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A co-op is a building or community that is owned and controlled by a group of individuals who have equal membership. (Getty Images)

If homeownership sounds like the right next step for you, it’s time to consider the types of ownership that would fit you best. While owning property, be it a plot of land with a house or a condo within a larger building, is the most common form of homeownership in the U.S., you may want to consider buying into a housing cooperative. Especially if you live in a larger city where co-ops are common, it may be a great fit for you.

What Is a Housing Co-Op?

A housing cooperative, or co-op, is a building or community that is owned and controlled by a group of individuals who have equal membership in the group. When you buy into a housing co-op, you purchase shares in the ownership of the entire community, which entitles you to occupy a specific residence.

Here are six things you should know about living in a co-op:

[Read: Easy Virtual Tools for Homebuyers]

While all co-ops are run by the members in a democratic structure, there are a few different types of co-ops that can change the experience – and the amount of money you spend.

A market-rate co-op is the most common type you’ll see in major cities, where shareholders build equity as the value of the property increases. Shares are bought and sold based on buyer interest and demand, so the price can vary at which a person enters and leaves.

A limited-equity co-op aims to provide an affordable form of homeownership for people who may not be able to purchase a home otherwise. While equity is able to build, the price at which a person can sell shares is limited. This keeps the housing option affordable for future residents.

“In limited equity housing co-ops, the appreciation on a membership interest is tied to something like the consumer price index or a set rate like 10% on initial value,” Jay Cumberland, equal justice works fellow for the Sustainable Economies Law Center, wrote in an email.

A leasing co-op allows residents to make decisions democratically, but residents are considered tenants rather than partial owners of the property. This model often provides an affordable housing option for college students. “If you give all the tenants a vote on next year’s rent, they’ll keep the rent down,” says Daniel Miller, director of properties for North American Students of Cooperation and general manager of NASCO Properties. “Their incentive is to make sure the people who come along next year have an affordable place to live.”

Co-ops are considered democratic organizations, with each member having a vote and a board elected by the members to set up policies and decisions on behalf of the community. The size or purchase price of an individual space does not make any individual shareholder more powerful than another.

“While membership in a worker co-op often ends up being about getting a piece of the pie, being a member of a housing co-op is often about reducing the size of the pie. Housing co-ops are more like consumer co-ops. The consumers govern the co-op with a goal of making the good they consume as cheap as possible,” Cumberland says.

[Read: Which Home Is the Best Layout for You?]

Rather than the deed you receive when you purchase property, you will get a membership certificate and occupancy agreement, explains Randall Pentiuk, an attorney who specializes in housing cooperatives whose firm, Pentiuk, Couvreur & Kobiljak P.C. has law offices in Chicago on Wyandotte, Michigan.

Because you’re not technically buying a piece of property like you would with a condo or house, the type of loan you need to finance your co-op purchase is different from a traditional mortgage – though it will feel very similar to a mortgage.

Unlike with a mortgage, the co-op corporation has the first lien on the property, rather than the lender. In the event of default on the loan, the co-op is owed any overdue money or deferred maintenance first. The co-op is also able to maintain its rules and stipulations for selling the shares to a new buyer, which the lender must follow.

Prior to the closing of a real estate deal with an apartment or home in a co-op community, the board has the ability to decline membership. If the board declines membership, it may choose not to provide an explanation, though common reasons are a low sale price or plans for renovation that don’t line up with the co-op’s stated goals.

“The screening process typically involves examining the applicant’s background as to creditworthiness and criminal history, as well as past problems with living in a community. Recourse is generally only available where there has been discrimination based upon a protected class under the law,” Pentiuk wrote in an email.

Housing cooperatives are prohibited by federal law from discriminating against people based on race, color, religion, national origin, sex, familial status or disability, which is outlined in the Fair Housing Act. Many states and cities further establish local laws against such discrimination, and may extend the protected classes to include sexuality, gender identity or native language, among others.

If people have been denied membership by a board and they believe they have been discriminated against in violation of fair housing rights, they should contact the U.S. Department of Housing and Urban Development to file a complaint at the federal level or reach out to the appropriate housing department for the state or city regarding locally specific law violations.

[Read: Should You Buy a House With Cash?]

Depending on where you live, your co-op may prohibit or put restrictions on your ability to rent or sublet your individual living space to tenants while remaining a shareholder of the community. Be sure to check rules and bylaws before having a tenant sign a lease, as additional co-op approval may be required.

While many housing co-ops look like a standard apartment building, you may find differences between a landlord-owned apartment building or condo and a co-op.

Particularly for leasing co-ops, you may find options that operate more as a co-living option in a large house rather than separate homes, including shared bathrooms, kitchens and living spaces. “Some are set up as an apartment co-op or dorm with en suite bathrooms; others are a large group rooming house,” Miller says.

Even in apartment-style co-ops, you may find the amenities are customized to the tastes of the community. Depending on the group of shareholders, you may see a focus on pet-friendly options versus entertainment, for example.


The Best Apps for House Hunting

Browse for homes – and maybe even close a deal.

Woman on smartphone

(Getty Images)

Luckily for homebuyers, house hunting apps are growing in number and sophistication. As the online real estate marketing industry becomes more competitive, mobile apps are getting better at helping consumers find accurate housing information while offering features to help users narrow down their search. Read on for some of the most popular and helpful apps to use when searching for your next house. All apps are available on both iOS and Android.

Updated on Nov. 6, 2019: This slideshow was published at an earlier date and has been updated with new information.

Zillow

Zillow

(Courtesy of Zillow)

This is the most downloaded real estate app for both Apple and Android phones, and it includes Zillow's signature map and home value estimate tools. With more than 100 million homes in its database, Zillow's app is the most popular method for users to explore the platform. In fact, Zillow reports that more than two-thirds of its usage takes place on a mobile device, jumping to more than three-quarters on the weekends.

Best feature: The app’s dashboard includes a Your Home tab that allows you to store your property’s information and see how its value estimate changes over time.

Pro: You have the option to filter your saved searches by property listings that have recently changed, so you don’t have to scroll far to see if a house's asking price dropped.

Con: As much as you may want it to be, the Zillow Zestimate isn’t a guarantee of what your home will sell for.

Realtor.com Real Estate Search

Realtor.com Real Estate Search

(Courtesy of Realtor.com)

Filters on this app's search function allow you to include specific details on your must-have list, such as multiple floors, a fireplace, central air and even community swimming pools or security features.

Best feature: With the Sign Snap feature, you can take a photo of a real estate sign you see in a neighborhood and get details about the property right away.

Pro: You have the option to connect with a real estate agent who can represent you as the buyer in a deal, but you can also see the contact information of the listing agent if you want to talk to him or her directly.

Con: The more specific filters rely on listing agents using the right keywords, so if you’re struggling to find everything you want in a house, you may have to widen your search and keep an eye out for details in listing photos.

Trulia

Trulia

Fascia and Ridge of Gable Roof

(Getty Images)

Trulia’s app gives users a desktop-like experience in a mobile platform, with a focus on design that makes it easy to use.

Best feature: Trulia polls its online users who live in specific neighborhoods and includes the results on the app. For example, you might find that 93% of one neighborhood's respondents feel comfortable walking alone at night or that 76% say kids play outside regularly.

Pros: On each property profile, Trulia lists local legal protections, noting whether there is legislation in the area to protect against discrimination for gender identity or sexual orientation in employment, housing or public accommodations.

Cons: On any property profile, you’re prompted to call or email an agent about the property. While this is convenient if you’re serious about buying but don’t have an agent, it can get in the way if you’re just browsing.

Redfin Real Estate

Redfin Real Estate

Stock image of someone holding a smart phone.

(Getty Images)

Since Redfin utilizes an out-of-the-box business model with agents and professionals specializing in different steps of the homebuying and selling process, the company’s app serves as a way for users and Redfin agents to communicate. A map indicates which properties are listed by Redfin or another broker and also notes homes that are likely to sell fast through its Hot Homes feature.

Best feature: You can schedule a tour with a Redfin agent directly through the app. The app even lists the next available tour time.

Pro: You can click the heart symbol to keep a property you like on your radar, and you can also nix properties so they don’t keep popping up in searches.

Con: If you don’t live in one of the 80 markets where Redfin has agents, the app offers local listing information pulled from the MLS, but you won't be able to utilize the features that connect you with Redfin agents.

Homesnap Real Estate & Rentals

Homesnap Real Estate & Rentals

(Courtesy of Homesnap)

Homesnap gives house hunters the reins with this app. A signature feature allows users to take a photo of a home, and the app will identify the property and provide details about it from the local multiple listing service or public records.

Best feature: The beginning of each property profile details the property history, including previous sale prices and when it last went on market.

Pro: Each home has a section that allows you to determine your commute route and time and see both map and street views of the property.

Con: The property details are in list form, which you can expand to see everything from the home's architectural style to number of bathrooms and homeowners association fees. The depth of information is helpful, but long lists can make it easy to lose focus and miss key criteria.

Homes.com

Homes.com

Woman on her phone

(Getty Images)

On this app, you can search based on your needs and desires, including buying versus renting, home value information for properties on the market and what neighborhoods are ideal based on your preferred commute time.

Best feature: An exclamation point in the corner of a property profile lets you know that it’s a new listing, which can help you move quickly to avoid competition with other buyers.

Pro: If you'd like to get in touch with a local agent, the bottom of a property's profile often lists more than one option, making it easier for you to shop around for the right agent.

Con: While Homes.com has much of the same property information as other house hunting platforms, the app doesn't offer much in the way of neighborhood information.

Estately Real Estate

Estately Real Estate

Mature businesswoman at cafe

(Getty Images)

Estately aims to connect consumers with the right local real estate agent, and its app offers multiple ways to get in touch with agents.

Best feature: Users can click on icons on property profiles for quick information on taxes, utilities, appliances, schools and more. Profiles also include scores on things like area noise pollution and internet speed – details that aren’t always considered but could be deal-breakers.

Pro: The app encourages you to see houses in person, with multiple opportunities on a property profile to schedule a day and time to visit.

Con: Estately only covers markets in 40 states, so those looking for homes in Arkansas, Iowa, Kentucky and several others are out of luck.

Century 21 Local

Century 21 Local

(Courtesy of Century 21)

A longstanding national brokerage, Century 21 provides consumers with access to home listing information pulled from the local multiple listing services. The app can particularly come in handy if you plan to use a Century 21 agent, as that’s who you'll be in touch with if you would like to inquire more about a property.

Best feature: The app provides a notes section for every property, so you can keep track of your impressions as you compare homes.

Pro: If you start searching for homes in a different city, information about the local Century 21 brokerage you should contact changes accordingly, although you can still see listings from brokerages outside Century 21.

Con: This app pulls from Zillow to provide home value estimates, but occasionally lists "unavailable" even if the property has a Zestimate available on Zillow.

The best apps for house hunting include:

The best apps for house hunting include:

A row of detached homes in an idyllic community in Fredericksburg, Virginia

(Getty Images)

  • Zillow.
  • Realtor.com Real Estate Search.
  • Trulia.
  • Redfin Real Estate.
  • Homesnap Real Estate & Rentals.
  • Homes.com.
  • Estately Real Estate.
  • Century 21 Local.

Read More

Tags: real estate, housing, home prices, loans


Devon Thorsby is the Real Estate editor at U.S. News & World Report, where she writes consumer-focused articles about the homebuying and selling process, home improvement, tenant rights and the state of the housing market.

She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.

Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at dthorsby@usnews.com.

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