Accredited Buyer Representative
William Raveis Legends Realty Group
Buyers prefer condos because the rules are less strict. Investors who want to rent prefer condos since it is easier to rent after purchase. Foreign buyers usually need to purchase in condos because they can not produce the financial documents required by condos and banks.
Charles Rutenberg Realty
It is a matter of basic economics. Condos are considered more desirable and therefore in higher demand than coops. However, the supply of coops far exceeds the supply of condos.
Licensed Real Estate Associate Broker
450 7th Avenue Suite 1501
New York, NY 10123
This is a great question. You may want to refer to my previous answers to other questions explaining in depth the difference between co-ops and condos. As for the question at hand, "why are condos more expensive than co-ops?" there are several answers.
Many buyers today prefer condos to co-ops because co-ops have strict rules about subletting, who may purchase, pet policies, etc. Of the apts. you can own, about 75-80% are co-op. So simple supply and demand and the relative scarcity of condos makes them more expensive. Lastly, most condos are relatively new construction or new conversions, and costs today are much higher than when most co-op conversions occurred in the 1980s.
The most important guidance I can give you is that it is crucial to use a skilled, experienced buyers agent to guide you through the purchase process. It will save you time, money and aggravation.
Halstead Property, LLC
There are a number of reasons why condos trade at a higher price per square foot than co-ops:
1) When you buy a condo, you own the property outright. Therefore, you are directly responsible for any real estate taxes attached to the property, and have a great deal of flexibility with regard to property alterations/renovations, etc. With 'ownership' of a co-op, you are actually buying into shares of the building, which is set up as a corporation. Each apartment is allocated a certain number of shares, based on size, floor, outdoor space, etc. The shareholders are effectively taking on responsibility for an allocated portion of the building's mortgage.
2) Condo boards tend to be more lenient than their co-op counterparts. Therefore, from an investment standpoint, condos are more attractive because of the ease with which the property owner can sublet their apartment. Co-op rules vary form building to building. Some co-ops do not allow subletting; others allow 2 years of subletting for every 7 years that the owner lives there. There are many variations on co-op policies.
3) Condos generally require a 10% down-payment, with some even accepting 3% down. Co-ops, however, have widely varying levels of required down-payment. Most commonly seen in Manhattan, below 120th street, is a required 20-25% down payment on co-ops. This is important from an investment standpoint because a higher down-payment requirement rules out a significant part of the potential buying pool. For example, a $2million condo would require a buyer to have $200,000 to put down - a co-op asking the same price would typically require $500,000 down. Big difference.
4) Due to the leniency of condo boards in comparison to co-op boards, the closing process is generally faster for condo purchases. The co-op board process has a number of layers and can take quite a bit of time and effort. Additionally, in a co-op, any substantial renovations have to be presented to the board and approved. As mentioned above, you own a condo outright; therefore, you have much more flexibility with regard to renovations.
Note: Most NYC conversions after 1991 are condos. Prior to '91, co-ops were more common. Because of this, many prewar buildings are co-ops. If you find a prewar building with the condo distinction (like 190 Riverside Drive), you have a real gem!
Hope this helps. Feel free to reach out to me; I would be delighted to assist you or answer any questions regarding New York City real estate.
When you purchase a coop, you purchase shares within a corporation. You don't own the apartment, you have a proprietary lease. Co-ops are generally less expensive than comparable condominium apartments.
All prospective purchasers must be approved by the Board of Directors. The Board approval process is often time-consuming and rigorous -- requiring extensive information regarding finances, employment, and personal background. Monthly maintenance fees for co-ops are much higher than for condos. This is because the monthly fee includes part of the underlying mortgage for the building.
Many co-op boards limit the amount of the purchase price that can be financed and require higher down payments than are usually required for condominiums. It is harder to sub-lease a co-op. Each co-op building has its own rules, but many limit or forbid subletting.
When you purchase a condo you own that property. You would be a homeowner and have few restrictions. Condos are more popular in New York City. Each individual unit has its own deed and its own tax bill. Condos offer greater flexibility, but are often priced higher than comparable co-op apartments.
In most cases, buyers can finance a larger portion of the purchase price (up to 90%) and put less money down. With a condo you donâ€™t have to deal with board approval, although you do have to submit a board package with personal and financial informationto the condo board who has the right to waive first refusal. Rarely has a condo board ever not waived their right of first refusal. Monthly maintenance fees for condos are much lower than for co-ops.
Condos are generally more expensive than comparable co-op apartments. Monthly maintenance payments are not tax-deductible. There are fewer condos available in the New York City real estate market, which limits your options.
Feel free to contact me with any questions.
Licensed Real Estate Salesperson
Member of Real Estate Board of New York
770 Lexington Avenue, 10th Floor New York, NY 10065