New developments won’t give you prewar historic details, but they do have their own set of desirable attributes. If you want a move-in ready apartment that’s crisp and clean: a newly constructed unit might be the right fit for you.
Does a New Development Suit Your Sensibility?
Prewar buildings have their fans. People love them for their unique architectural flair, sense of history and super solid ‘they don’t make them like they used to’ bones. But prewar units could also need costly renovations to be updated like air conditioning, tearing down walls to create an open concept, and putting in more efficient windows. Is that something you could see yourself doing? Or even wanting to do?
Your home should reflect your personality. If clean lines, an open concept and the absolute latest in home features make your heart sing— you may find your future home in a new development.
There are several considerations when deciding when to make your play for a unit in a brand new building.
- If you’re one of the first few to purchase in a new building, you will have the most options when it comes to views, light and floor plans. Score.
- Lower Price. Developers want to get some buyers stat so they can look good to their lenders. They may offer lower prices in the very beginning to accomplish this. Additionally, units in new buildings are frequently released in stages—so it’s possible that the price will go up after each new release of units.
- It’s a new project—there could be bumps or setbacks and the market could start acting unfavorably.
- It may be difficult to secure a mortgage. Lenders like to know that a certain percentage of units in a new building are sold before they offer loans to other buyers. To compensate for this, developers often offer a ‘preferred lender’ who will offer mortgages, but there is no guarantee that the terms of the mortgage will be desirable or the right fit for you.
- You may not get to actually see the unit when you buy. If it’s super early on, you might be basing your purchase on a floorplan. It can be hard to visualize the amount of space and light. Some developers have an office where you can visit and see some of the fixtures and samples of finishes and materials. And you may be able to snag a hard-hat tour afteryou’ve signed on the dotted line.
Details To Keep in Mind: Contract Deposit & Timeframe
Usually your down payment will need to be at least 10% of the sale price when you go into contract, but the required amount can sometimes be much higher—20% or more. When you’ve signed the contract, the money you have put down is considered a non-refundable deposit for the unit.
In new construction especially, the closing date is really an estimate—it can get nudged into the next several weeks or months. Large scale building projects almost always take longer to complete than initially expected. Keep this in mind and know that you can be fronting the contract deposit and not actually close on your unit for a long time—a few months to a couple years.
Special Closing Cost Considerations
In a typical re-sale situation, the seller usually pays for the transfer tax and their own attorney fees at closing. When buying a unit in a new development, the buyer pays for these costs in addition to their standard closing costs. These costs can really add up. You may also be required to front some cash for the building’s new working capital fund. This money helps get the wheels turning on the building’s new operating costs and you can expect to pay what would be equal to several months common charges for it.
The Punch List
A punch list is somewhat similar to a regular walk-through when purchasing a re-sale property but amped up. Before closing on a unit in a new development, the buyer, their broker, and someone representing the developer will walk through the unit, make a ‘punch list’ of tasks that must be completed, and check to make sure that chosen finishes and fixtures are correct.
This is the buyer’s big chance to check for mistakes and issues ranging from minor to major. Examples of things on the punch list may be marred or scratched surfaces, mistakes regarding paint, fixtures or appliances that haven’t been installed correctly, etc.
Give a thorough walk-through, note every single issue and double check every finish and fixture because it’s your last chance before closing to make sure the developer held up their end of the bargain. After closing, most requests will go unanswered.
Look Up The Developer: More Detective Work
Chances are that the new development you’re interested in isn’t the first one that the developer has built. This is what they do.
- Look up their history
- What’s their reputation?
- Find their other projects.
- Have they been involved in any lawsuits or been sued? If so—over what?
- Are there any reviews about their buildings or working with them?
- Have they had any faulty buildings?
- Do they have a history of completing projects on time or in a relatively timely manner?
Best to be informed and have this info before committing to a lengthy build, drawn out closing, and high price tag. With that being said, there are many options for new developments in NYC. So have fun researching—you will definitely have multiple options to choose from!