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Thread: Buying a new construction condominium

  1. #226

    Default definately add 2-6 months on promise date of new constructions

    Yeah, from my experiences adding 3-6 months to the promised time is about par for the new construction course. There are some that are better than others but delays are a part of construction. Figuring that in when you buy a new construction will just help keep u sane.

    Quote Originally Posted by zarzapan View Post
    Here's another question on new construction: how much "optimism" is typical when the sponsor tells prospective buyers when the closings are expected to start?

    I would guess this varies quite a lot, and I would expect there to be a wider range the earlier in the construction process. But by the time the building tops out -- or by the time the exterior is mostly complete -- shouldn't they have a pretty darn good idea? I have been unpleasantly surprised by the delays on my own condo. Should I have known to just add 3 to 6 months to their estimate, even at such a late stage?

  2. #227
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    Default Closing delays getting worse than usual . . .

    The old rule of thumb when buying new developments was to assume that the sales office's estimate of closing were "optimistic" and to add three months.

    Now, however, it's gotten worse for two reasons. One is that as sales slow down, sales offices want to maintain a sunny face, so they won't even admit to realities they might have copped to a couple of years ago. I am selling a client into a new development (I'm a real estate agent) and the building was under a stop work order. Despite this, the sales office is clinging to its prior forecast of "October-November" for completion, even as the construction guys on site are saying "January-February."

    The second reason is that with the recent and deplorable crane accidents, DOB is under tremendous scrutiny, so they're giving a lot more care to signoffs. As a result, we're seeing a bottleneck in the issuance of C of Os.

    The delays are starting to hit buyers hard, because of course interest rates are moving against them, and therefore these apartments are costing more than they'd estimated.

    Two years ago, when I started working in New York, I met an entire breed of buyer who said, "hey, real estate agents are useless, why should I pay you for advice when I can see an apartment on the Internet and buy directly from the sales office?"

    At the time, I had many answers to that question, but now I have one more: the current climate. How many of those buyers had the current scenario of spectacularly delayed closings and rising interest rates explained to them by those smiling people in the sales office?

    ali r.
    {downtown broker}

  3. #228
    European Import KenNYC's Avatar
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    Do you typically get more "bang for the buck" by buying in a new development? Or is the prices pretty much fixed?

    Also would you use an agent for these purchases too, or would the developer insist on selling directly?

  4. #229
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    why, you would use an agent, of course, says the agent.

    There is certainly a debate on using an agent versus going directly to the developer, and I'd say the strongest case for using an agent is made by people who didn't.

    If you read through these boards at your leisure, you'll see some people who have bought directly from the developer in an attempt to get a discount ("I'm not using a broker, can I save the broker's fee?") who ended up with either no discount or with a slight discount but then no advocacy for things they wanted -- and were surprised when their building's construction turned out to be shoddy, or when their building closed a year late and they had the expense of moving to and from temporary housing.

    ali r.
    {downtown broker}

  5. #230
    Senior Swanky Peteynyc1's Avatar
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    I used an agent but only for one thing and that one thing saved me approx 50K. My agent knew someone in the sales office and was able to get me in the door first, before anyone else could buy a place. I was able to get in on the initial offering price before the first ammendment came out the next day. That was really all I used him for and I handled most of the communication with the sales office after that. I think having a great lawyer handled alot of the issues and questions as well. All in all, having an agent was essential in my case.

  6. #231
    European Import KenNYC's Avatar
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    Quote Originally Posted by Front_Porch View Post
    why, you would use an agent, of course, says the agent.

    There is certainly a debate on using an agent versus going directly to the developer, and I'd say the strongest case for using an agent is made by people who didn't.

    If you read through these boards at your leisure, you'll see some people who have bought directly from the developer in an attempt to get a discount ("I'm not using a broker, can I save the broker's fee?") who ended up with either no discount or with a slight discount but then no advocacy for things they wanted -- and were surprised when their building's construction turned out to be shoddy, or when their building closed a year late and they had the expense of moving to and from temporary housing.

    ali r.
    {downtown broker}
    Oh, I'm certainly going to use an agent, no worries More so, I don't think I'd want to buy in a new construction any time soon, seems kinda risky with the very 'approximate' finish dates etc, just thought maybe the developers preferred to sell directly themselves.

    I doubt saving the broker's fee really is worth it, unless you're very familiar with the market etc yourself. That's what I choose to believe at least.

  7. #232

  8. #233
    Disgruntled Optimist lofter1's Avatar
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    succinct ^

  9. #234

    Default

    In my experience, most agents are missing at least one marketable job skill.

    For this reason I recommend working through the stages of your transaction in parallel with the agent. The worst that can happen to you is that your agent does a perfect job and you back them up.

    I've done six condo transactions with agents. In three the agent did a great job and earned the commission. In the other three, the agent bungled at least one important step.

    I did my last two transactions, a purchase and a sale, without an agent. Both went very smoothly and I saved a bundle, but then I had plenty of time to work on them. I would not recommend this if you already have a busy life!

    I expect to use agents again in the future, but then I'll choose carefully, and work in parallel with them to make sure I have a successful outcome.

  10. #235

    Default new developments

    One other issue to think about in new developments here in NYC is increased delays. As a result of the various crane incidents I think the permit/inspection process has slowed down considerably. In addition, the developers are generally okay with that dynamic because of the relative softness of the overall market. Therefore, I would expect closing delays to be even more delayed than usual in new developments.

  11. #236
    Disgruntled Optimist lofter1's Avatar
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    With credit tight why would developers be "ok" with slow sales of properties for which they are paying their creditors on a monthly basis?

  12. #237
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    I am totally with bananaman that agents are generally missing one marketable job skill. In my case, it's an inability to be at work at 8 in the morning, so real estate and publishing became the only sensible career fields for me!

    ali r.
    {downtown broker}

  13. #238
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    ^^Because, L1, developers don't necessary pay their loans off regular monthly bit by regular monthly bit the way you or I would pay a mortgage.

    Sometimes principal repayments are tied to closing schedules.

    In that case, it's not necessarily in the developer's best interest to hit a certain closing benchmark, because then he'll have to pay a big chunk of change to the bank.

    This is supposedly why one of those long-delayed Tribeca buildings never really got "finished."

    ali r.
    {downtown broker}

  14. #239
    Disgruntled Optimist lofter1's Avatar
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    Thanks for the info, Ali.

    Here's news of another possible casualty of behind-schedule new construction condos ...

    Real World could be moving

    The Real Deal
    By James Kelly
    July 14, 2008

    MTV's "The Real World, Brooklyn" could be moving from two penthouse duplexes at Belltel Lofts, where the show has been used a selling point by the development's marketing agency, Prudential Douglas Elliman.

    The show appears to be moving to a five-unit, six-story brick walk-up at 116 Third Place in Carroll Gardens, between Smith and Court streets, as first reported by Brownstoner.com. The 4,500-square-foot prewar building was renovated in 2006, according to public records.

    Equipment that will be used for the show's filming has been transported from Belltel to the new location, a source familiar with the show said.

    Meanwhile, the show plans to keep a single floor of Belltel that it had originally planned to use for production, the source said.

    Brownstoner reported that the slow pace of unfinished construction at Belltel has caused the MTV show to consider either postpone the start of filming to mid-August or move the location.

    It is unclear if Elliman and broker Ilan Bracha will continue using 'Real World' branding on ads for the project if it turns out that the production facility, but not the cast, remains in the building. As The Real Deal reported in this month's issue, the show helped create a buzz at developer David Bistricer's conversion, which had been selling slowly.

    At 116 Third Place, the apartments were listed for between $1.2 million to $2.6 million, and average $1,200 per square foot. The property's owner told the Brooklyn Paper that MTV had been scouting it before the show picked Belltel.

  15. #240

    Default

    thanks for this thread. i posted my own problem with new construction condos here http://wirednewyork.com/forum/showthread.php?t=18564

    but i wanted to share with others who may be considering new construction that if you are inexperienced, walk away. the contracts written for new construction, overall, seem to be so strongly in the favor of the developer that you have no recourse when things go wrong.

    if you do sign, try to get a clause in your contract that says that if you do not close in X months, that you can get out. my contract said 24 months and it was too long. i should have asked for 12 months.

    i also recomend that you do not take recommendations from your broker or the sponsor of lawyers or mortgage brokers. get everything on your own. my broker and lawyer are friends and seem to be plotting against me to get me to stay in contract. i could be paranoid, but the situation i have been in for the last 20 months can do that to you.

    regarding an agent to walk you through things. i had a buyers agent who i thought was on my side but she really encouraged me to make an offer on a new construction place even though i was 7 months pregnant and needed a place right away to raise my new baby. i think she should have been experienced enough to know that new construction does not complete when they say it will. even though i am now expecting baby #2, she is trying to get me to stay in my contract even though i am not certain that the building will be complete for our new addition to the family. so perhaps its a good idea to have a broker, but mine didn't serve my interests as well as she served her own.

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