California Condos and Coops

[Lost Cause]

The title is a tad misleading; I am really inquiring about San Francisco, but that's not alliterative.

Anyway, I have a question for those of you who have some experience valuing condominiums in the San Francisco area. I have been appraising condo and coop apartments here in New York City for a long, long time. In this market one never compares condos to coops; they are completely different property types and appeal to entirely different markets. Now I have a lender here at the bank telling me that in San Francisco these types commonly compete for the same potential purchasers and the market does not recognize a significant difference. What say you experienced SF appraisers; does this make sense to you? Thanks...

 

[Vernon Martin]

I'm in LA, but the differences between condos and co-ops seem to be the same in all markets. Co-ops are difficult to sell here in LA, so much so that they're not even called co-ops.

Loan officers love to BS out-of-town appraisers.

 

[Smokey Bear]

Funny, I'm from San Francisco, and know there are condos there, but never heard of a co-op there. They do tenants in common for smaller condo conversions (due to condo conversion laws) but I've NEVER heard of a co-op there. That seems to be a New York thing.

 

[Restrain]

It would seem that the ownership differences, approvals needed to buy in a co-op, etc, would preclude a similarity. However, the market itself should show a difference through the use of typical sales comparisons.

 

[ghrousseau]

The title is a tad misleading; I am really inquiring about San Francisco, but that's not alliterative.

Anyway, I have a question for those of you who have some experience valuing condominiums in the San Francisco area. I have been appraising condo and coop apartments here in New York City for a long, long time. In this market one never compares condos to coops; they are completely different property types and appeal to entirely different markets. Now I have a lender here at the bank telling me that in San Francisco these types commonly compete for the same potential purchasers and the market does not recognize a significant difference. What say you experienced SF appraisers; does this make sense to you? Thanks...

Cooperatives are very hard to finance, so I do believe the market makes a distinction. I think you will find your market data reflects this.

 

[Lost Cause]

Thanks, Everyone

Thanks to everyone for their responses.

I understand that coops are pretty rare outside of New York City and a limited number of other areas. It could be a lack of familiarity with coops that is fueling claims that they are comparable to condo apartments. I've never seen an appraiser here use coop apartments as comparables for condo apartments or vice versa. The differences are significant enough that I have my doubts any kind of matched pair analysis would be effective in quantifying the differences in market appeal. Furthermore, I suspect this is true no matter what the location.

Cynthia, there are at least five coop projects that I know of in or near the Pacific Heights neighborhood of San Francisco. They are all five high- or mid-rise apartment buildings.

Financing of coop apartments in New York City is not difficult, but that would be because they are so common here and people are used to the concept. I am not surprised to hear that financing of coops can be difficult elsewhere. They are so different from most forms of ownership that if one only sees a handful, it would be quite difficult to develop a thorough understanding of them.

My next step will be to call some experienced appraisers in San Franciso to see what their take on this is, but if anyone having experience with coops in SF has anything else to add here, it will be welcome.

 

[realbiz]

Not in San Fran, but I have run across them in Southern Cal. There are only a few, and as stated above financing is the hardest part. The buildings that I have done do compete with the condo's, but most buyers I have ran into do not know the difference between the two until they have financing problems since they are so rare. Sometimes the brokers do not know the difference, but I have run into some local realtors in those areas that are very knowledgeable. There is a difference in values between the two here.

 

[John Hassler]

FWIW I work the area just north of SF and recently finished an estate appraisal where I utilized co-ops and condos sales due to lack of data. Based on matched pairs, over the years the co-ops averaged about 8% less than condos of the same size & bed count. Whether this applies to SF I can not say. I do have access to SF MLS so PM me if that would be of use.

 

[Vernon Martin]

When I moved to California 20 years ago, the term "co-op" was not used. They were called OYO's ("Own-your-own"). The local lenders would not finance them, so many OYO's converted to condominium ownership instead. This would intuitively suggest that co-ops cannot be compared with condos for appraisal purposes in California.

Interestingly enough, I just read a New York appraisal report which said that at the "Super-Luxury" level of the residential market in Manhattan, buyers do not make a distinction between co-op or condo units. Is that true?

 

[Caligirl]

What you will find in San Francisco are TIC buildings (tenants in common). I don't do much residential work anymore but I can refer you to some appraisers who do, if it would be helpful.

http://www.sfticcoalition.com/resources.html