New real estate developments have an undeniable appeal for homebuyers. I have overseen sales and marketing for more than 300 new development projects totaling over 10,000 residences over the last 30 years, and I’ve found that everyone from first-time buyers to seasoned homeowners needs an education on the nuances of buying new.
Here are five tips to help get you started:
1. Understand The Timeline
Developers typically begin sales 12 to 24 months prior to the projected occupancy (move-in) date of the property, which means that you need to plan well in advance for your purchase.
On the plus side, this gives you time to save additional funds for the remaining down payment after deposit and to sell an existing property, if necessary. But if unforeseen delays alter the construction timeline, you might not move in when you expected.
If you are moving from a rental, it’s best to negotiate flexibility with your landlord. For buyers who are selling another property, try timing of the sale of your home so you have some wiggle room on your ultimate closing and moving-out dates. This way, you’re not sleeping in your parent’s basement, bunking with friends or camping out in a hotel for a few weeks. Ask the developer for regular construction updates starting six months prior to the projected closing date so that if you need to extend your lease or closing date, you have plenty of time to do so.
2. Not All New Construction Is Created Equal
Make sure to do your homework on both the developer and the contractor actually performing the work. You will want to assure that they are well-respected developers and builders who stand behind their product. Construction defects happen, but that does not mean the developer is necessarily to blame or that they are a bad developer.
More importantly, does the developer have a reputation for responding quickly when a problem arises? Are they amenable to correcting any construction defects without litigation? What is their reputation for quality workmanship? In addition, it is important to ask when the warranties begin when purchasing in a newly built development and that you obtain all of the warranty information.
3. What You See May Not Be What You Get
Artist renderings and sales office models that depict the finishes of the property are key marketing tools when selling new development because these residences are being sold before there is a finished product. Make sure to ask what comes with the actual residence you are purchasing. For instance, a three-bedroom model kitchen may not be representative of the kitchen in the one-bedroom you have selected, which will most likely have a smaller kitchen.
It’s important to get specific. Ask what size the appliances are in your residence, and how much cabinet space you will have. If the model kitchen is shown with drawer inserts or pull-out drawers, is this standard for all units? Find out if the model bathroom is typical or if your bath will be smaller with fewer fixtures. Inquire what lighting will be included.
Most developers only install recessed lighting in hallways, kitchens and bathrooms and supply switched outlets everywhere else. The same goes for closet design. Just because a model home shows a fully outfitted closet does not mean you should assume your unit will come with the same.
4. Budget For Additional Closing Costs
In New York City in particular, it is customary that the developer expects the purchaser to pay the New York State and New York City Transfer Taxes. (In re-sales, these costs are typically born by the seller.) You can attempt to negotiate these additional expenses, and depending on the building and market, a developer may agree. Often, developers prefer to negotiate closing costs rather than price to maintain value throughout the building not only for themselves but also to protect the investment being made by everyone purchasing from them. In addition, developers may pass along part of their legal fees for creating the condominium documents and performing the closing, which can add another $2,500-$3,000 to buyer expenses in most cases.
5. Check The House Rules And Bylaws
Co-ops are not the only buildings with rules. Every property (yes, even a condo) has a different pet policy, smoking policy and rules and fees for subleasing. Make sure that the rules work for you and that your furry friend meets any building limits on breed or size.
Buying in a new development is very exciting, but can also be nerve-wracking due to the many nuances and potential unknowns as to what the finished product will actually look and feel like. Doing as much homework up front as possible will help to ease any concerns and assure a more expected outcome.