Buying a new construction condominium

[Front_Porch]

Hey everybody!

Propose a new thread, a sticky, called "buying a new construction condominium"

to deal with issues like what to ask a sales office, what offering plans and amendments are, how late you should expect delivery of your unit to be, what a 421(a) is, etc.

This could go in either Q&A or in "New York Real Estate"

Came to mind because the discussion of offering plans and amendments and charges on the Platinum thread would be of general interest to new buyers, if they could find it.

What think?

ali r.
{downtown broker}

[Edward]

I think this is a great idea. I am making this a sticky and placing in Real Estate. Start posting!

[Front_Porch]

This is always one of the big questions buyers have -- on older condos and co-ops, we generally see "flexibility" in pricing -- it would generally not occur to a buyer to be embarrassed to offer less than full asking price on an older building.

But the question comes up, does it work that way on a newer building?

And the answer is, sometimes: there are times when developers demand full asking, and times when they will cut you a break.

Ilyce Glink, who is a national personal finance expert, wrote a great column about this. I am prohibited for copyright reasons from reproducing the whole column, but if you're interested, follow the link below:


http://www.thinkglink.com/Negotiating_New_Condo.htm


ali r.
{downtown broker}

[zarzapan]

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?

[bizzan]

I was wondering the same thing. My surmises would suggest that it's simply on a case by case basis (building by building, actually). Things to consider after a building tops out are high detail finishings and import (or import quality) materials for the units, lobbies, etc. I think delays in the deliveries of these materials and the labor that goes into installation and re-installation, if necessary, probably plays a big role in completion timing.

Anyone else want to chime in?

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?

[Front_Porch]

In my experience, just adding on three months doesn't hurt.


Part of what has happened in NYC is the construction boom -- the suppliers that the developers are counting on are stretched pretty thin, and the developers, building two buildings each, can't necessarily see that big picture.

ali r.
{downtown broker}

[bigkdc]

Yes I think sponsors are generally pretty optimistic and underestimate how much time it will take to get the TCO....

Also, if you have the flexibility, you should try not to be the first to close as buildings take a while to settle down and become good places to live. The first few months the building will still be like a construction site and there will be tons of dust everywhere...once the construction (and renovations) have died down I would suggest getting an industrial cleaner to come in and clean the vents so you dont have dust re-circulating throughout your apartment.

[poorsod]

When do you pay the 10% down for a new development? During closing or when you decide to take the offer? I assume you pay the fees and taxes during closing right? Thanks.

[zarzapan]

When do you pay the 10% down for a new development? During closing or when you decide to take the offer? I assume you pay the fees and taxes during closing right? Thanks.

You pay the downpayment (normally 10%) when the offer is made and accepted and the sale goes "into contract." You probably also have to pay your attorney a portion of their fee at this time. Then you pay the balance as well as the closing costs (fees, taxes, rest of attorney's fee, etc) at closing.

Some places (like 10WEA where I am buying) have an additional downpayment before closing -- our sponsor is requiring 20% down of which 10% was paid when the sale went into contract and 10% about 6 months later.

[Front_Porch]

When do you pay the 10% down for a new development? During closing or when you decide to take the offer? I assume you pay the fees and taxes during closing right? Thanks.

Some new buildings will ask for 5% at contract and 5% at closing -- since it varies from building to building, look at it as a perfectly legitimate question to ask when you're being shown around the sales office.

Some buyers like the more general, "if we like a particular unit, how do we move forward?" because then the sales office/listing broker will tell you what it takes to get into contract, what they want to see down, etc.

ali r.
{downtown broker}

[telebob]

that has to be nuts .
they lie about square footage and your stuck in a closet.
in some places they count sq footage through the brick;and even pipe areas behind walls right through to the neighbors wall.

The sheffield does that but its a renovation. That building is having problems other than that issue though

[bigkdc]

in many cases you can go up into the building while under construction and see your actual space. yes there is some risk in pre-construction about how things will come out but that is why it is important to do your research on the developer and the quality of their past projects

[bizzan]

can't stress this strongly enough!

but that is why it is important to do your research on the developer and the quality of their past projects

[Front_Porch]

Along with looking at a developer's track record, it is worth asking what concurrent projects they are involved in.

Elad, for example, had a strong record going into the Link and the Grand Madison -- but now residents of the Link say they are experiencing delays in their closings. It's possible that these are caused by the developer's working on multiple projects ... try and feel your developer out to anticipate this kind of problem.

ali r.
{downtown broker}

[Justwinbaby]

This has the potential to be a very helpful thread. I hope people with recent experience will comment here about what to expect.

This post linked below over at Triple Mint lists some of the closing costs to expect when closing on a new construction condo.

Closing Costs