When you're searching for a new home, one of the most important things to know is the difference between a condo and co-op. One thing you should be aware of about a co-op is that your purchase doesn't mean that you own the co-op.
Co-op owners are buying stocks or shares in a cooperation that is privately held and owns and operates the Co-op. If you decide to live in a co-op, you won't get a deed to the property. A co-op isn't technically real estate like a home. Instead, you're issued a document known as a Proprietary Lease that entitles you to live in your unit.
The determining factors for the number of shares you own include:
- Floor you live on
- Square footage
- Number of rooms
- Outdoor space
If you choose to buy a condo, you're buying real estate and are issued a deed for your property. You're the owner of the unit and have a share in the common areas designated for residents of the building. Condo ownership is a form of Fee Simple Ownership and is subject to the financial obligations of home ownership.
Another difference between condos and co-ops is that when you're approved for a mortgage, you can buy the Condo. With a Co-op, you must be voted in by the owners so that you can choose your nearby neighbors. However, the voting process could delay closing if you decide to sell. Co-ops are more exclusive than Condos.
What are the Important Considerations?
Everyone with shares in a Co-op has an equal interest and equal share in the building and the decisions about how the Co-op is run. Since most Co-ops are smaller than Condos, there tends to be a friendlier atmosphere and sense of community than in a large complex. However, the screening process for buying into a Co-op is more intense, and it may be harder to get into a unit.
In a well managed Condo, there is still a sense of community and usually a lot of interaction with neighbors if that's what residents prefer. A lot of Condo owners love the concept of maintenance-free living. A Homeowner's Association governs what homeowners may do with their property. When you buy a Condo, you become a member of the HOA. Some of the things that may be regulated by the HOA are:
- Color of your home
- Whether you can have pets and how many
- How many cars you may own
- Where you can park
- Whether you can sub-lease
- Restrictions about noise
When a Homeowner's Association has control over a Condo community, it's sometimes hard to get homeowners to agree about things they need to act on. Condo owners are charged fees by the HOA each month, and what's included can differ a lot. Another possible issue is that the HOA can raise the fees at their discretion.
Top 3 Listing Websites
RealtyNow - This website lists condos for sale around the country. Enter the zip code to find listings near you.
Century 21 - Lists co-ops, apartments, manufactured homes, single homes, and farm/ranches for sale.
Trulia - lists condos for sale, and you can search by neighborhood, city, or zip code.