Manhattan Real Estate Glossary – the dish on Condos, Co-ops, Condops, Townhouse & Brownstone

Real estate in Manhattan is very different than anywhere else. If you are 1st time buyer or from other state, other country to search an apartment in New York City may seem a bit overwhelming at first time. Therefore, to understand the process, learning about the current market, terminology will be very important in order to help you to find your next perfect home.

Condominiums

Condos are considered real property in Manhattan. A condo is a multiple-unit dwelling in a building. The difference of ownership between Condo and Single house which is Condo’s owner owns him/her individual unit and share the common area with others. There are three instrument uses in the purchase of condo: 1) deed to the unit, 2) the declaration of condominium, and 3) the bylaw. I can also show you 5 tips for purchase Real Estate in Manhattan.

The condo managed under strict rules by the condo association or the board of managers. The board of managers is elected by the condo association and all the condo owners. The board of managers controls its house rule, including the cost of operating the building and sets the monthly maintenance expense (common charge). The owners of the building are jointly responsible for the cost of common area and responsible for the cost of its own unit. The owners have to pay their own tax of condominium units direct to the city and state, and are free to sell or lease it. The common charge does not including the real estate tax; however, the common charge is usually much lower than the co-op. There is no board approval process for any condos.

Condominiums – Pros
• Condos are generally less expensive than Townhouse in Manhattan
• Most Condo often including amenities such as pool, gym and rooftop or terrace
• Good to be a vacation home
• Easy approval
• Flexibility in financing
• Lower maintenance fee
• Freedom

Condominiums – Cons
• High price and Legal responsibility
• Noise from neighbors
Homeowner association fee, and building reserve fund
Building policy and CC&R restrictions
Share the common area
• The common areas and facilities of the condo complex are shared by each of the units’ owners

There are some other things to look out when purchase an apartment. Because you shear the walls with your neighbors, so you need to check on the soundproofing. Also check on how well the building is maintained and its quality of the construction if you can.

There are two type of condo. One is new construction or pre-construction which selling by developer of that condo. If you purchase a pre-construction condo, the benefits to you are the ability to customize it more. The builder usually will like to work with your idea of the customizations on bathrooms and kitchen. The price of pre-construction is usually lower than the market value. Once the developer finished the construction, the price could be easily swell up, and you could earn a great tidy profit. Developers are willing to take some risk to selling pre-construction, because the developers need investor funds to stay in business and usually the construction loan either not cheap or difficult to get. However, the disadvantages to you are the timing issue built up a symbiotic relationship with investors and builders. You may lose it all when the market has dramatically down turn. The pre-construction could be either delay the closing date or uncertain the closing date. You can’t check out the quality of the construction of building and soundproofing. Pre-construction was more popular on early 2003 and 2004. The new construction condos are selling by developer’s agency.

The other type is re-sale condo which sells by the current unit owner. Once the buyer becomes an owner, he/she will still pay the same common charge as the previous owner did. It may change until the condo association has new rule of the building common charge. The buyers could finance up to 90% of the purchase price.

Cooperation / Co-op

Co-op’s formal mane is cooperation. Which means the building owned by the by a corporation and operated for the benefit of persons living in the building. Co-op owners often referred as a proprietary lease and receives share of stock depending on the size of the unit. The co-op owners have the right to use their own unit of space. The ownership for co-op unit is considered as personal property. The owners of the unit dose not receive a title or deed for the unit that they purchased.

In Manhattan, the most prevalent buildings are co-op. It is about 85% of the buildings in NYC. The market value of the co-op unit is based on the number of the share, size of the unit, the building service offers, how much the reserve fund the building has and location of the building.

The co-op operated by the Board of Directors, whom elected annually by the shareholder at their annual meeting. The Board Directors determine the monthly maintenance fee and expenses in order to pay for the tax, staff and operate the building. Each shareholder pays their monthly maintenance is directly related to the number of shares that he/she owns in the co-op. and the cooperation use that money to pay real estate taxes, maintenance expenses and underlying mortgage on the building.

Cooperation – Pros
• Control your own living space
• As a shareholder, you are entitled to deduct your share of the real estate taxes and mortgage interest paid by the cooperative on tax years. Check out Tax Deductions for more info
• Most the buildings are co-op in Manhattan, and you have wide choice
Co-ops cost 20% to 30% less than the identical condos
Closing costs of approximately 1% of the contract price which is far less than condos
• A lot of new co-ops have a amnesties, pool, gym or Terrace

Cooperation – Cons
• Purchase the co-op is stringent co-op board
• It may restrictions on the sublease, allowing guarantor, co-purchase, gift money from parents, pied-a-terre
• Usually require a minimum down payment of 25%
• Most Boards inspect a prospective buyer’s liquid assets, income, debt, work history, etc.
• Often the monthly maintenance of amount exceed than condo’s common charge plus real estate tax
• When the owner of the unit sells their apartment, the buyer has to approval by the board through the application process.
• There is a flip tax when you sell the unit to benefit the building’s reserve fund
• Usually the unit is not allowed to use for business purpose
• Renovations may have to approval by the board

Though co-ops have many disadvantage than condos. Coops are still the most popular common form of properties in Manhattan. Since there are almost 4 times the number of co-ops vs. condos and by comparing co-ops with condos, the price are much more affordable.

In addition, there is other kind co-op called sponsor co-op building. The sponsor co-op is sold by the developer themselves. There isn’t a board approval for sponsor building. The sponsor won’t scrutinize the prospective buyer’s income, debt, liquid assets and work history as the standard co-op board dose. It is benefit for the buyers who don’t want go though the board approval or couldn’t show their income history. But the disadvantage is the sponsor attempts pass along those transfer tax cost to the buyer and also most likely you will have to pay the sponsor’s legal fees for the closing cost. If it is $1mm coop, you most likely to pay $18K for transfer tax and around $2K or more for high-end law firms which usually the sponsor would be using.

Condops
There are few buildings called Condops. Condop is a coop that has rule and by-law similar to condo. It is the co-ops operated by the condos rule. There isn’t a board approval. It has the freedom of sublet. It put only 10% down at closing. It is a lot of flexibility for investors. The closing cost will be similar to coop. It is a personal property which means you will be buying shares rather than real property. You won’t have a title or deed.

Townhouses
Most Townhouse in Manhattan built in 18th or 19th century. Townhouses in Manhattan often can be excellent single family homes or were converted to multiple Condon buildings. These houses usually feature fireplaces, moldings and prewar characteristics. A definition of the townhouses is attached by one or more houses. The price range of the townhouse is usually higher than single unit of condo or co-op apartments.

Brownstones
Brownstones refer to the brown sandstone built in townhouses contraction. Many of the stonemasons in 19th century found the soft stone easy to work with. There are many brownstone townhouses in New York City. The brownstones will have an entrance to the ground floor from the street. Usually the half of a story is below street level and ground level with the garden in the back. All the brownstones often offer plenty of unique details. New York City brownstones are highly desired and the purchase price usually cost several million dollars.

Buying a new house is very exciting. And very stressful. If you are interesting to have a FREE consultation, if you have any question about buy or sell real estate in Manhattan, Please contact me directly Diana Wu at 516-320-0231 (cell) or email me at diana.wu@elliman.com, I work for The Voda Group, the  top AWARD-WINNING sales team at Prudential Douglas Elliman.

To learn more about our custom-designed marketing plans and listings, visit my website at:  http://www.elliman.com/real-estate-agent/diana-wu/4623 to receive a complimentary valuation of your home, or to discuss any real estate related topics, please contact us today.

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