Using a Co-op as Comp for Condo

[V. Nightshade]

I am appraising a high rise building for estate valuation purposes. The best comps are from a similar building that is a co-op. (Cooperative ownership is not the norm in San Francisco.) Is there any way that I can use them as comps? The owner is the corporation, of course, and the "sale price" is listed in the MLS, and there is an "assessed value" in the tax record.

 

[Eli Weiss]

Who can answer this better then a New Yorker....:blush:

In New York City a co-op unit will sell for less then a condo of similar size and amenities...

First of all, a co-op ownership is not fee simple, there is financing restrictions, board approval and not suitable for international investor's....

I would use it only as additional support to value as a 5th or 6th comps, but not to base my value on it.

 

[John Hassler]

I had a similar appraisal problem recently for an appraisal across the Bay. There is only one co-op development in the county. I compared prices of condos vs co-ops at various periods in the past and derived a percentage adjustment for the differential attributable for type of property ownership. This appeared to be the best solution for my one-bedroom (rare in this area) property.

The alternative is to use older sales, those further afield, or a combination of all. Cool assignment, charge accordingly and enjoy!

 

[EXSTATECERT]

No never . They have a different set of ownership and rights. One is a corporation one is a condominium.

 

[MikeinLA]

The recent downturn puts an even greater divide between the two forms of ownership. When someone walks away from a condo, the other owners aren't generally affected (other than the loss of HOA fees which can sometimes be recovered). However, if I understand coops correctly, a unit from which the owner has "walked away" puts a real burden on all the owners. One possible ray of sunshine....here in LA, I have found many coops which show up in public record as coops, but when you call the HOA, you find that they actually converted to condos in the past and public records simply never picked it up. I'll say a little prayer for this being the case with your comp.

Mike

 

[timd354]

I am appraising a high rise building for estate valuation purposes. The best comps are from a similar building that is a co-op. (Cooperative ownership is not the norm in San Francisco.) Is there any way that I can use them as comps? The owner is the corporation, of course, and the "sale price" is listed in the MLS, and there is an "assessed value" in the tax record.

No way. How can you compare ownership of shares in a corporation which is not even a direct interest in real property to ownership of a condominium unit, which is a real property interest? They are simply not comparable.

 

[Howard Klahr]

The recent downturn puts an even greater divide between the two forms of ownership. When someone walks away from a condo, the other owners aren't generally affected (other than the loss of HOA fees which can sometimes be recovered). However, if I understand coops correctly, a unit from which the owner has "walked away" puts a real burden on all the owners.

Actually, it is easier to get rid of someone from a co-op for failure to pay common fees than it is for a condominium. In a co-op it is handled thru an eviction process while a condominium is handled by foreclosure. Depending on the state, eviction is quicker and cheaper.

 

[Ann O'Rourke]

There are very few co-ops in California. There is one in my city, Alameda, which was set up after World War II (former worker housing). In the past, it was very easy to tell the difference in value between a condo and co-op. I always used sales within the co-op. There are a few others in Northern California. I recently appraised a co-op unit in Oakland (nearby) with an excellent lake view. It was retrospective back to July, 2008. I used two sales in the project - one after the effective date of value and one before and made time adjustments. I also used a condo sale nearby with a very similar unit and made a condo/co-op adjustment. It was similar with a similar view. In my research for a view adjustment I went back in time two years.

If I didn't have any sales, expireds, listings, etc. within the project it would have been very difficult.

 

[timd354]

There are very few co-ops in California. There is one in my city, Alameda, which was set up after World War II (former worker housing). In the past, it was very easy to tell the difference in value between a condo and co-op. I always used sales within the co-op. There are a few others in Northern California. I recently appraised a co-op unit in Oakland (nearby) with an excellent lake view. It was retrospective back to July, 2008. I used two sales in the project - one after the effective date of value and one before and made time adjustments. I also used a condo sale nearby with a very similar unit and made a condo/co-op adjustment. It was similar with a similar view. In my research for a view adjustment I went back in time two years.

If I didn't have any sales, expireds, listings, etc. within the project it would have been very difficult.

There is a development of former World War II worker housing just outside of Washington, DC that is a coop....the interesting part is that the cooperative consists of about 100 individual single family detached type homes....obviously anyone appraising an interest in that cooperative would have a very difficult time finding any comparable cooperative interests outside of that cooperative....I can't say that I am sorry that I have never appraised any interest in that cooperative.

 

[John Hassler]

They have a different set of ownership and rights. One is a corporation one is a condominium.

This is absolutely correct, the rights are different. However the underlying purchase is for shelter and the ownership rights can be adjusted for. This happens every time you compare a condo with a PUD. The ownership rights are different but they can be adjusted for based on market data.

In a perfect world I would never mix ownership types, but in a perfect world I wouldn't mix properties with different GLA, room count, or even the number of fireplaces. There will always be some appraisal assignments where good or even average market sales data is not available. That's why I suggested looking at the problem in more than one way. If market support for an adjustment like property ownership can be made (and I would tend to looks and multipe sets of data over different time periods), and is reasonable and reliable, then I see no issue. If the adjustment data is unreliable and unreasonable then reliance on a valuation method other than the SCA may be the best choice.