I bought a co-op from an auction can I make money from it

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I bought a co-op from an auction can I make money from it

Gregg Fratto
Member since 2019 · 28 posts · 3 votes

I bought a 2 bedroom co-op in a complex in Westchester, paid $83k other have sold for $150k, can I still make money from it...what are the obstacles of selling a co-op

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
5y

You can't get a standard owners title insurance policy on shares in a co-operative association and a standard title search is not going to identify the types of defects that occur with co-op transfers.

Closings on co-ops are a niche business... I would find a company (not a title company) who specializes in this ASAP.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    5y

    First, make sure you didn’t inherit any mtgs/liens with the unit. Get a title search done. Who Exactly prompted/initiated this auction. If it was the coop board/association for some kind of dues, there is likely a mtg that stays attached to the unit. 

    The fact that you paid about half of value indicates that you are missing something as there are many full time investors looking at these deals and they bid higher than that. 

    1Reply
  • Gregg Fratto
    OP
    Member since 2019 · 28 posts · 3 votes
    5y

    @Wayne Brooks hey Wayne, this went through hubzu auction...this was not auctioned through the board, im all in at 83k all I have to do is sign the docs......any advice ?

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    5y

    @Gregg Fratto Have Your title company do the title search and issue title insurance. 

    1Reply
  • Gregg Fratto
    OP
    Member since 2019 · 28 posts · 3 votes
    5y

    @Wayne Brooks ok thanks, what about reselling this, is there any issues when fixing and flipping ?

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  • Zack Bruce Lindsay
    Realtor · Phoenix, AZ · Member since 2020 · 20 posts · 13 votes
    5y

    @Gregg Fratto You should really know the answer to that question. What do your numbers looks like?

    Sounds like you haven’t closed the deal and signed the paper work… are you signing on Monday Aug, 30th? You might have some work to do.

    You asked if you’re allowed to renovate and resell… What’s leading you to think that you couldn’t sell your property (once you purchase it)? Or, renovate it?

    It’s important to understand the governing docs of the community. Co-op’s cannot be financed and are cash sales (at least here in Phoenix). That’s a reason why their values are so much less than comparable units in the general area that can be financed.

    - read the HOA / governing documents.

    - get a free and clear title.

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    You can't get a standard owners title insurance policy on shares in a co-operative association and a standard title search is not going to identify the types of defects that occur with co-op transfers.

    Closings on co-ops are a niche business... I would find a company (not a title company) who specializes in this ASAP.

    Gimer Law516 Reviews
    WebsiteView Page
    3Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 957 votes
    5y

    @Gregg Fratto, my firm issues the only title insurance-like product for co-ops in the country.  It does seem like the value is out of wack with the market though.  But if the deal you're getting is correct, that's a home run!

    1Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    One more thing to consider going forward... typically with co-ops the Board has to deep dive on the financials of the proposed buyer (not a foreclosure purchaser, but an end buyer, if the goal was a quick flip). You'll want to pull the co-op governing docs in order to determine the process and restrictions, as well as the financial condition of the cooperative itself. Good luck.

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  • Gregg Fratto
    OP
    Member since 2019 · 28 posts · 3 votes
    5y

    @Tom Gimer this seems like more of a problem that I could be worth, the HOA fees are $1,000 per month, and I know I could make some money off of it, I think I'm gonna let this one go

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  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    5y

    I believe a co-op purchaser can be issued a Leasehold Title policy for their interest in the exclusive right to use unit.

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