Article
Pre-Construction Condos
When you buy a New York condominium home that is still under construction, there can be setbacks before you move in. Pre-construction New York condominiums are units that a developer proposes to build, but the construction work has not yet started. When you purchase a pre-construction unit, you are putting money down before construction begins. Buying a pre-construction New York condominium can be a great opportunity, but it is better to proceed with caution. As you are buying into something that does not yet exist, there are greater chances for unforeseen problems and setbacks before you move into your New York condominium home. By understanding the risks and planning carefully, you can avoid complications and come out a winner.
The main advantage to buying into a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete. The reason for this is that developers typically need pre-construction sales of 50 percent to 90 percent of the units in a development before they can borrow funds to begin construction.
Pre-construction condominiums can also get you in on the ground floor of an investment that will appreciate. The market value of pre-construction units generally increases during the one to three years it takes to build a development, so your unit may be worth more than you have actually paid for, before you even move in! In addition, you can often choose from a variety of finishes and flooring options, allowing you to customize your New York condominium home.
There are several steps to buying a pre-construction condominium. They can vary from developer to developer but the basic components are the same. First, you give a deposit to reserve the unit and set the price although technically the builder has the right to change price in the contract. The deposit is in escrow and you can cancel the agreement at any time with a full refund.
When a development gets approved for construction, the developer submits condominium documents that include budgets, association rules, unit descriptions, materials and other important information for approval by the state.
After approval of the documents, the buyer has to review the papers. Read them carefully to make sure that you will be comfortable living by the association rules. Once you receive the condominium documents, you have a 15-day period to decide whether you would like to proceed into a binding contract. If you do not, you can exercise your right of rescission and withdraw with a full refund.
If you do not withdraw, you will provide the balance of the required down payment, usually 15 to 20 percent of the purchase price, and sign a binding contract agreeing to purchase the condominium. You generally have seven days after that to cancel. This is your last chance to walk away with no penalty.
When construction of your chosen New York condominium is nearly finished, the developer will issue you a certificate of occupancy. A closing date is set when you will hand over the balance of the purchase price and sign the final documents. If all goes according to plan, your closing will coincide with your move-in date and you will be fully ready to enjoy your new home.
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