Co-Op Versus Condo: What’s the Difference?
While co-ops and condominiums seem pretty similar on the surface, they are actually very different types of real property. It’s important to understand the differences between these two products before making a purchase involving one or the other. Here’s an overview:
The Major Difference
The main difference between a co-op and a condo is the way that unit sales actually occur. When a person buys a condo, they are buying the physical unit that they own. When a person buys a co-op, they are actually buying shares in a corporation, not the actual property that they live in. They buy enough shares to represent an equivalent size of the housing unit they want, and this gives the person access to one of the units in the building owned by the corporation. With a co-op there is no actual deed like there is with a condo.
A Different Approval Process
The next difference is the approval process. Since it’s happening by a specialized board of shareholders usually, the process tends to be a very intensive one. The shareholders sit down and come up with the most stringent process that they think they need, and each new buyer has to go through those steps to become a part owner in the company. The board reserves the right to turn anybody down, and it’s usually much more difficult to buy a co-op than it is a condo.
Selling is More Difficult
Since a Co-Op requires a much more stringent approval process, it’s more difficult to sell it off to another person. Generally a realtor broker is relied on to make the exchange happen, and it can take months to find a suitable seller. If you’re looking for a housing option that’s going to be easy to unload in the future, a condo is
A Difference in Monthly Charges
Both co-ops and condominiums come with monthly charges. These are to cover things like maintenance and repairs, employees and group services. Condo charges tend to be more affordable than co-op charges though. Most of the time a co-op building has a current mortgage on it, and those monthly fees include mortgage costs as well, which is part of why they are significantly more expensive usually.
A Difference in Availability
Condos and co-ops are available in different amounts as well and that’s a key deciding factor for many people, especially people living in the Chicago area. With more co-ops available than condos, it’s difficult to find quality condos, which leads more people to the stringent co-ops. Even though many investors find condos to be more favorable, it’s ultimately the local supply and demand that determines what people end up buying.
Make sure you understand the differences in the two housing options before spending the money to make a purchase. Buying the wrong type of property can cause real problems and lead to an unsatisfactory ownership experience overall.
If you’re hoping to buy a condo in Chicago in the coming months, check out these West Loop Condos for sale. I would love to help you in your search. Contact me today at (847) 226-8681 or via email at ebooth@ericboothrealty.com to begin.
