Appraising A Co-op Apartment

[Riick]

I had a request, a month or three ago, to appraise a Cooperative Apartment for "mortgage" purposes.
Since it's not real property, had no idea how to do it, and so turned it down.
(In fact, turned it down 4 times from 4 different sources, seems no one else wanted to deal with it either.)
Co-Ops are rare ducks around here, I know of only four Co-Op buildings though there are doubtless more.
I was wondering how the people in NYC and surrounding areas deal with these;
as I understand them buyer purchases stock in the entity that owns the building,
owning the stock also allows him to live in a specific apartment, but he never "owns" the unit.

 

[HF Mudd]

A shareholder in a cooperative does not have a fee simple interest in real property. The shareholder owns shares in the corporation and has a leasehold interest in the unit. That is the real property interest that is being appraised.

Of course it's not as easy as it looks. For example, units in buildings with high monthly maintenance costs tend to sell for less than those with lower monthly maintenance costs. The culprit is frequently a high underlying mortgage on the development (usually with a balloon payment). Full service buildings tend to have higher maintenance costs as well due to staffing costs. Floor location, view, condition, etc. can also have a major influence on value.

Experience with such appraisals is key, as it is in most assignments.

 

[J Grant]

In NYC and cities with lots of co-op apts there would be lots of comps. I personally would not want to do one but like anything else, if one does them a lot they get a feel for it. Many co-op units are sold all cash but there lenders who finance them ( i have no idea who they are)

 

[J Grant]

Many Co-op apts in Manhattan typically sell for millions of dollars...many boards are snobs and want the purchase to be all cash, or half cash down . Apart from some fair housing laws, Co op boards can discriminate financially/socially in creating bylaws, barriers to purchase. I used to sell RE in Manhattan and the upper crust buildings wanted a buyer to have twice the purchase price in liquid assets, have a certain net worth, be recommended by two people who live in the building etc Certain Boards were notorious for turning buyers down who were not of the social status the building wanted.

The lower price more ordinary co ops in Queens, Brooklyn etc will sell to regular people lol...but even they can behave pretty odd as to who they sell to and requirements.

 

[Joe Flacco]

It's not really any different from appraising a condo. The project information you need to gather is different.