Regardless of whether you love traditional or historic or modern, your first decision when buying a home is whether you are going to buy a house or a townhouse or a condo… or a co-op. Whether your passion is Mid-Century Modern or Craftsman or Victorian or something else, we would love to help you find it!
House vs Townhouse vs Condo vs Co-op… here are some of the differences to help you decide which is the best fit for you.
When you buy a house you typically own a piece of land and all the structures on it, including the house and garage. Restrictions about what you can do with your property are primarily dictated by the city in which you live. You are responsible for everything relating to the property, including the structure, mechanicals… even the pipes connecting to the city sewer system. In addition to electricity, gas, water, sewer and trash removal you also are responsible for hazard insurance, mowing the grass and shoveling the sidewalks and driveway. If the roof or siding needs to be replaced or the furnace goes out you have to deal with it yourself.
In a condo, townhouse or co-op some of the costs are shared and covered by the monthly association fees… just a different way of assuming the responsibilities of home ownership. Typically the higher the fees the more that is covered. They all may have restrictions regarding pets, but condos are often most restrictive. Many of the newer complexes have fewer pet restrictions than older ones.
Townhouses come in many different styles and price ranges, but all are governed by an association with a board elected by the owners who live there. When you buy a townhouse you own a section of a building from the ground to the sky and have your own private entrance from the street, much as with a house… but the group of townhomes is governed by an association. You usually have at least one shared wall and may share up to three walls. This means outside light may be limited and the direction you face could be more important depending on your natural light preferences. Some townhouses have no private grounds, some do… but all include some shared grounds. Rules about what you can do with your exterior vary from association to association and can include what color you can paint your front door and whether or not you can plant any bushes or flowers. If you want to do something outside normal standards you must request approval from the association board.
Town house association fees usually include:
- Snow and lawn care
- Outside maintenance
- Sanitation (trash removal)
- Hazard insurance covering the building structure and exterior (you should secure your own separate insurance for the interior and your personal property)
- Water/sewer (some town houses include it, but many don’t – condos include it)
When you buy a condo you are buying air space in a building and a share in the common areas. It is much like an apartment that you own. Top level units are often preferred because you have no one above you so overhead noise isn’t an issue. It is not uncommon for condos to have restrictions on flooring because of noise… for example, some require carpet and some require a certain percentage of the floors be covered with area rugs.
Condo fees usually cover all of the same things as townhouses, plus some or all of the following… typically the higher the fees the more that is included:
- Heating (if there is a central heating plant for the whole building)
- Security system (for the building, not individual units)
- Shared amenities, such as a pool, tennis courts, party room, exercise equipment, woodworking shop, car wash (some town houses also have shared amenities)
- Laundry (can be no charge or coin operated)
- Cable television
- Air conditioning (if central for the building, often individual rooftop units for each condo)
- Electricity (pretty unusual, but I have seen it included)
Associations are most often managed by a professional management company. However, some associations are self-managed by elected members of the community. They all establish their own bylaws and governing rules and regulations.
It is important to know whether the association has enough money in reserve to cover ongoing maintenance… if improvements are needed and there isn’t enough held in reserves it may result in a special assessment. Sometimes low association fees aren’t a good thing if they aren’t saving up for future expenses.
Here are some questions you might ask about the association…
- Are there any pet restrictions?
- Are rentals allowed? If so, any restrictions and what percentage is currently rented?
- Do they have a long-term repair/replacement/improvement plan? Will there be enough reserves to cover the plan or do they plan to pay for them by special assessments?
- What and when was the last major project, and how was it funded? Any upcoming plans?
- What kind of soundproofing is in between the units?
The maximum monthly payment you are approved for when you apply for a mortgage includes association fees. This means that you will qualify for different price ranges for a condo, townhouse or house depending on association costs.
All three forms of ownership are good options…it’s a matter of finding the best fit for you. A house gives you more independence, but also greater responsibility. A condo or town house has the security of more regular expenses and freedom from snow and lawn care, as well as outside maintenance.
Condos and coops look the same, but their form of ownership is completely different. In a housing cooperative you don’t own any real estate… you own a share in a corporation composed of residents who own and operate the property. Your share gives you the right to live in a certain unit, essentially a lease. In Minnesota, the unit ‘share cost’ is typically less than for a comparable condo, but the monthly fees are higher because the corporation may also have an underlying mortgage for the entire property. Each unit pays a monthly fee based on square footage that includes a share of the mortgage, real estate tax, insurance, utilities and maintenance costs.
Because you don’t actually hold title to a piece of real estate, traditional mortgage financing isn’t available for this kind of purchase but more specialized financing may be available… sometimes even through the coop itself.
Forms of cooperative ownership interest include both ‘limited equity’ and ‘market rate’, dictated by the corporation. ‘Limited equity’ coops limit the amount of profit or gain when a unit is sold, with the intent of maintaining affordable housing. This is most common in senior and limited income coops. With ‘market rate’ coops the share price follows the open market and shareholders can sell at whatever price the market will bear when they move out. The cooperative often has the right of first refusal to purchase when a share is sold.
Cooperatives exist in different forms throughout the world, and in New York City most apartments are held through cooperative corporations. Some college neighborhoods also have house coops where fee-paying members have the right to occupy a bedroom and share the resources of the house.
In Minnesota, the most common form of cooperative housing is limited equity Senior Cooperatives for people 55+ years of age. In fact, 7500 York built in Edina in 1978 was the first senior housing cooperative in the United States. Although some units are listed for sale in the MLS many are sold directly by the Senior Coops themselves. Many allow pets, but don’t assume… ask.
Services typically covered by the monthly carrying charges are similar to that of an apartment, including the items below. Any upgrades from the base standard are the responsibility of the share holder.
- All appliances, their repair and/or replacement
- Carpet replacement
- All utilities except telephone and Internet, including basic cable TV
- Garbage and recycling
- Water and sewer
- Lawn care and snow removal
- Individually controlled heat zone and air conditioning in unit
- Annual furnace inspection and filter change
- Annual window washing
- Security, on-site staff
- Reserves for future repairs/replacements
- Extended insurance coverage
- Care of unit by staff in your absence
Senior coops also often have group activities and/or amenities such as optional meals, programs and events, guest suites, beauty/barber shop, workshop, exercise center, gardens.