What's the difference between a condo and a co-op? D.C. homebuyers should know

What's the difference between a condo and a co-op? D.C. homebuyers should know
condo sign in D.C.

condo sign in D.C.

Homebuyers in the District's urban areas often consider purchasing a condominium, but real estate agents say not to overlook another, often misunderstood, option out there: the co-op.

Unlike New York City, cooperatives don’t dominate the D.C. real estate market. Still, there are plenty out there, and it’s smart for people looking to buy a home to know the difference between a condo and a co-op.

“It can be scary for people in D.C. to buy a co-op because they often don’t understand how it works,” says Angeles Curry, a highly rated real estate agent in Alexandria, Virginia.

Co-op buyers are not directly buying property, but instead, they purchase a share of a corporation. That corporation, in turn, owns the land and building containing the individual units.

Pros and cons to buying a co-op

Advantages Washington-area real estate agents cite to purchasing co-ops are lower property taxes and more purchase privacy. The transfer of ownership for a co-op is actually a transference of stock, which means there isn’t a public record. Normal real estate transactions are considered public information.

Co-op boards also have approval power regarding the purchaser, which in some cases can create an air of exclusivity.

Buying a condo, on the other hand, is more like buying a single-family house. Buyers basically purchase the part of the building where they will be living, whether that building is a brownstone or mid-rise. As a condo owner, you also have an ownership interest in the common facilities, such as a pool, lobby or on-site gym.

Condos have their own set of advantages, including easier mortgage approvals and more tax deductions.

“You really have to figure out which one fits your needs,” Curry says.

The first housing co-ops appeared in Washington in 1920, according to the D.C. Cooperative Housing Coalition. Since then, co-ops have expanded to every part of the metropolitan region.

Today, the area is home to about 15,000 units, most of them in D.C. Those aren’t New York City numbers, but they’re not too shabby.

Curry does advise local buyers considering a co-op to be prepared to disclose their finances with the co-op board (essentially your future neighbors) for the members' perusal and approval. “That can make some people very uncomfortable,” Curry says.

Anti-discrimination laws, rental rules must be followed

Although a co-op board has final approval over a homebuyer, that doesn’t mean members can break housing laws by discriminating against someone because of race or marital status. “Still, it’s something to consider,” Curry says.

Also, she adds, if you plan to eventually rent your living space, it can be more complicated to do with a co-op compared to a condo.

It helps to have a real estate agent who either has experience with co-ops, or the resources to acquire the best information to represent you. Both co-ops and condos are governed by an often lengthy list of rules, so find out what they are before you make a final decision.

Curry says in her experience, condos in the D.C. area tend to increase in value quicker than their co-op counterparts.

She does, however, single out one advantage to co-op living she's observed. “Co-op members tend to be more on top of things going on,” Curry says. “Many condo owners don’t even get involved, and don’t even attend their board meetings.”

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