Buying New Development Condo

Buying a new construction condo has a number of special risks- some of which will be specifically stated in the prospectus. Other risks, will not be in the prospectus..such as not knowing who your neighbors will be prior to buying (imagine a building with lousy soundproofing and a family with a few young children and dogs running around all day/night above your head). Is this a larger building or a smaller one? I ask because I bought a new construction condo that had some serious defects. Because we were a small building- and 100% sold out, the developer only wanted to do superficial repairs to the problem areas. After years of back and forth- the unit owners decided that we would make the repairs out of our own pockets because the NY Attorney Generals office was not enforcing the law (they didn't care about a small builing) and suing might not solve our problems.

More importantly- if I was asked if I would buy a new construction apartment again- yes I would- but I would insist on either on further pricing concessions to account for greater risks.

Also important- read the prospectus cover to cover. Know all the details.

pacom: The most important person to have on your team - and I cannot stress this strongly enough - is an excellent real estate attorney who has written offering plans as well as dealt with new construction previously in depth, and who knows all the possible exigencies that must be reviewed to adequately protect your interests. Just a good basic real estate attorney is not the answer here - you require a top quality highly experienced attorney, and it is worth every penny you will pay. The attorney should be negotiating concessions, not a broker.

At a later point - when you are taking possession, the other crucial person you will require is a super top notch building inspector who will fully review not only your unit, but the entire building top to bottom, roof to basement.

The broker is the least important part of your team in this specific case.

do get it inspected, and list anything that you want done or changed, fixed etc.. in your closing docs.
i've been really happy with my new construction condo, and i bought just off the floor plan. my neighbors turned out to be great, and all is well many years later. good luck!

Yes you can get it inspected and list anything you want done, changed, fixed in your closing docs. If these items are not fixed- you will likely still be required to close. This was the case in my building. While I did not personally have major issues in my apartment- another apartment did- and ultimately the sponser would not fix the problems. I did get lucky that most of my neighbors are great- but you can't possibly know that when buying off a floorplan. If you do buy and have any problems- organize with other owners ASAP.

Oh, and another thing to keep in mind- many developers write budgets that are at the low end of the spectrum. In our building, I think all the owners recognized that the developer did this- so it was no surprise when I took over as Treasurer that I increased the common charges dramatically.

Thanks for all the advice! Sounds like there'll be a lot fine print in the closing documents.

semerun, wisco, or matsonjones, I'd also appreciate any advice regarding negotiating concessions? Thanks very much.

Edit: This was probably the most useful resource I found about the negotiation process. http://www.brickunderground.com/blog/2011/10/concession_survival_guide

However, there was also a May 2012 NYT article that stated concessions have become rare now.
http://www.nytimes.com/2012/05/13/realestate/developers-cease-to-offer-condo-incentives.html?pagewanted=all&_r=0

Unlike 10+ years ago , buying pre construction /new construction is a bad idea.
-Financing is harder
-New developments are not price at a discount
-unknown's about how the building is constructed
-governance issues not settled.
-defects in the building

Unless you are buying at a discount to the market. You're better off buying a not-so-new building. There are plenty of buildings that were constructed in the last decade that come with a track record.

>Unlike 10+ years ago , buying pre construction /new construction is a bad idea.
-Financing is harder
But if you can get the financing, then this point is moot

-New developments are not price at a discount
ok

-unknown's about how the building is constructed
as opposed to 10 years ago when you would know how the building is constructed, before it was constructed?

-governance issues not settled.
don't even know what that means, but as opposed to 10 years ago when you would know how about governance in advance?

-defects in the building
all of a sudden new construction 10 years later has defects, and we know about them in advance, but 10 years ago there were no defects?

I agree with Riversider. I have bought off of plans and there are always delays and then you have to deal with lots of crap and unknowns. For example, a bunch of places recently decided to convert to rentals after selling units. How this is legal is beyond me, but it happens and would be a huge pain. Or in my place, the offering promised all these incredible amenities that were significantly scaled back.

SO if you are not getting a great deal why bother? Better to get a building that is at least a few years old where monthly costs are clear, major problems dealt with and you can actually see the quality of the construction and amenities.

>I agree with Riversider

vs 10 years ago?

Ten years ago, Pre-constuction sold at a discount to compensate the buyer for having to wait up to two years to move in. The developer still felt this was a good idea, since Pre-selling helped with financing the project. Today developers sell new construction at prices equal to or above existing stock.

Yup. I bought in 2006. Moved in, after delays. I got a very decent price and it was my first place so was able to save a better down payment. Price was about 30% higher by time I moved in. Now new construction is same price or more. Can't figure out why people would buy if they have equal options.