Condos or Co-ops

When you are getting ready to buy condos or co-ops, particularly in a place like New York City where co-ops are so common, it is smart to consult a condo specialist  Realtor® because these experts can alert you to the differences between the two, and all the pros and cons.

While Realtors® should be consulted to get the details, there are a few general points to keep in mind when thinking of buying a condo or co-op. First, while traditional condos are more common in Chicago, Miami and other cities outside New York, a majority of the multi-unit developments in the borough of Manhattan are co-ops, so there are a lot to choose from.

Also, when trying to decide if you have the down payment needed to finance your condo, or co-op, remember that purchasing a co-op often requires putting down at least 25 percent of the cost, and often as much as 50 percent or even the whole amount. Also, you must go through an interview with the co-op board of directors, who run the complex, which can accept or deny the application for ownership. This is because by definition, co-op buyers are buying a share of the whole building, rather than  one unit in the case of a condo.

 Many tax breaks are available to co-op owners that are not offered to condo owners. Once again, you should consult a professional to determine the details. And of course, make sure you have a healthy credit score, because that will be taken into consideration when taking out a loan in any case.

Whether you end up buying condos or co-ops, you will have to take into consideration the monthly maintenance fees, which they both have. The fees are used to cover the cost of general maintenance, groundskeeping, and general repairs in common areas of the property.  

It would be advisable too, whether you are buying condos or co-ops, to ask for financial statements for the complex, to see whether there is enough money on hand for major projects such as roof replacement. Also, because all the expenses are jointly shared, all the property owners share liability also. Although it rarely happens, when an owner defaults, the other owners have to share the responsibility of covering those expenses.

Selling condos is usually easier than with co-ops, due to the co-op board having the right to interview and scrutinize prospective buyers.

Because co-ops have an untraditional ownership system, it may be harder to find financing. The board also may have rules for down payments, which you'll probably find less flexible than some mortgage lenders.

These are just a few of the things to look out for whether you are buying  condos or co-ops, just to give you an idea of what to expect.