The main reason why buying a co-op in NYC
is a good idea is because they are generally 10% to 40% less expensive than condos of comparable
size and quality. Co-ops are less expensive for two main reasons: There are significantly more co-ops than condos
in NYC. Greater supply equates to lower prices, all
else equal. Co-ops are not generally purchased by investors
and foreign buyers due to subletting restrictions which makes them harder to rent. Less demand equates to lower prices, all else
equal. Buying a co-op instead of a condo is also
a good idea when it comes to your buyer closing costs. Buyer closing costs for co-ops are less than
half of what you’d pay for a comparably priced condo. Expect to pay around 1% to 2% for a co-op
compared to something like 4% in closing costs for a condo. If you’re buying a $1,000,000 apartment,
saving 2% on your buyer closing costs can equate to an extra $20,000 in your pocket
at closing. Often times, buying a coop in NYC is the only
way working families can afford a larger apartment when it’s time to have kids. Many buyers simply need more space for their
budget than what a condo will offer. Unlike condominium apartment owners, co-operative
apartment owners are technically shareholders of a corporation that owns the entire apartment
building. Co-op apartment shareholders are given a proprietary
lease that lets them reside in the apartment that they purchased. However, because they don’t technically
own the apartment that they dwell in, they are not considered to have real property rights. The cooperative corporation is run by a board
of directors that is elected by the shareholder base, similar to what you’d see in a regular
business corporation. Buying a co-op can be a bad idea due to the
fact that the board of directors enforces strict rules and regulations that touch every
aspect of life within a cooperative building. These rules can hamper your ability to sublet
the apartment and impact whether or not you can renovate your apartment before selling. What’s arguably the worst thing about owning
a co-op is that the co-op board can derail your future sale by rejecting your buyer,
in some cases multiple times. Furthermore, many co-ops charge sellers an
extra closing cost called a flip tax. In summary, buying a coop in NYC is a good
idea if you have a limited budget and need more space. For most working New York families who do
not want to deal with hour long commutes by moving out of the city, buying a coop is a
very attractive alternative primarily because of the reduced cost of co ops vs condos. Furthermore, the typical co-op subletting
restrictions don’t have any effect on a buyer who has no plans to leave NYC. Looking to buy or sell a home in New York? Learn how you can save on commission and closing
costs at Save Money with a Hauseit Buyer Closing Credit: