Excerpts from a recent BrickUnderground.com article entitled: How do high carrying costs lower the sales prices of a co-op or condo? Is there a formula to figure this out?:
“In addition to the sales price of a co-op or condo, an important consideration when you buy in New York City is an apartment’s carrying costs—the monthly payments you’ll make towards building operations. In a co-op, these monthly payments are called maintenance, and in a condo, they are common charges. If you have a mortgage, you will have additional financial commitments. So when you consider apartments in buildings with higher carrying costs, very often your buying power goes down.”
“To some degree, a formulaic approach ignores the huge variety in NYC apartments. For this reason, some brokers dismiss the idea of applying a formula, but others do have a numbers-based approach to figure out a relationship between carrying costs and sales price. It works best when you have narrowed down your search to two similar apartments, so you are left with just the monthlies and sales price as variables.”
“As for the calculations, there are a couple of ways to look at it”.
Read more on Brickunderground.com where Deanna Kory describes not only the mathematical approach but the psychological approach in the numbers.
