Physically, there’s really no difference between co-ops and condos. The savviest property manager in the five boroughs could not walk into a lobby and say for certain if it’s one or the other. When co-ops are converted to condos, or vice versa, the result is not visible to the naked eye. And yet, if two buildings that are exactly the same in every way, and two identical apartments in those buildings are listed, the condo will fetch a higher price than the co-op.
Night & Day
“If two buildings are exactly the same,” says Maryann Carro-Caputo, president of Tribor Management in Flushing, “the condo’s value is higher because it really is real property.” Co-ops are essentially private corporations that happen to own a brick-and-mortar building; ownership of shares in the corporation entitles the shareholder to occupy an apartment within that building. Condos are real property in the same way a free-standing house is; they're just all stacked one on top of the other, with shared common areas in between. This makes it easier for the latter to deal with the bank; to mortgage, to refinance, to extract equity, to rent, to sell.
This discrepancy in cost might lead us to conclude that condos are “better” than co-ops—but this is not inherently the case. Indeed, the same factors that make condos list at higher prices make them more difficult to manage.
Indeed, the difference between managing a co-op and a condo, Carro-Caputo says, is “like night and day. Some things are very, very subtle, but some issues in condos are more problematic than in co-ops.”
From a property management standpoint, there are two main differences between the two. The first is control—the ability of the manager and the board to effect change. The second involves violations—the resources open to the manager and board when an owner runs afoul of the rules.