The pros and cons of buying a sponsor unit

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Coming across the term "sponsor unit" but don’t have any clue what it means? We do. Keep reading to learn more about these unique apartments and how you can find one.

What is a sponsor apartment?
A sponsor unit is owned by the original owner or corporation responsible for turning the building from a rental into a co-op.  

What are some pros of buying a sponsor unit?

  • The biggest advantage is getting to skip over the entire co-op board approval process.  As long as your offer is accepted—and assuming you can get a mortgage—the apartment is yours.
  • The standard down payment in most co-op buildings is 25 or 30 percent. But if a sponsor doesn’t mind getting less money down (and financing is still approved), a buyer might only have to put 20 or even 10 percent down.
  • Since there are fewer financial hoops to jump through—no co-op board interview or review—the buying process tends to be quicker.
Pro Tip:

Did you know you can receive a buyer’s rebate from your broker? Buying with Prevu you’ll pocket a rebate of two-thirds of the commission paid to the buyer’s broker at closing.  On a $1.5 million condo, you’d receive up to $30,000. Click here to learn about Prevu’s Smart Buyer Rebate.

What are some cons of buying a sponsor unit?

  • Higher closing costs. With many sponsor units, the buyer has to pay the seller’s transfer taxes, which can be between 1.4 and 1.8 percent of the purchase price.
  • Sometimes, sponsor renovations are less than high-end. Another common malady: Many prewar co-ops with sponsor units have original plaster walls, which can be in crumbling condition with lead-based paint containing asbestos. That has to either be removed or covered up. This is not a clean or easy job, and requires specialists.

Who can buy a sponsor apartment?

If you have good credit, can get financing and have the required down payment, the unit is yours. Therefore, sponsor units tend to be good for freelancers, the unemployed and the self-employed—folks who might not otherwise pass a board interview.  

Do sponsor units cost the same as regular co-ops?

No, they’re actually often more expensive. "Two similar renovated apartments or two similar non-renovated apartments with sponsor ownership being the only difference might see a 5 percent or even 10 percent premium on the sponsor unit,” says real estate appraiser Jonathan Miller of Miller Samuel.  

Where can you find a sponsor unit?

They’re all over NYC—mostly in pre-war buildings—but are few and far between. Depending on the inventory available, be prepared to shop for 6 to 12 months for a sponsor apartment.  StreetEasy is a good place to start, where you can easily search for apartments offered directly by the sponsor. Click on "advanced search" on the left side of the home page (in sales); under "available criteria" and under "sale type" check "sponsor unit."

For more, read “Everything you ever wanted to know about sponsor apartments but were afraid to ask.”

In Case You Missed It: Every so often, BrickUnderground digs through the archives to find the best advice our experts have shared through the years.


Is a co-op sponsor unit the best bet for freelancers? Plus, five listings on the market

Skip the board interview—and other reasons a sponsor co-op may work for you