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    What is a Co-op? (And Why Do They Get Such A Bad Rap?)



    Coldwell Banker’s Blog, Blue Matter, recently published a basic overview on purchasing a co-operative condominium and while quite basic, it clearly establishes some ins/outs of this type of purchase. A link is here:

    Over the years, I have seen buyers, attorneys and even real estate brokers shy away from co-ops, usually based on lack of knowledge. Since there aren’t a ton of them in Chicago, it’s quite possible that a Realtor may never have sold one, a buyer may not know anyone else that lives in one, and that an attorney has never handled a purchase/sale of a co-op apartment.

    One key difference that isn’t mentioned in this blog article, is that when reviewing co-ops online or through the MLS, the monthly maintenance fees usually *include* property taxes. Most listings will then note what the annual share of the property taxes are so that buyers can plan for their tax write-off. Many buyers mistakenly add that expense *on* to the monthly fee when in fact it’s already included. Since co-op assessments tend to skew higher than a condo monthlies, this often scares buyers off.

    Additionally, I’ve seen many lenders tell buyers that they “wont’ be able to re-sell” or “won’t qualify for a mortgage” in co-ops. Personally, I find that statements like these reflect a lack of knowledge by the mortgage broker/banker or a  genuine desire to help a purchaser find the right home for them. If you appreciate vintage detail, grand living spaces & historic charm, then one of Chicago’s premier co-op buildings may very well be for you.  While financing is more rigid with co-ops (if the building allows financing at all, it could range from 20-50% minimum down payment required), it is by no means unattainable. Again, you’d want to find a loan officer who specializes in co-ops (a great place to start is with the co-op itself, asking if they allow financing – and if so, which lenders have recently done loans in the building).

    Lastly, if you’re considering purchasing a co-op apartment, it’s important to work with a broker that understands how these work, and also to retain an attorney that specializes in this type of transaction. It is different than a traditional condominium sale and you need specialized expertise to ensure a smooth closing.

    I’ve sold co-ops before (like the one pictured at the start of this article). If you’re interested in purchasing a co-op apartment, contact me today: