Condo vs. Co-op Ownership...what are the differences?
by peter liaskos
Condo Ownership - is a fee simple form of ownership, similar to a private home. You own the interior space of your unit and share ownership in the common areas, such as walkways, exterior space, etc. Condos come in a variety of styles, hi-rise, apartment, townhouse, gated community, etc. Condos generally have a lower maintenance charge, with utilities and real estate taxes being paid separately by the owner. Condos are easier to finance than co-ops and do not have down payment/income restrictions imposed by the condo board nor do they need board approval to purchase.
Co-operative Ownership - is in common with other apartment owners as shareholders in the building corporation. Co-ops tend to be lower in price, with a higher monthly maintenance fee which normally includes heat/hot water, building maintenance, underlying building mortgage, amenities, and real estate taxes. A portion of the monthly maintenance is tax deductible due to the included real estate taxes, the percentage deductible is based on your individual ownership interest (apartment square footage) in proportion to the gross real estate taxes. Shares in the corporation vary based on apartment size. Cooperative ownership is more restrictive with regard to financial qualifications, pets, ability to rent, set forth by the board of directors of the corporation. Minimum down payment requirements and debt to income ratios vary by co-op; however a co-op may require a 30% down payment and a 4:1 income ratio. The ratio in simple terms would be total monthly expenses of the property and personal indebtedness not exceeding 4 times the income of the purchaser.
The Spring 2017 Real Estate Season is On!
Below you will find some useful tips for buyers and sellers during this brisk buying & selling season:
Buyers:
1) Do your research! Be the prepared, use the internet, read and connect with an agent who has a clear understanding of the local marketplace. Working with one agent is your best asset, the agent has all the ins to the marketplace and connections to find you the right property!
2) The real estate market has been recovering over the past year and now with the Spring season in full swing, buyers are out in force looking for a place to call their "new home". Keep in mind, good, well priced properties are moving very quickly, the return of the "multiple offer" scenario has returned. If a home is well priced for what it is, you can expect competition when you try to make a deposit.
3) Be Prepared! Come armed with a Mortgage Pre-Approval letter (if you are financing), proof of funds and your checkbook! Be prepared to make an offer on the spot if you like what you see.
Through your research and your agent's knowledge of the area you will know when you find the property to move on. Be ready to make a reasonable, well informed offer if you find what you like, because there will be someone on your heels writing an offer right behind you. Accentuate the positives that make you the buyer they want to sell to: good credit, pre-approval, good down payment, flexible closing terms.
Sellers:
1) Put your home's best foot forward! Make sure you clean, de-clutter, paint, etc., before offering your home for sale. Try to be objective when looking at it, have your agent provide input also, we see so many homes that we know what works!
2) Price it Right! When pricing your home, do you homework and discuss with your agent the best positioning in the marketplace. Keep in mind there may be competition down the block or across town, so be realistic. Price your home to sell, not to sit on the market!!
3) Be sure your agent requires mortgage pre-approvals and qualifications of the potential buyer before signing a contract, this will ensure a smooth closing process down the road.
REMEMBER IT'S A PRICE WAR AND A BEAUTY CONTEST OUT THERE!!
Short Sales, Foreclosures and Real Estate Owned Properties (REO)
Short Sale - A short sale of real estate occurs when the borrower is unable pay their mortgage due to financial hardship and attempts to sell their property for a price which will not satisfy the outstanding mortgage balance owed the lender. In this transaction, a lender determines taking less than the mortgage balance owed is more prudent than proceeding with a protracted foreclosure process, which can be more costly for the lender and may do more damage to the borrower's credit rating than the short sale. Due to the growing number of short sales in today's economic climate, lenders have departments handling these transactions. The lender will request a BPO (Broker Price Opinion) or Appraisal to determine if the short sale price is in the lender's best interest. A short sale can be a very long process, as any subordinate lien holders to the first mortgage may need to approve the short sale. While some lenders may forgive the deficiency by prior agreement, some lien holders may not. Agreement by both borrower and lender are required for the short sale process to proceed, if at any time in the process either party changes their mind, the potential buyer can be left having invested time and money and not be able to purchase the property.
Foreclosure - Foreclosure is the legal process in which a lender obtains a court order to terminate an owners rights to a property when the owner defaults on the lien on the property. Upon completion of the foreclosure process the lender repossesses the property in order to sell it to recoup the mortgage balance and any legal costs associated with the foreclosure. The lender may pursue a deficiency judgement from the borrower if a promissory note with recourse was made.
REO Properties (Real Estate Owned) - REO properties are properties which have gone through the foreclosure process, have not successfully sold at auction and are now owned by the lender. REO properties are sold by the lender or through local real estate brokers experienced in REO properties.
Helpful Hints for Marketing your Home
#1 We have always heard, "put your best foot forward" and "you never get a second chance to make a first impression". The same is true with real estate; buyers judge your home from the curb. That is where staging begins! Make an extra effort to check your own "curb appeal" before putting your home on the market. Walk across the street and take a look at how your home looks to others, objectively. Spruce up the landscape with seasonal plantings, trim shrubbery, as needed, and anything else your home needs to give it a warm and inviting look to potential home buyers. If they don't like the outside, it can cast a negative vibe throughtout the tour, even if the interior is magnificent. Keep in mind, someone out there is always competing against you. Try harder!
#2 De-personalize your home when trying to sell it. Buyers want to imagine how they would live in your home with their things, not yours. Overcluttered and personalization confuses them and inhibits them from visualizing how their furniture and possessions would look in the home. Homestagers are a great investment. Their objective view can focus your home's best attributes and minimize distractions.
# 3 "Let the sun shine in". Clean windows, remove or pull back heavy window treatments, pump up the wattage in your lamps and recessed lighting, add extra lighting to dark areas. When showing to potential buyers your home should be lit up as if you single handedly support the local electric company.
#4 Kitchens and Bathrooms sell homes! These two areas of your home are important areas to upgrade. Investing in these areas offer the best return when selling. Depending upon your budget, you can see a significant return on your investment.
#5 Fresh paint, fresh smell and spaciousness are key when selling a home. A fresh coat of paint in neutral tones is a sure winner. Be sure to give the house a good top to bottom cleaning and de-cluttering to make it shine.
#6 When your home is being marketed it is always "SHOWTIME". Living in your home and showing your home are two different things. When your home is being marketed it must always be immaculate and ready to show on a moment's notice without having to clean and straighten up.
#7 Pricing your home in a today's market. We would all like to get the best price for our home and we all like getting a good deal. Even in today's real estate market, keep in mind that what your home may no longer be worth as a seller, becomes your opportunity as a buyer when you purchase your new home. Overpricing a home and having it languish on the market is not the object of the game, no one wants to have to be always ready on a moment's notice and have throngs of prospective buyers trail through your home with no offers. Realistically, pricing your home is the best way to attract motivated and qualified buyers and in the end you win by selling you property in the shortest time, with the least amount of inconvenience.
#8 It is a good idea to have a home inspection of your own if you suspect your home is in need of repair. By investing in a home inspector prior to pricing and marketing your home, you have the opportunity to fix deficiencies which may lead to difficult negotiations or lost sales contracts when it gets down to the wire.