Many of today's Buyers don't understand the difference between a co-op and a condo. What is the distinction and how do the differences influence your decision? Co-ops are fairly prevalent here in the rainy city and it's important to understand what you are buying into.
The main difference between a housing co-op and a condo is that in a co-op you don't directly own real estate. You are technically purchasing shares in a cooperative housing corporation. The corporation owns or leases the actual real estate and becoming a shareholder in the corporation allows you an exclusive right to live in a specific unit. This membership allows you to have a vote in the decision making processes of the corporation. The reality of this situation is that you are more involved in making decisions together as a group than you would if you were living in a condo.
Rules and regulations tend to be more on the stringent side when it comes to co-ops compared to condos. Co-ops tend to only allow owner occupied residency, meaning NO RENTALS. Pet policies also tend to be more strict, although I have seen some co-ops that allow small pets. Sometimes it is more difficult to perform changes on your unit, whereas condo associations seem to be a bit more liberal when it comes to allowing owners to make changes and updates.
One of the biggest differences between co-ops and condos is the financing. There are few lenders in Seattle that offer co-op financing and when they do, the typical down payment minimum is 5%. Potential co-op owners also typically have to be interviewed by the board in order to complete the purchase.
Co-ops can be a more affordable way to make an investment in the Seattle market where many Buyers are being priced out. Both Capitol Hill and Queen Anne tend to have quite a few co-op listings at very reasonable prices. But make sure your Realtor helps you understand the differences to make sure you are getting into what's right for you.
To learn a little of the ins and outs of owning a condo, watch the video below that we produced a couple of years ago that answers many questions.