Why is it that agents are so reluctant to show co-ops?

Asked by Jessica Cassady, Outside U.S. Mon Dec 17, 2012

This question was asked from this property: http://www.trulia.com/property/3089637847-2370-Champlain-St-…

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Aaron Smith’s answer
Aaron Smith, Agent, Washington, DC
Tue Dec 18, 2012
In my experience, its not that agents are reluctant to show (I'm not, as the previous authors state, there are many advantages to them) but that buyers tend to be less interested in seeing them. The limited options for financing, the higher monthly fees, both tend to discourage buyers.
1 vote
Thomas Zorc, Agent, Washington, DC
Mon Dec 17, 2012
Co-ops may not be suited for all buyers as co-ops typically have rental restrictions which prohibit investor purchasers or limit the possibility of renting the unit out in the future (a big negative for a buyer who doesn't plan to live in the building long term). Furthermore, not all lenders lend in co-ops therefore if a buyer wants to use a particular financial institution, credit union or FHA or VA financing it may not be possible for the buyer to obtain their desired financing. Finally many agents do not work with co-ops very frequently. This lack of experience and understanding may cause the agent to discourage buyers from considering co-ops as an option.

With all of the above said, I've sold many co-op units in DC and know that there are dozens of great cooperative housing associations in the area that can provide an excellent opportunity for many buyers. Some of DC's finest and most historic residential buildings are co-ops and they should not be overlooked.

Best of luck!
2 votes
Djana Morris, , Washington, DC
Wed Apr 10, 2013
Hi Jessica,

Although some DC agents are not familiar with co-ops, I don't believe that in general DC agents are reluctant to show co-ops. Experienced agents know that co-ops can be a great value as they are typically a lot less expensive than similar condos, and the fees include property taxes and usually most of the utilities. But many of my buyer clients opt not to consider coops because most do not allow renting or only allow it for a very limited time period. DC is such a transient area that buyers want the option to rent if work or life mandates a move, and don't want to be forced to sell in a down market or if they move away temporarily.

But, I still love selling co-ops. My very first client purchased a co-op, and I still believe she got the deal of a century. I've been hooked on them ever since.

Good luck!

--Djana Morris
Long & Foster Real Estate
1 vote
Santiago Tes…, Agent, Washington, DC
Mon Dec 17, 2012
--Mostly because they don"t understand them. I have lived in one (actually two adjacent units that I connected to create a 1,300 sf home).
With a co-op":
- Your co-op fee often includes the underlying mortgage and taxes, so it's higher than you might expect in a similar condo.
- Your financing options are limited to a few lenders approved by the co-op board (not really a prob)

there are a couple of other differences that have pre/cons associated with them and I'd be happy to review them with you.

Santiago Testa
202 552 5624
1 vote
Charles Schr…, Agent, Floral Park, NY
Tue Jun 17, 2014
I wouldn't say agents are reluctant to show them, as much as it is an issue of going through the co-op board itself. Co-ops are very strict on who they accept and subject the client to an unbelievable amount of screening. They make them go before a co-op board for what is essentially an interrogation to see if they think they are worthy enough to live there. They have strict guidelines of who can live there and don't have to give a reason for rejecting an applicant. In many cases they charge a non refundable application fee which they keep even if you're denied. Not only that, but some places are so picky in the kind of people they want to live there, they will have a minimum income requirement which is way above the amount needed to afford the place. Personally, I think that's gross. The whole process of closing and getting approved itself can take months. In the end, it's just a very big headache and most agents are realistic about it. Not to say that they would avoid them altogether, it's just they know what the qualifications are for those co-ops and who will be able to get through the difficult expectations of board.
0 votes
Eng Garcia G…, Agent, Washington, DC
Tue Jun 17, 2014
We're not reluctant at all, but it's usually the client that dictates whether or not we're looking at coops.
0 votes
George Ecker…, Agent, Washington, DC
Tue Mar 18, 2014
I own and live in a co-op. I always tell my clients, if you need to move within the next couple of years, condo is the way to go. If you are looking for the most apartment for the most reasonable money, over the long term, co-ops can be the way to go.
0 votes
Christopher…, Agent, Tarrytown, NY
Thu May 23, 2013
I'm not afraid to show anything, surprised others are. Maybe the agents in question aren't familiar with the process and focus on the negative side of the board approval process. Coops are a very affordable option for first purchases. The trick is to fully understand the process and what the boards look for. I always educate my buyers on the qualifying criteria and personally qualify them to ensure they have a good shot, or not.

Christopher Pagli
Accredited Buyer Representative
Licensed Associate Broker
Accredited Buyer Representative
William Raveis Legends Realty Group
0 votes
Jim Olive, Agent, Key West, FL
Thu May 23, 2013
Agents are a subset of society, and most of society stays away from co-ops as well. We fear that which we don't understand, and most people don't know what a co-op is, or the value it brings to the equation. Djana hit it right on the head. Best of luck with your purchase...
0 votes
Steven Dean, Agent, Washington, DC
Thu May 23, 2013
You can now pull the current tax bill from the District of Columbia's website at this URL:

Bear in mind that the tax bill for a new owner may not be the same as it is for the current owner.

The current information for calculating the tax bill can be found at this URL:

Steven Dean
RE/MAX Allegiance 202-547-5600
0 votes
Co-op profes…, , New York, NY
Wed Apr 10, 2013
Boris' response is a perfect example of why co-ops get shafted in markets like DC that don't have a lot of them - even the realtors don't actually know the myths from the facts!

Maybe this will help:

Myth: co-ops always have much higher fees than condos.
Fact: only a few of the old, luxury co-ops (e.g., the Watergate) have really high fees. The rest are about the same as condos (around $500/mo), and, unlike condos, co-op owners have total control over fee increases. Fees only appear high because they include property taxes, the "underlying mortgage" (see below) and often some or all ulitities. And when you account for tax and other savings, total non-mortgage expenses for a co-op unitl are often much lower than a similar condo.

Myth: You have to put 20% down on a co-op and only few "approved" lenders will finance them.
Fact: Many lenders finance co-ops and permit 10% down or even less (we did 5%), and rates are very competitive. Moreover, the "underlying mortgage" (i.e., the mortgage on the co-op building itseld) is subtracted from the sales price, so a buyer has to finance a smaller total amount (meaning less $$ down and potentially avoiding "jumbo" rates). So if a unit sells for 700k and has an underlying mortgage of 100k, the buyer only has to finance 600k. The other 100k is already set and paid monthly with the HOA fees.

HUGE Myth: Condos offer tax benefits over co-ops.
Fact: Tax deductibility on a mortgage co-op - including the underlying morthahe - is identical to that of a condo. More importantly, property taxes on a co-op unit are a fraction of a condo. For example, DC taxes on a 1500 sq ft co-op will run you about $1300/yr, while taxes on a similar condo in the same neighborhood will be $4k-$5k! So you save thousands per year.

Hope this helps. Yes, co-ops have rental restrictions (although not nearly as restrictive as people think - you can still rent, just not infinitely and/or to any shlub off the street), so they're wrong for people looking to buy a rental property but great for people who are looking for a home and don't want be surrounded by an endless stream of noisy/messy renters. And they're always priced at a significant $/sqft discount to condos. So if you're looking for a great deal on a HOME, do yourself a favor and get to know the facts.
0 votes
Henry Mohan, Agent, BETHESDA, MD
Tue Feb 19, 2013
Easier to buy but slower to sell. We have one now for less than $120,000. in DC with parking just about 550 sq ft. But it has been on the market a long time. Few banks make thes kind of loans. They also can be restrictive, especially towards renting.
0 votes
Catherine Da…, Agent, Rockville, MD
Tue Dec 18, 2012

Having lived for many years in one of Washington's finest co-ops (The Broadmoor) and sold many in DC, I am a big co-op fan. Feel free to contact me if you need guidance!

Catherine Davila
WC & AN Miller
Christie's Great Estates
0 votes
Jessica Cass…, , Outside U.S.
Mon Dec 17, 2012
Thank you. I actually own two and find the value tremendous and the downsides few. I've been baffled by the lack of understanding of how much you save by sq ft and prop taxes... hence my question. Appreciate the responses
0 votes
Miekeba Jones, Agent, Silver Spring, MD
Mon Dec 17, 2012
Hi Jessica I will show co-ops and explain the benefits and draw backs of purchasing a co-op. I can help you.
0 votes
Boris Miric, Agent, Alexandria, VA
Mon Dec 17, 2012

I am not certain of the details, but to my understanding in order to finance a unit on the COOP the purchaser is required to have 20%+ downpayment and the coop fees are rather much higher than for condos, sometimes in the excess of $1000 per month.

When a purchaser looks for financing they have the option of 3.5% down with FHA, if the condo building is not FHA approved they can go with the 5% or 10% down conventional financing and looking at the condo fee in the range of $190-$450 dependent of size and amenities.

Also, my understanding is that home and condo purchases have better tax benefits than the coops, in the respect of the amount of deductible sum of interest and so forth.

Hope this helps

Thank You,
Boris Miric - Realtor Serving DC–VA–MD
Certified Investor Agent Specialist (CIAS)
Certified Distressed Properties Expert (CDPE)
O: 202.459.4700 F: 202.318.6520
0 votes
James Downing, Agent, Dunedin, FL
Mon Dec 17, 2012
No idea?! We show and sell many co-ops around DC. I think many agents are not experienced enough on co-ops and cannot explain then to buyers; so they just stay away.
0 votes
Lanre Folayan, Agent, Washington, DC
Mon Dec 17, 2012
This one doesn't even have a price.
0 votes
Joseph Roraff, Agent, Onalaska, WI
Mon Dec 17, 2012
In my opinion it is probably because they are a lot more complicated than just regular housing. Here is a link to a good article...
0 votes
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