Coop vs. Condo

Funny enough for me (genius or not) there really isn't much of a difference.

I have no interest in ever renting out my place. I would be buying it for myself and my family.

I am not concerned about passing the board. And if I don't - so what? No harm, no foul.

I am buying for the very long term (as everyone should, in my opinion), so the board impact on the next buyer is of less importance to me.

The downpayment requirements are irrelevant because no banks are lending with 10% down anyway.

Any other reasons why I should prefer a condo?

http://www.streeteasy.com/nyc/talk/discussion/8339-nyt-the-downside-for-condos-in-a-downturn

From a legal standpoint, coops are better situated to ride out a foreclosure wave. Condos become toxic to remaining owners because they become responsible for those common charges. Is this really the kind of "expertise" that you get by on in the marketplace? Because frankly I feel better informed just from reading the stupid newspaper on a regular basis.

I'd love to hear some of the other brokers on the board respond to this, if you feel comfortable doing so.

evnyc, that article is a good summary, and clearly, the playing field between coops/condos has shifted in current market conditions.

That said, coops are not immune from the risk. A 'foreclosure' in a coop would still be an expensive endeavor for the building, and even after collecting the maintenance, the building would have to drop the price of the unit to sell it, or face an empty unit that was not contributing to the maintenance for the building.

Some coops are getting even more restrictive in the current market, and that is reducing the pool of potential buyers, and thus forcing sellers to lower prices to be competitive, which is lowering the value of the building overall. Banks are obviously even more weary today of lending to coops vs condo's, so the cost of financing is higher, and again, puts a seller of a coop at a disadvantage over seller of a condo, resulting in need for price discounts.

On the upside, the stricter financial due diligence conducted by the coops, which is somewhat unique to NYC, has been a primary reason that there are so few defaults. The buying frenzy that occurred nearly everywhere else in the US was simply not possible here, and therefore, the vast majority of coop owners are not at risk of foreclosure.

Both coop and condo serve a critical role, and act as checks and balances. As much of a hassle as board packages may be (and I have plenty of thoughts on ways to improve efficiency), that level of due diligence, applied across the US, would have severely curtailed the real estate boom and bust. Ironically, many mortgage applications today, even outside NYC, are tougher than the coop packages they were modeled on.

Onward and upward

FULL DISCLOSURE - I am a broker (although my primary role is Chief Technologist at Coldwell Banker) and President of Manhattan Association of Realtors. As a leader in the industry and a member of society, I have a vested interest in seeing the housing market and general economy turn around and start rising. It starts with education and people making rational, informed decisions.

Indeed. Which is why biased and self-serving blanket statements from brokers only further erode buyer trust.

"The stricter financial due diligence conducted by the coops, which is somewhat unique to NYC, has been a primary reason that there are so few defaults."

In a declining market, I as a buyer would not even consider a condo. The purported pluses of condos suddenly look like huge downsides. Coops have risk management strategies that - if I were to buy - I would prefer over condos. The flight to quality is not only happening in the stock market.

There are plenty of stories about coop boards messing with your business when you try to sell. This alone should devalue a coop vs condo. It almost cost me the sale of my apartment. no thank you coop.

Then again, this debate has been framed as the idea of condo vs. the idea of coop. But right now a high percentage of condos are in new developments that are not yet 70% sold, and those are the weakest link in all of the NYC RE market.

The co-op approval process may tend to weed out "undesirables", but who these people are specifically will never be known outside of a board meeting.The entire co-op entry mechanism is so distasteful that as an owner I could only imagine how the exit on sale is made into a living hell for someone who really needs to sell a place. As a condo board member I have seen both the plusses and minuses of condo ownership. Condos (much like divorce) have traditionally cost more because they are worth it.Any owner in any type of building can run into financial trouble resulting in failure to pay maintenance , taxes or a mortgage. The recourse is similar in each type of ownership model, but foreclosure may be somewhat quicker in a co-op. The remaining owners (via the corporation) still become burdened with the shortfall, so a larger well-established building of any type may be better able to withstand the increased per unit fees that need to be paid vs. a 20 unit or less building . A large reserve fund also helps get through the hard times.

When I bought my coop the board meeting lasted the shortest ten minutes of my life--and my building has always had a "strict" reputation. When I sold last fall I was lucky enough to get a bid from people whose income wasn't dependent on Wall Street, and for various reasons I knew the board would love them. it's like everything else in life, it's how you play the game.

Yes there are strict rules, but it bothered me less not to be able to renovate after 4, on every holiday and weekends than to hear the construction on my block during the evening, weekends and on holidays. I found that rude--not considerate of people's time.

I don't understand the anger in Feingirl's tone. I would have preferred a condo but in 97 there were only seven on the UWS, and most, if any, weren't prewar, and as Trompiloco said condos tend to have the least amount of apartments sold so if I were buying now it would be in an older condo

Until recently there wasn't a choice in Manhattan. It was buy a coop or rent and renting made no sense in the late 90's. To not respect that history is to show much ignorance of NY history

I truly think newbuyer is right and it's not that you should blanket shop for one form of ownership versus another, but take it building-by-building. For example, one thing that makes a building "quality" is a high level of maintenance -- but in a large condo with a high proportion of older shareholders, are you necessarily going to see that? When you decide to resell, does it balance out your freedom to rent if a building's hallways or lobby haven't been redone in 20 years?

Location; finishes; financial stability; strength of management . . . these are things that you want in any building that you buy into. Sure, there are co-op boards that are insane, but there is condo management that doesn't do a good job either. You have to take it case by case.

ali r.
{downtown broker, member MANAR]

newbuyer99: None I can think of, except that in a co-op you're taking on your share of the building's underlying mortgage. That's trivial in most buildings, and is reflected in the 30% discount we hear so much about but never see in an apples-to-apples comparison.

Another co-op advantage I've not seen mentioned: Let's say you fall in a rough patch and get behind a few months in your monthlies. In a condo, you're slapped with a common-charges lien that's there on your public record forever. In a co-op, nobody knows but the board (who've seen every vagary of personal finance) and all is forgiven after you cough up the arrears and the late-fees.

gotta love the broker who started this. obviously, there are pluses and minuses to both forms of ownership but its not like a lease vs buy on a car. you don't have the choice on how to get the same unit--its either one or the other. i would consider the apt first and form of ownership second.

Or, let's say the notorious David Pullman wants to buy in your building. (See http://www.google.com/search?hl=en&q=cooperative+67th+pullman) In a co-op, he never gets to see the board, and that's that. In a condo, it's much more difficult to avoid taking on the risk of the troublesome and litigious.

pkiracofe
evnyc is a died in the wool broker hater...don't take anything she says serious.
If you look at every good, interesting conversation had on the site for last, well I am not sure how long, at least the past 2 months she (because I believe it is a she)finds a way to be nasty and degrading to brokers. She destroy interesting and thought commentaries with...your are the scourge of the universe..or some such garbage.
Just ignore her...

I like and agree with most your commentary.
The issue is many people here compare one with another, in terms of price.

Oh...evnyc is obviously a vested coop owner??? Wouldn't you say?

Isn't feingirl a broker who is trying to sell overpriced condos? If she isn't identifying herself as a broker when she posts she is breaking a rule. Set her straight Ali.

"The recourse is similar in each type of ownership model, but foreclosure may be somewhat quicker in a co-op."

This couldn't be further from the truth. If a bankruptcy does occur, the co-op is at the front of the line, while the condo is at the end of the line.

waverly, I'm glad you believe in the strength of my powers! Some days my clients don't . .

ali r.
{downtown broker}

Haha...nice one Ali!

You are an honest person and you should remember that there is power in that when it comes to a sales business (I am in one myself). Plus, you have the whole conscious is clear thing going for you.