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How do you value a coop verses condo?

I live in SW DC and noticed that your valuations seem odd to me.  The zestimates for nearby coops are on par with condos.  I can assure you that in DC coops are not desireable.  It seems to me that your formula doesn't adequately take into account local values.
In addition, in DC a difference of several blocks can make a huge difference in value.  For example, in SW there are pockets of crime near the public housing complexes.  Your formula seems to ignore that and use sales of those condos as comps for those in nicer/safer blocks.  This lowers the value to those nicer/safer condos and houses.  I'd recommend not just looking at square feet and also having a consultant familiar with the area improve your formula.
  • December 01 2011 - Southwest Waterfront
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Answers (3)

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I'm not speaking for Zillow or as an appraiser, but as a lender who deals with these issues every day.  You're seeing one of the reasons people don't like to lend in DC in general.  As a lender, you cannot redline (choose particular areas over others).  How do you account for the impact of good areas over bad areas?  An automated valuation system will have problems like this until it can assemble enough data which is why most lenders won't use them solely.  The market, on the other hand, can correct this.  Buyers are telling you that those other units are "non-comparable" to yours (because they sell for less than people are willing to pay for units like yours).  When you look at sales of units in your project which sell for more, that confirms it.  In this case, getting a real estate brokers opinion (BPO) would give you a better sense of what you should sell your place for, or what an appraiser might think it's worth. 

On the issue of condo vs co-op, that's another challenge.  Because co-ops aren't (technically) real estate - you buy a pro-rata share of a corporation which owns the building - these sales don't show up in land records the way condos do.  It is harder to get Automated Values (AVMs) on these.  The ownership structure is also why most lenders won't finance them - co-ops don't have a simple recourse process in a  default situation.  You have to get the corporation to recognize your lien, which may already be a second lien against any underlying mortgage the co-op may have on the building.
 
I, personally, love SW DC and understand your concerns.  The market does punish the good projects there.  But that also meant that you probably got a relatively good deal per square foot compared to the overall area when you purchased.  It continues to be an place where you can get good values, if you are willing to deal with the "spottiness" of the values. 
  • December 01 2011
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A coop is a "share' in a property. A condo you own the property but are responsible for HOAs (Home Owners Association's); a monthly bill that covers your share of the community's maintenance i.e., gardener, gated entry, pool, clubhouse, etc. With both a coop and a condo, you are susceptible to their CCRs (Convenants, Codes & Restrictions). CCRs can be viewed as rules such as a dog/cat can only be allowed up to twenty pounds, no RV parking, etc.
  • July 15 2013
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Hi Lolo_honu!  when comparing co-ops in DC it is best to compare sold properties in a smaller area, due to the fluctuation of property types in a small area.  Generally, comparing according to the subdivisions is very effective.  Also staying within blocks of the subject is good.  And comparing less than one mile is good, because DC is only about a 10 mile radius. 
  • July 15 2013
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