Using a Co-op as Comp for Condo

[EXSTATECERT]

John. Here in Florida you best not compare a condo with something that is not a condo. There are plenty of puds here that are condo's under condo rules. The meaning of a pud, Planned Unit Development. Means nothing as to the Rights of ownership. I feel you are a bit confused about the meaning of PUD. But maybe its different in Cal.
Secondly how can you adjust for the damages when some owners leave a condo "skip out" vs the damages to a co-op. I feel again this is an impossible task. A co-op is a corporation that has IRS payments involved. The condo does not.

 

[Kevin Mc]

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.

Never,ever,ever. Go old, go far but go coop.

 

[John Hassler]

Hey ExCert, I claim ignorance as to condo/PUD ownership rights and appraising in Florida. The reference I was making is that with condos you own airspace and with a PUD (in CA at least) you own the land. Those are different ownership rights yet mixing the two types is common appraisal practice here as they appeal to the same general buyer.

My other point was to look at this as an "appraisal problem" which needs to be solved, not an exercise in filling out a form. For atypical appraisal problems I like to work out multiple soultions even if I don't include them in my report.

As to the OP, I would use properties which compete best in the market with the subject. Would a condo buyer really consider a coop, or vice versa? You may need to check with a few sales agents and find out.

 

[V. Nightshade]

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

Somehow I don't envision the high-end view-seeking highrise apartment buyer much caring about form of ownership of exclusive-dwelling A vs. exclusive-dwelling B. In San Francisco the buyer is looking for the room with a view. Anyway, I'm glad that you all disagree, and thank you for your enlightening opinions, always. Now I can go do my own thing with impunity! Appraisal rules and methodology can be so old fashioned and nit picky. Also, I wonder if NY, where coops used to be the norm, and condos the new cool thing, is different than S.F., where condos have led the way. In fact, I wonder why did they even make these few buildings into co-ops? Actually, I'll answer my own question: I bet the stock cooperatives preceded the condos, and the elegant apartment houses used to be apartments that were converted into condos in the 1970's.

 

[timd354]

Appraisal rules and methodology can be so old fashioned and nit picky.
Yeah, its real old fashioned and nit-picky to actually try to use an actual property interest which is similar to the subject property interest being appraised as a comparable sale....but suit yourself and go ahead and appraise a non-real property interest of shares in a cooperative corporation by using sales of real property interests which are not in all comparable due to the differing property interests involved.
Also, I wonder if NY, where coops used to be the norm, and condos the new cool thing, is different than S.F., where condos have led the way. In fact, I wonder why did they even make these few buildings into co-ops? Actually, I'll answer my own question: I bet the stock cooperatives preceded the condos, and the elegant apartment houses used to be apartments that were converted into condos in the 1970's.

The real answer to the question of why cooperatives were created in NYC and are still created in NYC and have spread to some other areas is that shareholders in cooperatives have control over who will be allowed to purchase an interest in the cooperative (so they can keep out the "undesirables"....which in days gone by usually meant minorities and nowadays means people of a lower perceived social class) and units owners in a condominium project typically have no control over who purchases a unit within the project.

 

[Kevin Mc]

Now I can go do my own thing with impunity! Appraisal rules and methodology can be so old fashioned and nit picky.

If you compare coops to condos you are making a mistake, period.

Also, I wonder if NY, where coops used to be the norm, and condos the new cool thing, is different than S.F., where condos have led the way. In fact, I wonder why did they even make these few buildings into co-ops?

Bulk cooperative conversion started in the late 60s in NYC. It was a way for sponsors (owners) to cash out the buildings that they owned and invest in other forms of real estate. Hemsley, Fisher Bros.,Trump (the father) and several others developed a larger part of their commercial building portfolios based on the profits made from converting their rental buildings into cooperatives. There still exist rentals units in some of these buildings to this day. Condos are not that new and came in in the mid 70s. The vast majority of Condo buildings are new built. Conversion of existing buildings to condo is far too costly and time consuming, thus the push towards Cooperative. Timd is right on one level in that nowadays coops can be extremely selective and employ some very stringent financial guidelines to prospective buyers thus giving the shareholders complete control as to who does or does not move in. Condo ownership, like home ownership requires to purchaser to have nothing more than a down payment and a pulse. You can sell your condo to Charles Manson and your fellow building owners cannot stop you provided he gets a mortgage.

 

[EXSTATECERT]

Please to all who would still think of comparing a condo to a co-op, Enjoy your money you have and insurance you have. You won't have it for long. These 2 types of ownership can not be calculated into dollars and cents. Never, Nada, Nohow, If you still want to, than I suggest going back to appraising 101 and start over. If there are no comparables around, including older comps, far away comps etc. Lets say that there are no other co-ops in the entire state, Than it is possible that it can not be appraised. We have run into an appraisal in the past, "A while ago" that we could not appraise the subject. Every way we tried, Sales comparison, Cost approach, Income approach, would need to much speculation as to the proper value. we advised the client, They than turned it over to a general appraiser who actually did a brick by brick cost approach. We asked the State General if he would advise us on how and what value he came in at. We would have been 40% off his valuation. We understood that the assignment could not be completed by a residential appraiser and gave the assignment back after quite a time checking data.
Be smart, Think before you jump.