A Pre-construction Condo - Are They Really A Great Deal?

Pre-construction condos are units that are proposed to be built by a developer, but have not yet been built.

When you buy a home that’s not built yet, it's possible to have setbacks before you can close and move in.

Buying a pre-construction condominium can be a great opportunity. You should proceed with caution. You are buying something that does not exist yet.

There is greater possibility for unforeseen problems and setbacks to arise before you clos and move into your home.

If you understand the risks, educate yourself and plan carefully, you can avoid complications and come out a winner.

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• The main advantage to buying in a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete.

• 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 condos 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’ve paid for it before you set foot in the place.

• You can often choose from a variety of finishes and flooring options, allowing you to customize your home.

The General Procedure For Reserving and Buying A Pre-Construction Condo

There are numerous steps to buying. The steps and terms may vary between developers, but in general are all very similar.

The Reservation Agreement

You make a deposit (usually between $5,000 and $10,000) to reserve the unit and set the price (the builder can reserve the right to change the price in the contract).

Condominium Documents

A development must be approved for construction by the state. The developer submits condominium documents which consist of association rules, budgets,unit descriptions and other important information. Once the documents are approved, they are sent to you for review. Read the documents carefully to make sure that you will be comfortable living by the association rules.

Your Right of Rescission

After you receive the condominium documents, you will have a 15-day period to decide whether you want to proceed to a binding contract. Your right of recission will allow you to withdraw from the contract and receive a full refund.

To Hard Contract If you don’t withdraw, you’ll 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.

Closing

When construction is nearly finished, the developer will issue you a Certificate of Occupancy. A closing date is set when you will pay the remaining balance of the purchase price and sign the final documents.

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Your savings on a pre-construction condominium can be signifigant. Those potential savings coupled with the Condo Buyers Rebate that I will provide you is money in the bank!

I encourage you to learn more about this type of condo purchase.

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