CO-OP housing - good OR bad??

Asked by Karina, 06854 Wed Sep 10, 2008

Am I getting myself into something that's not worth it? AS a first time home buyer I found a co-op apt. that's really affordable and with-in my price range , but people seems to be on the edge when it comes to co-op - why?

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Mary Gai, Agent, Westport, CT
Tue May 13, 2014
CO-Ops in Fairfield County are less common than any other type of housing. Buyers also must go before the board and they can decide if you're worthy or not to "buy in". I don't understand why it's still legal to have that power over someone else that deems them fit or unfit to live in the complex. I also find that the ones I am very familiar with do not appreciate at the same rate as condos. You own shares in a company that has ownership in the real estate. when you buy a co-op, you don't actually own real estate. (although you pay taxes).
1 vote
hi, can I ask what does it mean still pay taxes. it can't help to return taxes?
Flag Sun Nov 15, 2015
Chris Farris, , Stamford, CT
Tue Oct 21, 2008
Marcie has some great points about the other differences between Co-ops and condos, but one more additional concern about the Co-op is that many of the boards in this area also don’t allow for rental of the unit. Meaning that if you no longer want to live there it can be complicated to rent it out and keep the property as an investment for the future. As where the Condo associations sometimes have limitations of the rentals it is usually easier to rent them out and hold on to the condo as an investment.

I would look in the long term investment of your property, everyone has different need and willing to different opinions, you need to look at your needs and consider a purchase that is right for you. I would like to help you if you still have any questions.
1 vote
Marcie Berson, , Fairfield, CT
Wed Sep 10, 2008
Co-ops are much less common here in Fairfield County than they are in major cities, such as New York, so people are not as familiar with them and that can make them seem "risky". When you are purchasing a co-op, you're buying shares in a corporation, not real property like a condo or house, which is a consideration. They can be more difficult to finance, as well, so be sure to check with your mortgage broker to see if you can qualify for a co-op mortgage. In a co-op the common charges include your share of the property tax and mortgage of the overall complex, as well as maintenance of the complex and sometimes heat & hot water (depending on the complex). All of these expenses make common charges high (in one Norwalk co-op complex they are around $1,000/month) so you need to factor that expense in to your monthly budget. Your finances will also be subject to review and approval by the co-op board, so be prepared to complete an application and provide them with lots of financial documents (tax returns, etc.). Not everyone is comfortable with that type of scrutiny by a group of their future neighbors, so think about that too. If a co-op is well maintained and financially sound, then it can make a good investment. Just be sure that you understand the co-op board's approval process and what your total monthly housing cost will be (mortgage, common charges & utilities) so that you can be sure that you're staying within your budget before you go forward with your purchase. You should also look at any condos in your price range, too, just to have something to compare it to. Feel free to contact me if you'd like any more assistance. It would be my pleasure to help you with your first home purchase.
1 vote
Irbys1230, Home Buyer, Norwalk, CT
Sun Jul 12, 2015
We have found a coop apt. in New Haven for my daughter attending college. She does not want to rent the apt, only have a roommate to help with monthly expenses. That is not renting and it is not subleasing BUT would a coop board not want her because she is looking for a roommate?
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Christopher…, Agent, Tarrytown, NY
Tue May 13, 2014
You need an agent that will educate you on the coop process.
there is nothing to be scared about if you are financially sound, have good credit, low debt, strong income, and decent reserves in the bank. Beware of too many chefs in the kitchen, speak with agents that do this everyday.

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Lr0915, Home Buyer, Port Washington, NY
Tue May 6, 2014
I'm also looking for a home to buy but do not want a co-op.

I'm well aware of the differences between co-ops and condos. But I don't like the idea of having a bunch of strangers who are not bankers or mortgage professionals going through my finances to decide whether or not my money is good enough for them. What makes them more qualified than people at banks or mortgage companies who do this kind of thing for a living?

Now some of you will no doubt chime in saying that they do this to keep undesirables out and to make sure you can truly afford the unit. My answer to these points would be that banks don't give loans to deadbeats. As for controlling who your neighbors are, what difference does it make in congested cities like New York, where I've lived for most of my adult life. I mean, you're more likely to hear your neighbors having sex through the walls as opposed to randomly ringing their doorbell to borrow a cup of sugar and to chat.

Also, this business of going through a persons finances with a fine tooth comb after they've been approved by a bank wouldn't really be an issue if people were allowed to freely sell their units.

On the one hand, boards reject proposed buyers because they object to the selling price of an apartment being too low. Yet on the flip side of it, co-ops are always touted as being cheaper than condos. So which is it?
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reelsdemo, , Stamford, CT
Thu Nov 29, 2012
Anyone know of any lenders who finance co-ops in Fairfield County? There are a slew of owners at Sylvan Knoll in Stamford (a Co-op) who are interested in refinancing. WAMU used to finance co-ops here but then Chase took over. Now Chase won't do the re-finance even though they currently hold the co-op loans for many at Sylvan Knoll. Makes no sense. If anyone knows a lender who finances Co-ops in CT, please post! Someone could make a mint on this, there is quite a bit of pent up demand at this coop community. The board would welcome submissions.
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Ninfa Valella, Agent, Wilton, CT
Sat Nov 21, 2009
As some of the other agents have mentioned that in Ct. co-ops are not that common. My main concern is that you may not be able to rent the unit out and if you need to change residences it will force you to sell at maybe not the best of market conditions- this just happened to buyers of mine a couple of months ago. Luckily they could afford to hold both mortgages until they can sell their co-op in Stamford.
Alot to consider.
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Matthew Isle…, , Fairfield County, CT
Mon Nov 16, 2009
Both Marcie and Chris outline some great points. One important thing to keep in mind is obtaining financing for a co-op in Connecticut. It is extremely difficult. In New York it is very common therefore financing is not a hurdle but keep in mind once you are a buyer at some point you will be a seller. If it is difficult to secure financing yourself it will be difficult for someone else when you are a seller.
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