Cohousing-L Mailing List: Re: cohousing premium?

[Anne Birchfield (anne.birchfield]

Hi There:
I agree that initial co-housing prices are above the prevailing costs per
square foot. We made sure that our cash buyers closed on their units before
we had appraisals done for the units purchased with mortgages. I have never
before paid this much per square foot, and I could have purchased a unit
about 40% bigger with fancier amenities for this same price.  That isn't
what I wanted, however. I am clear that I am buying into a community, not a
condo association or a tract neighborhood of fancy homes where people may
not ever know each other. Sellers may eventually be able to recoup their
initial investment through appreciation, or because a buyer is willing to
pay more than market cost, and is able to put down a substantial amount in
cash. Banks lend based on appraised value but buyers often borrow far less
than that.
Anne
Fair Oaks Ecohousing
Fair Oaks, CA

On Fri, Nov 27, 2020 at 8:54 AM Diana Carroll <dianaecarroll [at] gmail.com>
wrote:

> Appraisals ARE based on selling price. That's what they are: a prediction
> of selling price. And if you DO list it above appraised value, and you DO
> get a buyer at the inflated price...they won't be able to get a mortgage,
> because mortgages are limited by appraised value.
>
> We've had several owners put their homes up for sale. When deciding how
> much to sell it for, they typically either get it professionally appraised
> by an appraiser or real estate agent, or do their own informal appraisal by
> looking at comparables.
>
> If there is a selling premium (such as if an individual buyer is really set
> on cohousing and this is the only cohousing home for sale in the area), it
> isn't anywhere *near *$100,000.  $10k maybe? But no, I don't really think
> there is any appreciable difference in price in our area (Central MA).
>
> If you are talking about initial prices for founding members...well, that's
> a wildly different story and has so many variables, there's no way to give
> any rule of thumb. It's amazing the price which our founding members
> (including me) were willing to pay...maybe 30% above equivalent units. But
> that was because we'd all sunk *soooooo *much money into the project (never
> mind time, energy, heart, soul and dreams) that we couldn't walk away. The
> prices were never aimed to be 30% higher, but construction costs grow as
> happens on pretty much every project ever. We weren't helped by the fact
> that comparable prices were dropping like crazy because we went "online" in
> 2008.  I paid $525,000 for a unit that was only worth about $300k on the
> day I bought it, and now is worth only about $400k. It's not happy-making.
>
> Diana
> (Mosaic Commons)
>
> On Fri, Nov 27, 2020 at 11:40 AM Dick Margulis <dick [at] dmargulis.com> 
> wrote:
>
> > Diana,
> >
> > Thanks for your response. I'm sorry that I didn't state my question
> > clearly.
> >
> > My question is about the difference in selling price, not the difference
> > in appraised value.
> >
> > In other words, if I see a cohousing unit listed for sale for $600K,
> > would a similar-size conventional condo nearby also be listed for $600K,
> > or would it likely be, say, $500K?
> >
> > Dick
> >
> > On 11/27/2020 11:23 AM, Diana Carroll wrote:
> > > No premium. I've worked with zillions of appraisers now and they don't
> > care
> > > at all. It's all about the square footage and number of bedrooms, and
> > maybe
> > > a really small premium for having more amenities, but for all the
> > > intangible benefits of cohousing? Nada. AND if you add in the fact that
> > > most cohousing units are smaller than corresponding conventional
> > > units...cohousing is kind of a minus on the appraisal front.
> > >
> > >
> > >
> > > On Fri, Nov 27, 2020 at 10:09 AM Dick Margulis <dick [at] dmargulis.com>
> > wrote:
> > >
> > >> If you are looking at a cohousing unit and at a comparable
> non-cohousing
> > >> condo, what is the average premium for the cohousing unit?
> > >>
> > >> Has anyone studied this question and come up with a US average?
> > >>
> > >> Lacking that, if anyone has done this exercise for their own
> community,
> > >> would you please comment?
> > >>
> > >> Thanks,
> > >>
> > >> Dick Margulis
> > >> Rocky Corner
> > >> Bethany CT
> >
> >
> >
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