Home Buying in Laurelton>Question Details

Maria Arlyn…, Home Buyer in Soundview, Bronx, NY

Is getting a condo unit better than a coop?

Asked by Maria Arlyn Aquino, Soundview, Bronx, NY Mon Jan 10, 2011

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Have we confused you more than you already were? Here are the basics:

Coops are personal property with essentially all the same benefits of real estate. Condos are real estate. With coops, you buy shares of stock in the company that owns the real estate, you receive a proprietary lease for your unit. With condos, you get a deed to your unit. In both cases you pay property taxes and insurance for what you own. With coops it's in the maintenance payment (which is therefore partly tax deductible); and, with condos, you pay it separately, just like with a house.

That said, the real important factors that will affect your decision are: availability, pricing, and flexibility.

Availability: In our general area, there are far more coops than condos.

Pricing: Pound for pound, condos are generally more expensive than coops. Why? See "Flexibility."

Flexibility: Condos provide the homeowner with a greater bundle of rights than coops. Coops often have restrictions and requirements that condos do not. Remember, you are a shareholder in a company with a board of directors and many other shareholders. They enact policies that affect you. For example: coops often have minimum required down payments (often 20%) and minimum income requirements for purchasers - these affect you when you buy but also when you sell (at which time the policies might be different). They may have policies like no pets, or flip taxes when you sell. They may restrict your ability to rent your unit to someone else. They may place restrictions on work you can do/have done in your unit and who you can hire to do the work. They may require that you use a particular real estate broker when you sell (you may prefer to use another). They also generally require purchasers be approved by the board before you can sell your unit to them. This is usually the final step after the 2-3 month process, and if they reject your purchaser, you have to start again. Condos are generally much more flexible, providing you a greater bundle of rights. This is why coops are generally less expensive than condos (though you may need more money to buy a coop vs a more expenseive condo - go figure!). So, why would anyone ever buy a coop? That's easy - see "Availabilty" and "Pricing," above.

Hope that helps!
3 votes Thank Flag Link Fri Feb 4, 2011
There are significant differences between a condominium and a cooperative, but each is considered a common interest development or CID. The terms 'co-op' and 'cooperative,' are short for 'cooperative housing project.' Cooperatives were in existence and common before the condominium scheme of ownership was fully developed in the United States. They were especially common in New York City and the northeast."

In a cooperative says, the building containing the residential units or apartments is owned by a 'cooperative housing corporation.'

"In a condominium, each unit owner owns an individual apartment in fee simple. In addition, the buyer owns an undivided interest in the common elements such as the exterior walls, roof, pool and other recreational areas."

Both condo and co-op owners have monthly maintenance fees to pay, but they can vary, depending on what expenses the fee covers.
2 votes Thank Flag Link Tue Jan 18, 2011
The way i think is that the mail difference to drive me out of a coop is that if the corp owing the building goes out of biz or building falls down, all u get is a piece of paper like a stock.
but in a condo you are owner of actual piece of land and not a piece of paper.
Good Luck.
1 vote Thank Flag Link Tue Jan 18, 2011
Let's not forget to mention the fact that the closing costs are much higher on a condo than a co-op. However, you can often get an FHA loan on a condo with only 3.5% down. Also, there are times that you can qualify for a mortgage, but you don't fit the criteria that the co-op is looking for. With a condo, that isn't a concern.
As others have said, it is personal preference. The one person I definitely do not agree with is Mr. Singh. Many people are very happy with co-ops. There is one thing to watch out for however with a co-op. Some have a sizeable flip tax. That is a tax paid to the co-op corporation when you sell. There are times that it affects your financin with certain lenders. Besides that, you have to be concerned about paying some of your appreciation for the flip tax.
1 vote Thank Flag Link Mon Jan 10, 2011
Dear Maria

This question comes down to preference. In the Bronx the prices of Condos and Coops does not vary as much as David mentions it does in Queens. But this also depends on the areas that you are looking to potentially purchase in prices from one area to the next will vary greatly. In my experience the coop boards are a bit more cautious and strict in their rules and regulations. Condo boards also has specific rules its unit owners must follow but their restrictions on renting out a unit is a bit more relaxed.

Please give me a call if you would like to discuss further.

Nirmala Caraballo
Licensed Real Estate Agent
Cruse Realty
Cell: 646-479-7873
Email: nhcaraballo@yahoo.com
1 vote Thank Flag Link Mon Jan 10, 2011
buying a co-op means you are buying shares of a company. whereas in condo you own a piece of
property. so it is better to buy a condo as compared to a co-po.
1 vote Thank Flag Link Mon Jan 10, 2011

There is no "better" choice between condo vs co-op; only different.

Some of the diffrences are:
- Co-ops will generally have financial/credit requirements of buyers and may require an interview of the buyer by the board. Co-ops are not required by law to disclosure why they may reject a buyer. In the 1980's, two buyers were rejected by their co-op boards: one was a pop start named Madonna, and the other was ex-President Nixon.
- Condos generally do not place any financial restrictions on who an owner may sell to. If your buyer has a bank that will allow 100% financing, that's fine.
- Co-ops include heat and property taxes in their "Monthly Maintenance."
- Condos have the owner pay heat and property taxes individually, and these are not included in the monthly "Common Charge."

In Queens, on average, for a similar size unit, the Asking Price for a Condo will be almost twice as expensive as a Co-op. Since the vast majortity of units in Queens are co-ops, it is simply a function of Supply & Demand. On the other hand, you will have a much greater selection of units when looking at co-ops.

Good luck in your search.

David Callaghan
Keller Williams Realty
1 vote Thank Flag Link Mon Jan 10, 2011
It's really a matter of preference---The traditional housing co-op involves the formation of a corporation for the purpose of acquiring title to a multi-unit building and, in turn, leasing individual units (apartments) to the shareholders of the corporation; whereas condominium ownership involves acquiring title to individual apartments or units. In fact, condominium ownership is, for most practical purposes, only one form of cooperative housing and, like the co-op, must include provisions for management and maintenance of the building(s) and common areas, usually dictated by an elected Board of Managers, in the case of a condominium, and a Board of Directors in the case of a co-op. The condo advantage of individual unit ownership can be compared to the benefit of being able to choose your neighbors in a co-op setting, where the application process is very often quite selective. In the sale of a condo, once a price is agreed upon, the deal is done; whereas the sale of a co-op requires approval by the Board of Directors—which can be (and often is) withheld based upon arbitrary selection criteria—with no recourse to the buyer or seller if the sale is not approved. Co-op ownership represents an interest (i.e. stock) in realty; condo ownership is actual ownership of realty. Price differences reflect demographic and geographic distinctions. You decide what’s best for you.
1 vote Thank Flag Link Mon Jan 10, 2011
Manu, the problem with your analysis is that condos are run by a homeowner's association, and if the association mismanages the units, your individual unit isn't worth very much, so in reality it is not very different than owning the shares. If of course, you have any knowledge of times that co-op corporations have gone out of business and the shareholders couldn't sell their units, please let us know. No that Fannie Mae and Freddie Mac guidelines have tightened on condos as well, there can be issues when someone goes to sell as well.
In the Q&A section of Trulia, from time to time people ask the question about whether agents from out of an area should comment. This is one of the cases where people from outside the NYC area, with the exception of possibly the Chicago and DC area, should keep quiet.
0 votes Thank Flag Link Wed Jan 19, 2011
En general es mejor una inversion en un condominio que en una cooperativa. Todo depende de las condiciones propias de cada quien.
0 votes Thank Flag Link Tue Jan 11, 2011
Best way to determine these which is better.

Compare all pros and cons excel spread sheet review the HOA rules and etc. sure you can arrive at your own answer

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Tue Jan 11, 2011
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