Own Your Own Vs. Co-op

[Lee Steidel]

Could someone please explain the technical difference to me between co-ops and own-your-owns? They are listed separately on my local MLS. Do you use the same Fannie Mae Form 1075 for both?

 

[Walter Kirk]

If you own a co-op you own stock in the corporation which owns the real estate, you don't own real estate. I wouldn't use any abreviated form to report on a co-op. With the exception of New York City co-ops are rare and in many cases the ownership of co-op shares is limited to members of certain groups and resales are limited by the co-op rules, sometimes sales price is limited.

Unless you are very familiar with co-ops I would suggest turning the appraisal request over to someone with experience.

 

[Pamela Crowley (Florida)]

LISTEN TO WALT!!!!

No way I would touch a co-op appraisal since I couldn't pass the competency rule and I don't even want to begin to try!!!

Danger, Danger, Danger!

 

[Patrick Egger]

Lee ...

you might find some answer's here

Co-op

or here

co-ops on yahoo

or here

overview

There are government sponsored financing programs set up for qualified co-ops and you appraise them with the sales comparision approach on the same forms used for condo's. The difference is that the purchase price is for the stock, not the real estate and you have to be familiar with the co-op reg's for the one you are appraising as there may be substantial restrictions on price, the number of units sold each year, etc.

I would imagine that since you are valuing the stock, its a personal property appraisal and like Walt & Pam said ... be careful and get someone with experience to assit you.

 

[Lee Steidel]

Thanks for your feedback everyone. Long Beach, CA has a lot of both OYO's and co-ops in close proximity to the ocean. I called title company for information and subject is an OYO. Apparently only one local lender specializes in their financing. Most OYO are small older apartment buildings most of which were originally built in the 1950's. Due to current parking ratio requirements they do no qualify for condo conversions which became popular here in the late 1970's. Thought I would share this information I received as a result of Patrick's resource links:
*******
In an own your own, you have title to real estate and are responsible for all taxes and mortgage payments, and have to get your own financing.

In a co-op, you own a share (personal property) in the co-op and are entitled to occupy a unit. The co-op owns the real estate, gets financing on the building, pays the taxes. In the US, tax law allows individuals to take a federal tax deduction for a proportionate share of the interest and taxes that the co-op pays on your behalf.


Douglas M. Kleine, CAE
Executive Director
National Association of Housing Cooperatives
1707 H St. NW #201
Washington, DC 20006
202-737-0797, x321
fax 202-783-7869
www.coophousing.org

 

[Mike Garrett RAA]

I wouldn't attempt an appraisal of a co-op either. Actually, I don't believe there are any in my county other than those ag co-ops. Own-your-own is a term I have never heard before and I have been in the real estate game for 35+ years. Guess that might be a condo here???

 

[Monica Otto]

I agree with everyone else. I wouldnt do one unless I had a lot of help from someone who had. I run across them from time to time in Florida, but have never had to complete an assignment. Everytime I have gotten one, I have called the lender and told them what it was, and they cancelled the loan. Not too many lenders will handle them.

 

[Don Clark]

B) Not much to add except..........................run like hell

Also, since the stock you purchase in a co op is an interest in real estate, they are cosidered an appraisal of real estate. I believe you will find that in USPAP any interest in real estate, whether fractional, by stock, in a corporation(say co op), or to whatever degree an interest is held, it is real estate. I was at an appraisal board meeting where the attorney for an appraiser tried to argue that since his client did an appraisal of a co op the state laws regarding real estate appraisers did not apply. That attorney got a quick lesson in real estate law. At least that's how we see it in Virginia.

Don

 

[Lee Steidel]

Thanks, everyone! I finally got the answer I was seeking!!

OYO’s are pre-condominium law creation.

For some reason they are only really prevalent in the following areas of Southern California: Long Beach, Glendale, Pasadena, Arcadia and some parts of Santa Monica – only areas with 1950’s genre apartments.

Both condos and OYO are fee simple with individual tax bills and deeds. With an OYO, you own a common interest with the right to occupy a certain space. Most OYO are eligible for condo conversion status and approximately 33% of OYO’s elect to convert at some point.The reason OYO’s are not condos is that most OYO’s were built in the 1950’s and condos were not legally created the late 1960’s. OYO’s are fee simple ownership and financing is available based on an owner’s individual interest. Unlike stock cooperatives, they have no blanket mortgage and are taxed and deeded separately just like condos.

Downside to them is that financing is more difficult and expensive due to lack of competition. Due to the specialized market segment for OYO’s, there are only four PORTFOLIO lenders who make loans on them in Southern California and Quaker City is one of them. FNMA, FHA etc. do not lend on OYO’s. Also most are too small to be operated by professional management companies, so most are operated by directors voted in by owners.

Upside is that OYO are priced 20% below similar condos and if converted to condo status, they then become worth approximately 15% more.

BASIC DIFFERENCE IS LEGAL DESCRIPTION. A condo will read ”Condominium Unit 10 and an undiv…..”, whereas an OYO will read “Apartment Unit # 10 and an undivided interest….”

Accordingly, OYO’s should be appraised using a condo form.

 

[Frederick R. Ruffell]

Some of the first appraisals I performed were co-op's in San Francisco. Not any more difficult than a condo. Be careful, some co-ops will restrict the sales price as they are designated as "affordable housing " . Most buildings have a manager that Can be very helpful with sales info. check for land lease!