Continued from ‘Buying a Condo part III’
Buying a new construction Condominium
Sometimes you shop around and find that new is more attractive(literally), or where you are looking and the features or location you want are only available in new construction. It may(or may not) be more money, but that is not the point, this is a long term investment and your future home.
Another reason to buy new, as an investment, is because of the time lag involved. You put down 10% and you have 18-24 months to complete the purchase. Theoretically enough time for the market to go up and for you to make some easy profit (be very careful on this one)!
New Condominium purchase is a whole different thing than resale. When you make an offer, it isn’t really a negotiation, its the price the builder is offering and whatever upgrades you ask for, like hardwood floors, better light fixtures and stainless appliances. If the market is weaker, the developer may include a special upgrade package at a reduced price, as a purchase incentive…. like options on a car.
Often these projects are not built, or partially constructed when you decide to buy. In Alberta, New condominium purchase contracts allow for a 10 day unilateral right of recision; so, you as the buyer can back out if you get cold feet, find out the builder has a questionable reputation, or maybe the bank simply won’t lend you the money on this project for some reason. The contract provides some guidance for all involved as to what will be built, how long it will take and how much notice the developer will give you when the unit is ready for possession. Be careful here, the devil is in the details! The developer may be able to put off construction or dramatically change the project, if the market conditions change. Usually the condo fees that are proposed are referred to as a ‘marketing budget’, which is a nice way of saying they are way too low and expect them to jump by 30-50% when the owners have their first meeting. Check to see past projects the builder has done and ask the owners how they were treated, what issues have come up and how the developer resolved these. That is a powerful predictor of your own future!
BE AWARE, a developer and their sales people are under no legal obligation to inform you of the prevailing market conditions or even qualified to give an opinion on future value, so do your own homework. I recommend you use a Realtor for your purchase, so as part of my job I would have inform you the pertinent market facts and potential for future profit or loss . Go in with your head up and your eyes open!
This has been a long explanation and by no means covers everything, however, this does give you a good overview of the process. Knowledge is power, so be confident in your purchase by reading this and calling me to help, I am an expert, and will to keep you on track to make a great purchasing decision!