A stock co-op in San Francisco is a rare property on the MLS. An elusive, exclusive type of real estate. We thought it best then to bring in a few experts to clarify what a stock co-op is. Following is an interview with insight from local experts, in hopes of illuminating that many layered, very shrouded commodity, the stock co-op. Contributing are San Francisco Realtors Alex Clark and Luba Muzichenko.
Q: What is a stock co-op?
A: (Alex Clark): It's like buying a share of a building/property and having exclusive use to a portion of it.
Q:So you own a share of the whole building, and you own your own unit. How is it different than a condo complex?
A: (Luba Muzichenko): You don't really own your unit. You own a share in the corporation that owns the building, and you own the right to exclusively use a unit, which is yours, sort of. So you don't really have a grant deed, but a share of stock with the perk of framing it with a place to live. That answer may actually even confuse you more!
Q: Indeed, because in SF, they're like $7 million, with huge HOAs that seem to do very little other than what HOA fees a fraction as much do. What's the payoff beyond the bling of it?
A: (Alex Clark): That HOA covers property taxes, generally. Also keep in mind that in the U.S., we have different tax laws on both interest and deductions for shareholders of a corporation than we do for traditional property owners.
A: (Luba Muzichenko): In a nutshell... folks get together and form a corporation that buys a building; then as a shareholder, you have right to certain share: your unit. So it's not even really buying real estate as much as it is buying stock. And stock holders get to make up any house rules and regulations they want, from not allowing people to rent their units to holding multiple interviews with prospective buyers. Downside is, they're hard to finance and they are rather exclusive.
Co-op Board/Gate Keepers
Rather exclusive? Make that extremely so: The board of any co-op, beyond any bank or mortgage broker, gets final say on who can indeed buy into an existing cooperative. (Better hope you fit the current board's idea of an ideal neighbor.) On the plus side, expenses are shared, as is buying power.Of course, buyers of this kind of property usually need 50% to 100% of the purchase price up front. So, if you're very rich, Luba's caveat that "financing them is difficult" is moot. On the other hand, if you've a more moderate income, the caveat that "financing them is difficult" is an understatement.
With their machinations, complications, and obfuscations, no one should wonder that A) Stock co-ops are rare in general in SF, and the B) they go on the market even more rarely (because who would sell one after making it through the multiple shareholder interviews?). But if you're still interested, 1960 Broadway, Unit 8 is a sweet one upon which to try your luck.
· Host a Legendary Oscars Party in Your Pac Heights Stock Co-Op [CurbedSF]
· What You Need to Know about About Buying a Home in San Francisco, Part One [CurbedSF]
· All Curbed University coverage [CurbedSF]
· The Frontsteps [Alex Clark, official site]
· LubaSF [Luba Muzichenko, official site]