What New Homebuyers Need to Know About Condos and Cooperatives

During the hunt for the perfect home, you may find yourself trying to decide between purchasing a condominium (condo) or a cooperative (co-op). While the two types of residences share similarities, it is essential that any potential buyer can thoroughly distinguish the different properties.

We are here to help break down the differences between condos and co-ops so that moving forward you can feel confident making the perfect purchase.

What’s The Difference Between a Co-op and a Condo?

Co-ops and condos closely resemble each other in the fact that they offer separate units in a single building. These buildings also provide residents with shared common areas, such as a lobby or outdoor recreational space.

The main difference between the two property types comes down to the ownership terms of the units.

When buyers purchase a condo, they are gaining ownership of the individual unit and paying fees to the HOA, which manages the exterior and shared spaces within and around the building.

Co-ops, on the other hand, are homes you do not actually own. Instead, companies own them. This means that rather than acquiring the title to the physical unit, the buyer purchases shares of the company. A shareholder of the company is then entitled to a proprietary lease, giving him or her the right to occupy a specific unit.

Due to the varying nature of co-op and condo ownership, there are other noticeable differences between the two properties, including the application process, building types, pricing, and taxes.

How Does Cooperative Housing Work?

Co-ops, specifically ones situated in Chicago, often feature old historic buildings, boasting stunning architecture, unbeatable character and unique floor plans in each unit.

In a cooperative building, residents may get a few units on each floor or even multiple stories. Generally, the larger the apartment, the more shares the buyer must purchase.

When it comes to obtaining cooperative housing, buyers should know that it is a more restrictive process than condo purchases for a few reasons.

While cooperative housing allows financing, there are many more limits in place compared to condo purchases. Also, the co-op board has a major say as to who moves into the building. However, no person can be turned down because of age, race, sexual orientation, or religion (or other discrimination categories defined by both state and federal statutes).

Buyers must go through an approval process to make sure they can afford their share of the building. The cooperative housing process frequently involves an application, a detailed balance sheet, and several personal and professional letters of reference. Some co-ops also request to see tax returns. Once the co-op board has received and reviewed the buyer’s application, an interview is scheduled, and then the buyer may be officially approved.

Once buyers are approved, they are discouraged or prohibited from leasing or flipping the unit for investment. Cooperatives promote long-term residency, as opposed to many condominium buildings.

Co-op vs Condo Advantages and Disadvantages

Since co-ops and condos are uniquely different, they each offer their own advantages and disadvantages. It is important for house hunters to consider the pros and cons of each to determine which property is most suited for them.

Co-ops– While one of the advantages of living in a co-op includes getting a better deal per square feet than condo units, higher monthly fees pose as a disadvantage.

The buying and selling process is a bit more tricky when it comes to cooperatives. Not only is the application process more extensive, but loans are more challenging. It is always wise to involve a broker who can provide critical knowledge and guidance during these stages.

This extensive buying process partially explains why the resale time for co-ops is much longer than condos. In fact, million dollar cooperatives have been known to sit on the market for years.

While co-ops are more restrictive than condos, these buildings are known for being managed extremely well.

Condos- For any home buyer seeking an investment, condominiums are the way to go. Not only is the resale process much quicker and easier, but leasing out condos is generally permitted, unlike co-ops.

While the ease of leasing and moving out of condos may be an advantage for some, this also may pose as a disadvantage for those looking for a more permanent place with a tight-knit community. Condominiums often have a higher turnover rate, with new residents frequently coming and going.

Who’s Responsible? Condo vs. Co-op Maintenance Fees

Many buyers are surprised to learn that monthly co-op fees are higher than condo fees. The reason for this is that co-ops bundle multiple expenses into one bill, including gas, water, and property tax.

Condominium maintenance fees, on the other hand, strictly reflect the expense of maintaining the building.

Maintenance fees can vary dramatically in price, for both condos and co-ops.

While HOA fees are standard across the board for all condo owners in the same building, the fees that residents pay for a co-op are based on their percent of shares in the company. For example, if a co-op shareholder owns 10 percent of the building, they will pay 10 percent of the maintenance bills.

While some buyers appreciate this expense method, people who travel frequently may not find it to be cost effective.

Condo vs. Co-op Taxes — What You Can Expect

If you are a condo owner and own the physical unit, you are expected to pay separate and individual property tax.

Co-ops, on the other hand, do not require separate tax payments. Instead, monthly maintenance fees include property taxes. This is because the government taxes the entire building as one entity and then that cost is distributed based on the percentage interest of the co-op owners through maintenance fees.

Condo owners can often expect higher property taxes. Because condominiums are newer, larger, and come with more amenities, they tend to have a higher market value, which results in increased taxes.

The cost of property taxes for both condos and co-ops are dependent on the mill levy and the assessed value of your property. The mill levy is simply the tax rate imposed on your property value and varies depending on the tax jurisdiction. The assessed value of your property is an annual estimation of the reasonable market value of your condo or co-op based upon local real estate conditions. These conditions may include factors such as the selling price of similar properties in the area, replacement costs for the property, and maintenance costs for the property owner.

To determine the property tax for your home, the assessed value is multiplied by the mill levy.

Where Can You Find Co-op Chicago Housing?

If you find yourself drawn to the idea of cooperative housing, but not sure where to look, we have got you covered.

In Chicago, you will find co-op housing in the best parts of the city with the greatest views. Neighborhoods like Lakeview, Lincoln Park, Gold Coast, and Hyde Park boast incredible pre-War and Art Deco cooperative buildings.

Cooperative Communities of Chicago offers a fantastic resource for anyone looking to learn more or find a co-op property in the city for themselves. Not only does this co-op hub offer insight and advice to prospective buyers, but it also provides a directory of currently available co-op listings in the Chicago area.

Recently, Logan Square has seen various co-ops pop up on the market. The Ema Goldman Cooperative offers beautiful multi-family living quarters in a unique 1920’s era flat. Check out the available unit with three bedrooms, two baths.

Little Italy also offers a fair selection of co-op housing, including the HUB Housing Cooperative which features a six-unit apartment building with two units currently available. This co-op focuses on sustainable living offering residents a large storage space for bicycles, compost recycling, and community sustainable agriculture.

Whether you are looking for a home rich in history and character or a breezy buying and selling process, condos and cooperatives both offer home buyers unique benefits.

Contact an experienced real estate expert today to help find the property that best fits your needs today!

Planning Your Investment: Condo vs Townhome Resale Value

If you are looking for a wise investment, it is crucial to investigate condo vs. townhome resale value before making a big purchase.

Here is everything you need to ensure long-term value of your potential townhome or condo.

Overview of Reselling a Condo

If you are leaning towards a condominium investment, the good news is that these properties typically sell much quickerthan single-family homes, even in a down-market, due to lower costs.

To ensure higher resale values, buyers need to select condo units carefully. It is essential to take into consideration factors such as the resale history of other units in the building, current property values, and the local real estate market.

When condo owners are ready to resell, it is also critical to get up to speed on the condo association’s rules and guidelines as to what can be done with the units. Associations may place limits on who the condo may be sold to, buyer pre-approval and where you place for-sale signs.

Setting your home apart from the other similar surrounding condo units and communities involves highlighting your condo’s assets and neighborhood amenities. Determining a competitive selling point is also crucial to the success of your resale.

Overview of Reselling a Townhome

The process of reselling a townhome closely mirrors that of a condo. However, sellers have found that townhomes tend to have lower resale values.

Not only can it be more challenging to fill a townhome community, but it is often harder to obtain financing for townhomes. This is due to the increased liability of owning both the land and the physical structure.

On the positive side, determining a fair selling price of a townhome is relatively easy because of the many similar properties in the community.

When listing a townhome, it is also critical to highlight the amenities of the community and the HOA dues that the buyer will encounter.

Where you Can Look to Find a Good Investment

Finding a worthwhile investment, whether that involves the purchase of a condo or townhome, involves finding a desirable location and community.

Here are a couple of questions you may want to ponder to determine if you have found an ideal area for the ideal investment:

  • Is the property in an area where properties are in demand, such as near a college or university?
  • Is the property in an area that is getting less popular or more popular?
  • Could a major employer in the area close down and cause rental/purchase demand to decline?
  • Could a new condo development be built nearby, requiring expensive improvements to compete?

Now that you are up to speed with condo vs. townhome resale value, it is time to start planning that perfect property investment!

Condo vs. Townhome Insurance — What’s the Difference?

When it comes to examining property insurance, the good news is that both condo and townhome insurance tend to run less expensive than single-family home insurance. However, it is important for any potential buyer to understand condo vs. townhome insurance.

Types of Coverage You’ll Need in a Condo

The key distinction between condo and townhome insurance comes down to the areas each property owner is responsible for.

While townhome owners need to provide coverage for the interior and exterior of their property, condominium owners claim responsibility for the interior of their unit, while HOA covers the exterior.

If you are considering purchasing a condominium, the good news is that condo associations take some of the insurance burden off the owners by providing partial coverage. However, condo owners still need additional protection through individual homeowners insurance policies.

Before determining what coverage a condo owner needs, it is critical to first examine the condo association’s policy found in the HOA’s declaration pages.

Often condominium HOA insurance policies will cover the common areas and most of the building’s exterior.  However, individual owners are responsible for the inside of their unit.

Individual condo insurance, known as HO-6 insurance, covers the interior of each condo unit, the condo owners’ possessions, and provides the owner with a liability policy.

The average cost of a homeowner’s insurance policy for an Illinois condo runs approximately $365 per year or $30 per month, which is relatively low compared to the rest of the country.

Types of Coverage You’ll Need in a Townhome

Townhome insurance, known as HO-3,  generally works the same as insuring a detached single-family home.

The insurance policy covers the unit as well as any outdoor space the owner has title to. This outdoor space includes the yard and any patio or balcony that the townhome may offer.

HO-3 covers fire damage and some storm damage, however flood and earthquake insurance are both optional coverage the homeowner may chose to add.

Similarly to condo homeowner associations, townhome HOAs cover any common space that residents have access to.

The price for townhome insurance can vary dramatically depending on which coverage the resident choses to include in their policy.

Which Type of Insurance is More Expensive

Townhome insurance coverage tends to cost more than condo insurance because it is more expansive.  A townhome owner has more ownership than a condo owner, since they have title to the interior and exterior of the unit, therefore they have greater risk associated with their property.

However, depending on individual insurance plans, it is important that prices may vary drastically.

Before choosing your perfect property make sure you take the insurance costs into consideration so that you can budget accordingly.

Understanding condo vs. townhome insurance can help you avoid potential discrepancies during your purchasing process.

What Are Townhome Fees Like?

Many people find townhomes so appealing because they boast benefits of single-family properties, like the yard and multiple stories, yet often come with the convenience of a condo, including less maintenance and community amenities.

If this sounds like the best of both worlds, then a townhome may be the ideal property for you. Before making the big decision, here is everything you need to know to avoid being blindsided by townhome fees.

Townhome HOA Fees

Townhome residents are members of their neighborhood’s HOA, which requires monthly or annual dues.

Member fees ensure common space maintenance and upkeep, which may include activities like pest control of common areas and garbage removal. Despite the extra cost, these fees save residents time and energy.

Another plus for townhome owners is that their HOA fees are usually less expensive than condo fees because the HOA is less involved in property maintenance.

While townhome owners’ monthly expenses are lower than condo owners, maintenance work can require much higher out of pocket expenses because unit owners are solely responsible for the indoor and outdoor space of their unit.

On average HOA fees will run townhome residents $200 to $400 per month depending on services and amenities that the neighborhood provides.

It is also important to be aware that these fees can potentially increase over time. In order to stay up to speed with these changes, it is critical that townhome owners regularly attend HOA meetings.

Along with monthly or annual HOA dues, townhome owners are also responsible for paying utilities, taxes, and mortgages. While these costs work just like a single-family home, the good news is they tend to cost residents less.

Luxury Amenities that may Cost More

While luxury amenities may draw buyers into a condo community, it is important to know that the more bells and whistles offered, the higher the price for residents.

Since townhome owners help indirectly fund these luxury features through their HOA fees, as these amenities increase, so do those member dues.

While the list of potential community amenities is vast, popular bonus features include community pools, spas, gyms, outdoor parks, security systems, and gate security guards.

While townhome fees may not be any buyer’s favorite topic, it is important to understand that they enable residents to enjoy the convenient, low maintenance living that so many townhome communities offer.

Now that you can feel more confident understanding townhome fees, begin the search for your perfect home today!

What Do Average Condo Fees Cost?

While condominiums are more affordable than single-family homes, potential condo owners need to be aware of the average condo fees that come with the investment.

What the Average Condo Fees Are

Condo owners can expect to pay a few different fees with their purchase, including move-in costs, property tax, and HOA expenses.

When purchasing a condo, buyers may pay between $100 to $400 in move-in fees, and that price can quickly increase if the unit is intended to be leased out.

Property taxes can vary drastically, even for similarly priced condo units, depending on the location and neighborhood. However, these taxes generally remain less expensive than single-family homes due to less space per taxpayer.

Because condominiums offer residents shared common areas, building maintenance, and landscaping, residents are required to pay monthly or annual HOA dues. These additional costs allow the homeowner’s association to fund, manage, and protect these shared spaces outside of the individual units.

Unfortunately, condominium HOA fees tend to be the priciest out there. These costs can run residents anywhere from$1,200 to $8,000 annually depending on what services the HOA covers.

This gap in average HOA fees is so significant because these fees depend on many variables, such as the community’s reputation, age, and location, as well as the amenities that the condominium offers.

What you Can Expect to Pay

When it comes to condo fees, the windy city is already on the higher end of the spectrum. A report from Trulia also reveals that HOA fees specifically are on the rise.

According to the same report, the older the condominium building, the higher the HOA fees. These fees also increase when there are more units within the building.

HOA fees for condo buildings with 20 to 29 run on-average $160 higher per month more than single-family detached homes within a development. Buildings with 50 or more units have monthly HOA fees that are $330 higher than the same single-family homes.

The report also estimates that condo owners can expect to pay an extra $30 per month for each additional bedroom that the unit offers.

A Chicago condo owner can expect to pay an average of $342 in HOA fees monthly. This number is on the higher end of the national averages, but not the highest.

Expect to Pay More with Luxury Amenities

While standard amenities, such as a pool and fitness center, typically run residents around $300 to $500 per month, additional luxury amenities can quickly skyrocket HOA fees.

These upgraded amenities may include outdoor dog facilities, room-service, maid-service, spas, concierge, valet, and 24-hour security. When condominiums provide these extra amenities, monthly HOA fees can easily run residents over $1,000 per month.

When condo shopping it is very important to research the community amenities and the additional costs associated with these benefits.

To successfully budget for your future home, don’t forget to take into consideration all of the condo fees that may come with your purchase.

What is a Condo Community Like?

Condo communities offer residents a convenient and comfortable lifestyle.

While condos may not provide the same amount of space as single-family homes, they do offer less maintenance, extra amenities, and opportunities for a close-knit community all at a more reasonable cost.

How Condo Communities Typically Function

By definition, a condo community consists of a single building or multiple buildings with separate units owned independently. Condominiums are often adjacent to other units, and unlike townhomes, may also be situated above or below the other units, particularly if the building is a high-rise.

Although each condominium unit is independently owned, and frequently leased out, the entire condominium is managed by the community’s homeowners’ association.

Every homeowner is a member of HOA and pays annual or monthly dues which help fund community amenities, such as a pool and gym, and provide services including garbage removal and building maintenance.

Do you Have to Attend Homeowners’ Association Meetings?

Condo community HOA meetings may take place on a regular or annual basis.

As members and critical voices of the condominium’s HOA, residents are strongly encouraged to attend these meetings.

While meetings generally are not mandatory, they provide a forum for critical discussion regarding homeowner issues and opportunities to make changes. Decisions made during these meetings also impact members property values, therefore remain very important for any townhome owner.

Topics of discussion at HOA meetings may include altering the budget, electing a new board of directors, or voting on amendments to the HOAs governing documents.

Attending HOA meetings additionally provides residents a terrific opportunity to connect with other neighbors and enhance the sense of community.

How you Share Common Areas

If you live in a condominium, it is not uncommon for neighbors to cross paths due to a large amount of shared common space.

While common areas vary depending on the specific condo community, many residents share hallways, stairs, lobbies, elevators, parking lots, and building entries and exits.

It is not uncommon for condos to provide shared parking lots or garages, but reserving a spot often comes at an additional cost to residents. Condo owners can learn more about parking regulations through their HOA’s governing documents.

Additional common space for condo neighborhoods to share may include amenities such as a community park, lounge, pool, gym or tennis court. These amenities are optional for residents to take advantage of, however, each unit owner should be aware that he or she is helping to fund these amenities through their HOA dues.

Utilizing these common areas provide residents with great activities and opportunities to socialize and get to know neighbors in the community,

Take advantage of all of the convenience condo communities offer and find your perfect home today!

What is a Townhome Community Like?

If you find yourself drawn to the amenities and convenience of a condo, but not prepared to sacrifice your own yard space, then a townhome may be the perfect property for you.

Here is everything you need to know about living in a townhome community!

How Townhomes Typically Function

A townhome community is made up of conjoined single-family homes, meaning that each unit may have multiple floors and share one or more walls with the neighboring unit(s). Each unit is individually owned and may be leased out.

When a person purchases a townhome, they are gaining title to their individual unit as well as the yard or space outside of the unit. This space may also include a balcony or porch.

While this outdoor space is under the resident’s ownership, the community’s homeowners’ association take care of the maintenance. This means that townhome owners can enjoy the perfectly kept yard year round, without even having to touch a lawnmower.

Although townhome owners do not have to worry about the physical yard work, their checkbooks indirectly fund this maintenance through their annual or monthly HOA fees.

HOA also funds additional amenities and services that the neighborhood provides, such as community surveillance cameras and garbage removal.

How Easy it is to Meet New People

Meeting new people in a townhome community rarely poses a challenge for residents.

Close proximity to neighbors opens the door for social opportunities and an extra sense of security in the community.

It is easy to get to know the people around you and keep an eye out for each other’s property and suspicious activity, ensuring a better night’s rest and worry-free trips away from home.

Townhome communities also boast lower turnover rates than condominiums, meaning that residents often stay put for more extended periods of time which also promotes better neighbor relations.

How You Share the Common Areas

Typically townhome residents share at least one wall the neighboring unit and sometimes a driveway as well.

While the idea of sharing a wall with neighbors may spark hesitation, rest assured that party walls divide the townhome units. These unique walls are built using quality soundproofing and special materials to help block out sound from neighboring units.

Neighbors in townhome communities often have the opportunity to share common spaces and amenities. Depending on the specific neighborhood, these may include pools, parks, gyms, and recreation rooms for hosting the perfect party.

While all townhome residents have access to these common areas through their HOA fees, these additional amenities are all optional for residents to enjoy.

Experience the convenience and community that a townhome has to offer and find your perfect home today!

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