Appraising cooperatives requires a unique skill set different from appraising single-family houses. You probably think of the market value of your co-op as the price you could sell it for on the open market. However, State law requires us to value residential cooperative apartment buildings as if they were rental apartment buildings. This means that we look at the income and expense statements of rental buildings that have similar characteristics to determine your co-op building’s market value.
Definition of Cooperatives
With a cooperative, or co-op, a buyer buys shares in a corporation that owns an apartment building. In exchange, the buyer receives the right to live in a specific unit. Co-ops are unlike condominiums in that the buyer does not acquire and own a specific unit. The buyer simply becomes a shareholder in the corporation.
Transactions involving co-ops can be more complicated, because there may be an interview process for prospective buyers, and lenders may not finance a co-op purchase without the ability to foreclose on a specific unit or home.
5 Factors Which Can Affect The Valuation of Cooperative Properties
Comparable co-op properties are chosen based on the number of units, size, age, distance and number of stories. There is never a perfect match. To account for any differences, adjustments are made to the income and expense of the rental buildings used as comparables for your property. For example, if your co-op is older than the rental building that is the best comparable match in your neighborhood, we use a computer model to adjust the rental comparable to produce a more accurate value for your building.
Similar co-op apartments just a few blocks from one another can have very different values. The floor that a home is on, the kind of view or light it gets — each factor contributes to its value. Our Expert appraisers are intimately familiar with the neighborhoods they work in.
The appraiser will take into account the age, condition, location, and the amenities offered in the building. An apartment in a building with a doorman attended lobby, elevator, laundry, and gym will be appraised at a higher value than a building with none of the aforementioned qualities. To the same point, consistently desirable locations have a positive impact on appraisals.
The appraiser will look at the materials used in the home, taking into account condition and quality; their condition is very important. The walls, flooring, windows and doors, will be inspected to determine quality and locate any defects or damage. The lighting fixtures and kitchen appliances are also evaluated during an appraisal; their condition will have an influence on the appraiser’s estimate.
Amenities that contribute to the comfort and safety of a cooperative apartement will greatly improve the appraised value. Our Expert appraisers will take into consideration all the extras that your home offers, such as air conditioning, fireplaces and security systems. Building amenities, such as a gym, tenant lounge, elevator, doorman, swimming pool and parking garage could also increase value and lead to a higher appraisal.
Any improvements made to the apartment since the last ownership will affect the appraisal. While inspecting the interior of your apartment, the appraiser will pay attention to upgrades that were made to the kitchen and bathrooms especially. A new oven, stove, sink or bathtub is a big plus when determining the home’s value. Because the appraiser might not notice all the upgrades that you’ve made, it is important to provide him or her with a list of all the improvements before the appraisal starts.
Determining what counts obviously depends on market trends. Are large contemporary buildings bringing in the big dollars, or is it the more classic style that’s generating sales? At Hudson View, we will work hard to match amenity against amenity to determine the best possible estimate of your property’s value.
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Hudson View Appraisal Services has many years of experience in the business, we have a proven track record of reducing lenders aggravations, efforts, and costs in managing the appraisal process.