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Thread: Buying a new construction condominium

  1. #16
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    Default What does XX% sold mean?

    When a developer sells a building, they don't release all the apartments at once. They are trying to balance different objectives: bringing cash in to hand it over to the bank, limiting supply so the building will seem "hot," and testing their pricing estimates to see if they can raise prices on the next round of apartments.

    Sometimes, as part of this process, they will throw around a number: "the building is 40% sold," or "the building is 80% sold."

    There are two ways in which this number is not as informative as it could be. The first is that we are starting to see buildings pre-selling before they open. Then the developer has a party, and announces the next day "the building is xx% sold."

    Wow, the potential buyer thinks, that must have been some building to sell well in three hours! (Or, those must have been some great drinks served at the party!) But actually, brokers had been working away for weeks or even months before, lining up those deals and getting them signed. We are increasingly seeing this happen in Chelsea. Don't be fooled by an "instant" sellout.

    Secondly, sometimes developers calculate "xx% sold" of what has been released. So if a building has one hundred units, releases thirty and sells fifteen, a buyer would think the building is 15% sold, but in developer-speak, it might be "50% sold."

    One of these buildings might still be the right building for you, just be aware of the glamour lighting and the hairspray on the camera lens.

    ali r.
    {downtown broker}

  2. #17

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    Front Porch, thank you.

    In your experience do they release the most or least desirable units first? or is it a mix?

  3. #18
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    Default Best units first? Or last?

    It can be a mix . . .

    The most prime units will go to "friends and family" and the public will never see them. But whether the next good units, such as the penthouses, come out early or late depends. Some developers save the penthouses for last, so that the building has gone through all of its price increases and seems prime, and then they sell those last units and take their profit.

    The thing is, though, which units are best isn't going to be a secret if you can see all the floorplans -- you can generally pick out a line that you like and then try to buy it on as high a floor as possible.

    As Ilyce Glink, the personal finance writer, has said, "stretch to buy the best view you can afford."

    ali r.
    {downtown broker}

  4. #19

    Default Realy interesting

    I have always found the release process really interesting. I guess its a real art as you want thing to move early so its important to make units available but you also want to be able to amend and raise prices on some good units.

    Hey - I have been told that many developers make back their entire cost on the penthouse alone? Once they sell the penthouse everything else they sell is profit. I guess that is a pretty general statement and probably only applies to smaller developments.

  5. #20
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    Default So where's the dry cleaner?

    It has become increasingly popular for the sales offices of new condos to put out a map of the local area with their sales brochures. These maps are meant to be reassuring -- look, you're not moving to the hinterlands, here's a bank right here.

    If you are indeed serious about moving into a neighborhood, you might want to actually take a second or two to look at this map -- make sure everything you would want is on it -- a hardware store? a clothing boutique?

    If these types of retail are not marked, just ask. The point is to not be fooled into thinking there are more neighborhood services than there are just because you get a four-color map with a lot of dots on it.

    ali r.
    {downtown broker}

  6. #21

    Default

    Knowing what I know now about buying new construction I really don't know if I would do it all over again. I bought a new place close to two years ago and I still have not moved in yet.

    My advice to prospective new development buyers is to be ready for anything. Everybody tells you to expect delays..but seriously...EXPECT DELAYS...you will not get in any where close to when you think you will.

    And if you expect to have your own architect/designer to do some changes make sure you put it in the contract you will be able to get in to the apt early and get full cooperation regarding plans etc. My developer was less than helpful in that department.

    Expect changes in the final product. When they say square footage is approximate believe them...that's really just a euphemism for "subtract at least 300 sqft, because we are totally lying to you to get you to buy."

    Things change...a lot.

    Getting in early allowed me to get a crazy good deal on the place...I couldn't find nearly the same amount of sqft for the $$$ or finishes I got...but the frustration and disappointment that came from the process is daunting. Hopefully, the end result will make the wait and angst worth it...I won't know that till later...

    Your guess is as good as mine as to when.

  7. #22

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    i am really nervous now. we signed a contract on a new development about two months ago. 300 sq feet on an 875 sq foot apt is HUGE. i know the contract states that its approximate, but arent they liable for anything? in the end can you fight it if the sq footage is off by that much?

  8. #23

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    My place was supposed to be 1700 and now it's closer to 1400...

    I doubt your place will be reduced that much...but there is a chance it will be smaller than they quoted you. Also, a lot of times they include the outside walls in their estimates of sq ft...as well as closets, terraces, and interior walls.

    The reduction in sq ft in my place is not super noticeable because it's not all from one place. It's sort of like the whole apartment melted. It's frustrating nonetheless.

    There is also usually a way out of your contract with a good lawyer.

  9. #24

    Default

    Quote Originally Posted by incredibleskulk View Post
    My place was supposed to be 1700 and now it's closer to 1400...

    I doubt your place will be reduced that much...but there is a chance it will be smaller than they quoted you. Also, a lot of times they include the outside walls in their estimates of sq ft...as well as closets, terraces, and interior walls.

    The reduction in sq ft in my place is not super noticeable because it's not all from one place. It's sort of like the whole apartment melted. It's frustrating nonetheless.

    There is also usually a way out of your contract with a good lawyer.
    Again - the key is to buy a new development from a developer with a good reputation for delivering high quality product....

  10. #25

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    I 100% agree.

    I went with a first time developer who was trying to make a splash with his first building. The finishes are amazing...and the price per sqft even in with the shrunken plan is still heads and tails better than I could have gotten any where else comparable, but I paid for the risk of a 1st timer.

    I just think you have to manage your expectations...

  11. #26

    Default Inspection

    What is the process for the inspection? Is it usual / advisable for the buyer to hire a professional inspector?

  12. #27
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    Default Hiring a professional inspector . . .

    This discussion has been had on the Link thread, so you might want to take a minute to check it out.

    Typically, buyers do not hire a pro to do apartment walkthroughs -- while a condo purchaser has a stake in the shape of the apartments' boiler, roof, etc., it's not the same as buying a fifty-year-old house.

    I have a list of things to look for in a walk-through on my website, and buyers have generally found it helpful, so click below.

    This is the link:
    http://www.frontporchllc.com/2006/09...ld-i-look-for/

    Also, you want to look up to make sure your ceilings aren't buckled and you don't see any water damage stains.

    Good luck!

    ali r.
    {downtown broker}

  13. #28

    Default

    Quote Originally Posted by incredibleskulk View Post
    My place was supposed to be 1700 and now it's closer to 1400...

    I doubt your place will be reduced that much...but there is a chance it will be smaller than they quoted you. Also, a lot of times they include the outside walls in their estimates of sq ft...as well as closets, terraces, and interior walls.

    The reduction in sq ft in my place is not super noticeable because it's not all from one place. It's sort of like the whole apartment melted. It's frustrating nonetheless.

    There is also usually a way out of your contract with a good lawyer.
    Wow that is incredible, what happened? Do you have any recourse?

    As for doing your research on the developer, are there any particular tricks or hints to dig up past complaints? I'm currently looking at a unit in the Chelsea Stratus, and the developer is LCOR. It seems they've done some residential high rises in Washington DC, and they're currently doing another project called the Charleston. Anyone know anything about them?


    I'm looking to buy for the first time also, and this thread really helps. Thanks.
    Last edited by nyrealestate; June 7th, 2007 at 11:37 AM.

  14. #29

    Default Late completion is my biggest issue

    I bought into a new const building and it's been over 6-7 months late and who knows when it'll be done. That's the most frustrating thing about it - say you buy a year ahead of the planned completion date and than it's another 6 months late - life can change quite a bit in that timeframe. While you do get a discount (presumably) in a new construction you ARE taking many risks as well. I did not appreciate that as much as I should have at the time.
    As per the size, a plan clearly should explain how the measurements are done, ie. include outside and inside walls, pipes, sometime hallways, etc and the apt end up being much smaller.

  15. #30
    http://tinyurl.com/2ag28z Front_Porch's Avatar
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    Default Doing research on your developer . . .

    That's part of why, as a buyer, you should work with a decent realtor. It's funny to me how many buyers want to bypass neighborhood real estate agents (generally because the profession has a bad reputation) to go straight to the marketing department of the developer (a profession not known for being full of theologians).

    However, if you want to do some research yourself to supplement what your agent is doing, I'd suggest doing some reading in The Real Deal. They're a real estate trade magazine that writes about the developer and brokerage communities (and, full disclosure, in my publishing life they are my buds and I'm on this week's webcast shilling my book).

    They seem to have written some articles on LCOR.

    www.therealdeal.net

    ali r.
    {downtown broker}

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