When it comes to New York City co-ops, it’s important to weigh the pros and cons before committing to a purchase. Established by well-to-do Manhattanites in the late 19th century, the co-op model is common throughout the island, giving individual unit owners a stake in the corporation that owns their entire building.
While co-ops often cost less than traditional condos up front, high maintenance fees can leave owners with large bills. The sense of community that comes with a co-op can be a double-edged sword, as long-term neighbors tend to enforce stricter guidelines for how owners can use their homes. Here’s a breakdown of the pros and cons of co-op ownership to help you decide whether this style of living is right for you.
So, What Is a Co-op?
Technically, a co-op is a corporation run by a board of directors made up of tenants of the building that the co-op owns. Since the building is owned by the corporation, the board of directors has a large amount of power over what goes on inside the building, from approving new co-op owners to scheduling maintenance and repairs. Co-op boards tend to rotate among residents, with different owners serving on the board or in various roles during their time living in the co-op.
Pros: Costs and Community
Let’s start with the pros of buying a co-op over a traditional condominium. For starters, co-ops are less expensive, with prices ranging anywhere from 10-50% less than comparable condos. Not only are co-ops less expensive up front, but buyers are spared a few of the closing costs associated with purchasing a condo, including the mortgage recording tax and purchase title insurance.
In addition to the financial advantages, co-ops tend to have long-term occupants who take pride in their building and engage with their neighbors. As such, co-ops are perfect for people who are looking for a sense of community.
Cons: The Application Process, Fees, and Rules
Of course, with these pros come cons that might cause potential buyers to choose a traditional condo over a co-op. One downside is that the application process can be more difficult. Approval for buying a co-op must be granted by each co-op’s board, and the board is free to set whatever guidelines it likes for ownership, including greater financial requirements, such as more post-close liquidity. As such, rejection rates for co-ops are much higher than those for condos. And, for the same reasons given above, selling your co-op can be more difficult than selling a condo.
If you are approved, your new co-op will come with maintenance fees that will likely be higher than comparable fees in a condo building. Additionally, most co-ops have stricter guidelines for how you can use your home, usually taking the form of restrictions on subletting.
And, of course, most co-ops encourage the members to participate in running the corporation, whether that means voting for the board of directors or serving as a corporate officer. This can be either a pro or a con depending on how much you want to be involved in how your building is run.
In the end, choosing a co-op over a condo comes down to personal choice. Here at Byson, we have experience with every type of New York housing, so whether you’re interested in a charming co-op or a gleaming condo tower, we are here to help you find your dream home.
