How to Buy New Construction Real Estate Offerings

Business Articles | March 2, 2008

If you are considering buying a home or condo pre-construction there are a few things you should know.

Brand new real estate is a pleasure to own. No deferred maintenance to worry about and it even smells new. But buying something unseen comes with its own little quirks to worry about.

First things first. The contract, also called developer contract, is drafter by and for the benefit of the developer. Make sure your interests are adequately represented. The best way to guarantee that is to employ a lawyer to read the contract and suggest changes.

Watch out for any earnest money release provisions. If the earnest money is not going to be held with a title company or escrow agent then you better make sure that the developer is well known and has an impeccable track record.

Consider hiring an independent building inspector. Defects are much easier to discover while the structure goes up. After completion many defects can be hidden below the surface.

If you are risking your earnest money to have the right to purchase the pre-construction property you should make sure that you could assign your rights, as you feel fit. That includes the ability to sell your contract before closing. Check the contract for any assignability penalties.

Not all condos are created equal. Walk the proposed building site. Watch sunrise and sun set orientations, view corridors, traffic impact and whatever else might negatively or positively impact the property. Make sure you understand which the most desirable units are and don’t let the sales brochure tell you. There is real money to be made in discovering an under priced unit in that had a great feature overlooked by the developer.

As your closing will be a considerable time in the future make sure that you will have the ability to close on the property. Have more cash reserves than required by your bank in case lending standards are tightened. If financing is at risk then a pre-construction purchase might not be a good idea for you.

Article Tags: Real Estate, Make Sure

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ABOUT THE AUTHOR

After a 10 year career in derivatives trading Toby Munk relocated to Colorado to pursue a career in Aspen Real Estate. Explore more information on Aspen MLS search and Snomwass Real Estate listings.