Page 1

Home MORTGAGES

BANK ACCOUNTS

Rates

Calculators

CREDIT CARDS

INSURANCE

Search AUTO

INVESTMENTS

RETIREMENT

FINANCIAL PLANNING

Columns: Real Estate Adviser Expert: Steve McLinden

Real Estate Adviser Is it better to buy a condo or a co-op in this market?

Real Estate Adviser

Subm it

More Blogs, Experts

Co-op versus condo By Steve McLinden • Bankrate.com

Dear Steve, Please list the advantages of buying a co-op versus buying a condo. Also, is there a better strategy in buying one versus the other in the present market? -- Sharon Dear Sharon, Both co-ops and condos are considered common-interest developments. In a co-op, short for "cooperative housing project," you technically don't own your apartment, as you do with a condominium. Instead, you own shares of the co-op corporation that owns your building. The larger the living unit, the more shares you own in that corporation. Typically, co-ops are less expensive per square foot than condos, and their maintenance fees -- which cover building expenses like hot water, heating, air-conditioning, grounds maintenance, staff salaries, real estate taxes and insurance -are tax-deductible. There are some co-op caveats. All prospects have to be approved by the co-op's board of directors, and the vetting process is quite thorough. There are lots of demands for personal-background and personal-finance information, comprehensive employment history and background checks. It's also harder to sublease your co-op, and in many cases that is not allowed at all. Moreover, co-ops require larger down payments than condos, and those all-encompassing maintenance fees are higher than in condos, although they are taxdeductible. Selling a co-op is also a little harder than selling a condo. Some boards assess a "flip tax" if you resell within a set period, such as one year to three years. Buying a condo, by contrast, is more like buying a house because buyers own their deeds and pay their own taxes. While condos are more expensive than co-ops, percentage down-payment requirements are smaller, though today's more stringent lending standards have tweaked that equation a little. Typically you can sublet condos more readily than co-ops. Condo boards also wield less power than co-op boards, and entry requirements aren't as tough, plus maintenance fees aren't as high. The trade-off: Condo maintenance fees aren't tax-deductible. Condo and co-op boards typically secure a contract for grounds maintenance, sewer, water, cable TV and the like. Generally, there is less speculation in co-ops than condos. If the real estate market continues to deteriorate, condos are likely to fall in value at a faster clip than co-ops, according to some of the industry experts. In areas where co-ops are less common, lending programs are harder to find because co-op purchases aren't secured by a deed of trust. In New York City, about 70 percent of all individual apartment units for sale are co-ops, a number that has dropped from about 85 percent a decade or so ago, as more condos come online to replace older co-op buildings. To ask a question of the Real Estate Adviser, go to the "Ask the Experts" page, and select "Buying, selling a home" as the topic.

Bankrate.com's corrections policy

-- Posted: Dec. 14, 2008

Read more Real Estate adviser colum ns

RESOURCES

Ask a question

TOP REA L ESTA TE STORIES

10 questions for your lender

How to lower your property taxes

Should you buy or rent?

Forged signature puts kibosh on home sale


How much house can you buy?

About us

Advertise with Bankrate

Partners

Press Room

Will mortgage assumption solve crisis?

Investor Relations

Free Content Center

Contact Us

Sitemap

Topics

Understanding Bankrate's rate averages Š 2013 Bankrate, Inc. All Rights Reserved. Privacy Policy/Your California Privacy Rights

Terms of Use

Advertising Disclosure: Bankrate.com is an independent, advertising-supported comparison service. Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this w ebsite.

This ad is supporting your extension YAGBE: More info | Privacy Policy | Hide on this page

Newsletters

Mobile Apps

Is it better to buy a condo or a co op  
Read more
Read more
Similar to
Popular now
Just for you