Voted one of the best real estate agents in DC by the Washington City Paper Readers’ Choice Poll in 2009, hipchickindc aka the not-so-hip Suzanne Des Marais is an Associate Broker with Urban Pace. She lives (and sells a lot of houses) in Bloomingdale, but works all over DC, with everyone from first time buyers to highly regarded developers. Unless specifically noted, neither she nor the company that she is affiliated with represented any of the parties or were directly involved in the transaction reported below. Unless otherwise noted, the source of information is Metropolitan Regional Information Systems (MRIS), which is the local multiple listing system. Information is deemed reliable but not guaranteed.
Featured Property: 1731 20th St NW
Original List Price: $349,000.
List Price at Contract: $285,000.
List Date: 04/02/2010
Days on Market: 147
Settled Sales Price: $255,000.
Settlement Date: 09/27/2010
Seller Subsidy: $0.
Bank Owned?: No Short Sale? No
Type Of Financing: Since purchasing in a cooperative is not technically buying real estate, but rather buying a share in a corporation, co-op loans are an animal unto themselves. There are a small hand full of lenders who will do them. Because the financial health of the cooperative is tied together, co-ops often have their own rules regarding a minimum down payment.
Original GDoN is: here.
The Listing can be seen: here. To see the pics, after opening the listing link, click on the main pic and scroll through using the arrows.
As noted in the comments in the original Good Deal or Not (GDoN) post, this unit is in a building that is cooperatively owned. DC actually has a good number of co-op buildings all over the city. Although most were set up with that ownership structure several decades ago, both The Chastleton (at 16th and R St NW) and Capitol Hill Tower (near the new baseball stadium) are both examples of recently structured co-ops.
Living in a co-op feels a lot like living in a condo unit. (I’ve owned in both situations). With condominium ownership, each owner individually owns their unit, while co-op owners cooperatively own the building. What is effectively being purchased is a certain number of shares in a corporation and in turn the owner receives a proprietary lease to the unit. Given that purchasing a co-op is not technically a real estate transaction, one of the advantages used to be that the District did not expect transfer and recordation taxes at settlement, which meant for very low closing costs. Unfortunately, co-ops are now subject to both transfer and recordation, as in regular real estate transactions.
Continues after the jump.
The challenge with looking at co-ops as GDoNs is that they are not true comparables to condos. Most agents and buyers are used to thinking in terms of condo prices. For the same reason that it makes absolutely no sense to compare the price per square feet of houses to condos, it doesn’t work to valuate co-ops in relation to condos. Why? All three are a completely different type of ownership structure.
In the GDoN post, the $508. monthly fee is called out as being “fairly high”, whereas it is probably on the low side compared to a lot of other buildings. It’s important to note that because there is not an individual tax bill generated for each unit in a cooperatively owned building, the taxes are typically paid via the monthly fee. Many buildings also have financing tied to the entire building, which is known as an underlying mortgage. One of the reasons this fee is on the lower side is because the agent mentions specifically that there is no underlying mortgage. In the case where there is an underlying mortgage, even though the monthly fee is higher, the mortgage held by the individual shareholder is adjusted to offset the amount of the building that is currently being financed.
I know. It’s complicated.
Back to the issue of comparing the value of co-ops and condos…What if you are not sure about whether to buy a co-op or a condo? One way of comparing is to look at the overall cost of ownership in either structure. Even with a unit that has a $1000.+ per month monthly fee, it is sometimes possible to purchase a co-op for a lower monthly outlay than a condo unit of similar size and condition.