4 Points to Consider When Appraising Condos, Co-ops and PUDs

Owning a condo can offer many perks, as can choosing a co-op or planned unit development, and all of these property types present opportunities for valuation professionals.

In fact, according to the National Association of Realtors, there were 601,000 condo and co-op sales in the U.S. in 2018.

From an appraisal perspective, these property types have characteristics and challenges that appraisers should understand in order to generate credible, reliable opinions of value. They include:


  • Learn the rules. The Federal Housing Administration, Fannie Mae and Freddie Mac have different rules for condo sales than stand-alone single-family homes. The reason is the long-held perception that condos are more risky than single family structures. The rules include limits on the number of units that can be rented, on the number of units that can be delinquent in dues – regardless of the financial standing of the property, and restrictions on commercial space.
  • Value with care. Appraisals are required for all types of financing, including individual co-op and condo loans, underlying permanent mortgages on cooperative apartment buildings and partial-interest property rights, such as shared common areas in condo properties. Of course, appraisers also should determine which valuation approach to use for these assignments.
  • Compare and contrast. Condos, co-ops and PUDs are different property types, and it’s important for valuation professionals to understand the specifics of each type. Generally, housing units in the U.S. are classified as either single family or multi-family, and there are only four different ownership boxes into which single family residences can be categorized.
  • Understand the ownership structure. Residents of both condos and co-ops  live in separate units in a single building with common areas such as as pools, recreation centers and playgrounds. The primary difference is how they’re owned. When a condominium is bought, the owner buys the residence and a portion of the common area. When purchasing a co-op, the owner is buying a percentage of the building, meaning no unit ownership, but a voice in how the co-op is run.

Appraisers should be familiar with the details of valuing these properties, and consider the potential business opportunities that they present.

 For more information on this subject, read “The Valuation of Condominiums, Cooperatives, and PUDs,” by Maureen Sweeney, SRA, AI-RRS, available on the Appraisal Institute website.