So….what’s a Co-Op?

“So….what’s a Co-Op?”

by Steve Meyers

August 8th, 2014

If you’ve been looking for a condominium to purchase, by now you’ve seen something that’s listed for sale called a “Co-Op”. A “Co-Op” or, Cooperative is a form of ownership of real estate. In its’ simplest form, a Cooperative is a non-profit entity that owns, and has title to, real estate. A person who wants to live in the building is actually purchasing stock in the non-profit Cooperative instead of purchasing a “fee-simple interest” in the real estate. When you purchase a single-family home or condominium, you’re generally purchasing the “fee-simple interest” of that real estate. Owners of their shares of stock in a Cooperative have a Proprietary Lease for their particular unit. The ownership value of a “Co-Op” is based upon the value of that unit in relationship to the total value of all the units in the building. Factors that may influence its’ value may be; the side of the building with a better view, a higher floor in the building, whether the unit includes a parking space, etc. The annual operating expenses and capital reserves are calculated with the ratio of the value of the particular unit to the total building value. Several additional hurdles you may face when purchasing a “Co-Op” include; the approval of your purchase by the Members of the “Co-Op”, possibly more restrictive Policies than a condominium, and fewer financing programs available for “Co-Ops” than condominiums. If you have any comments or questions about this article, please email me at smeyers@kw.com. If you know of someone who would also like the information in this article, please forward it to them. You can find other articles I’ve written at http://www.ourseattlehome.wordpress.com. Steve Meyers is a Managing Broker at Keller Williams Realty in Seattle, Washington. He can be reached at (206) 972-3328 or smeyers@kw.com.

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