By Carline Martin
Q: I recently began searching for a condo. I have identified complexes I told my agent I would like to focus on. She pointed out that a few of the units I am interested in are co-ops, not condos. I am not sure I understand the difference. Can you clarify?
A: Condos and co-ops have many similarities but there are a few key differences that you should be aware of. While co-ops are quite popular in the greater NYC area, they are less so in Connecticut, leaving many Connecticut homebuyers perplexed as to what the difference is. In Greenwich, we have only a few developments that are designated co-ops. They are Putnam Park and Putnam Hill in central Greenwich, Indian Harbor House at 630 Steamboat Rd, Indian Harbor Co-ops at 636 Steamboat Rd and Harborside at 680 Steamboat Rd. All of these locations are very popular with people who want convenient in-town living with very little maintenance.
Let’s begin by discussing the similarities between a condo and a co-op. Both types of housing are set up for residents to live in a private unit with shared common areas and amenities such as pool, recreation facilities, etc. Some developments offer more amenities than others but the living structure between the two are very similar. What is different, however, is the ownership structure.
When you purchase a condominium, you own your unit and are granted a deed of ownership for that unit. So, you own your unit and a percentage of the common area. When you purchase a co-op, however, you are essentially buying into a non-profit corporation which owns the entire property and you are issued a particular number of shares of the non-profit corporation. You are then granted a proprietary lease allowing you occupancy of that unit. Purchasing a co-op in a popular, financially solvent and well-run complex can be a very good investment. Inquire ahead of time about the financial standing of the development.
Co-ops are, generally, more affordable than condos but may carry higher monthly fees. Although the fees may appear high at face value, they typically include taxes and heat. Many co-ops do not favor financing so be sure to check with your agent about what is customary for the development you are interested in. Because co-ops require board approval for all potential buyers, you should also discuss what is involved in the overall approval process. If you plan on performing renovations on the unit, inquire about any limitations on what you will be allowed to do.
Q: I am a buyer who has been searching for a home for months. Although it seems as if the spring market has brought more options, I am still getting out bid on offers I am putting in. Do you have any advice?
A: Thank you for your question. If it comes as any consolation, you are not alone in your frustration. With inventory still low, when a nice listing hits the market, it gets snatched up almost immediately. In a market like this is important to be prepared to submit your highest and best offer. A seller who lists a nice home at a fair price is likely to get flooded with offers. To make your offer stand out, you want your offer to be as appealing as possible. Sellers are inclined to accept offers with the least potential for complication, so the terms of your offer are as important as the price you offer. Limiting contingencies or offering cash as opposed to financing could put you at the front of the line.
Have your agent speak with the listing agent to find out if they have had any other offers. If they have then you know you will need to go in strong. Have a discussion with your agent about what they feel would be a reasonable offer within your budget and offer cash if you are able to. Some buyers have opted to waive inspection and mortgage contingencies to gain favor with sellers, although this can be risky and not something I would recommend.
At the end of the day, your agent is a professional who is used to dealing with these situations and an invaluable resource. You should use their expertise and follow their advice. Above all, what I like to tell my clients is, don’t get caught up in the frenzy. The last thing you want is to get in over your head. Respect your limitations but don’t give up. Your persistence will pay off.
SEND ME YOUR QUESTIONS – If you have a real estate or home related question for which you would like a professional opinion, please email me at carlinemartin@bhhsne.com with “Sentinel” in the subject line. Each month, I will provide answers to one or two selected questions. Email me your Real questions. I look forward to hearing from you!
This article does not offer the opinions of Berkshire Hathaway/New England Properties and is not intended to provide legal, medical or tax advice.
