyers interested in your home for two primary reasons - the high monthly assessments and the amount of money needed to be put down for purchase. I am curious with respect to the co-op you are considering, how much down is mandated by the board? While some co-ops go as low as 20% down, many others demand half cash if not total cash deal. As you can imagine, this restriction significantly minimizes potentially interested parties.

I wish you the best as you sift through listings and move toward your decision.

Tom
1 vote Thank Flag Link Fri Apr 4, 2008
Co-operative apartments are the quiet gems in Chicago real estate for many purchasers. Provided you are aware of the legal description of a co-op and are prepared to be a shareholder, purchasing in a co-op is a great choice. Usually large spaces in well appointed buildings with a relatively low price tag. The sticker shock can come in the monthly fees. Before you go running away however, ask what is included in the monthly fee amount. Usually the big ticket item in the assessment is the inclusion of property taxes. Always ask the Realtor if property taxes are included in the monthly fee reflected on the listing sheet. Since it is a corporation, there is 1 tax bill. Each shareholder has a deductable amount for tax time.
Other items included in the monthly fee may be heat, door staff, parking, and even electricity (purchased in a bundle by the corporation and then each shareholder is charged according to usuage)

Generally be prepared for a higher downpayment. Many Lakeview and South shore Co operatives allow financing of shares but will require at least a 20% - 25% downpayment. Many Gold Coast co operatives do not allow financing and in addition, you must have a large amount in liquid assets to be voted into the corporation.

For financing, ask a Realtor that specializes in Co ops to recommend a lender to you. Many brokers and banks do not lend for this type of ownership.

Lastly, be prepared for a through screening of your assets. Since it is a corporation, the shareholders do not want to have to assume responsibiltiy of another shareholders shares should he or she become unable to meet the fees associated. A simple credit report will not suffice. Your Realtor can help you with this process.

I think co -ops are wonderful properties and should be considered!






5
0 votes Thank Flag Link Sun Apr 20, 2008
Yes, it is a good idea. given the fact that you have more square footage. For additional information try: Chicago Homes
0 votes Thank Flag Link Tue Apr 15, 2008
I had a co-op on the North Shore. The building was built in the 1940's but in excellent condition. The association was run very well and we had enough money in the building fund not to have any special assessments. The price of the unit was pretty low, under $150k but the assessments were on the high side, between $350 and $400. It included water, heat and property taxes. Buying into a co-op that is well managed is a great idea for the right person. Don't be put off by other peoples bad experiences but keep them in mind when selecting a property. Good Luck!
0 votes Thank Flag Link Sat Apr 12, 2008
If you were purchasing in New York ,then co-ops are sought after and are typically not difficult to sell. In Chicago, the situation is reverse. You can typically finance a mortgage in some co-ops for 10% down but there are many which require any where from a minimum 20% to 50% or more down. Note, there are just a few banks that will do co-op mortgages and you must check to see what mortgage lending programs they have as they are typically more restrictive than a mortgage for a condo.

Co-ops take a longer time to sell even though they usually contain larger space. The reason for longer sales time is the large assessments usually associated with these buildings. Be aware that your portion of the building's taxes are included in your assessment. Also, since co-ops are usually older buildings, many of them have taken out loans or have special assessments to do tuck pointing or special
repairs.

It is critical to review minutes for the last six to 12 months to get a good picture of how financially sound the building is as you own shares in the building and not outright ownership of your unit. And also to be considered is the requirement from the board to reveal all your personal, confidential financial data to a group of people on the board. Your income, what you have in your bank account plus items such as other assets may be asked for. Keep in mind, the board wants to make sure you can afford to live in the building as you will own a certain amount of shares in the building.
0 votes Thank Flag Link Fri Apr 11, 2008
There are people more qualified to answer this question, but it's my understanding that mortgages for a co-op are very difficult (if not impossible) to obtain so, unless this is going to be your last real estate purchase, you should probably be looking at condos. Hope this helps. -Mike Savage
0 votes Thank Flag Link Sat Apr 5, 2008
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