A sleek new condo building certainly has its draws, from sensible layouts to high-end stainless steel appliances, pristine lobbies and fast, reliable multiple elevators. Of course, we know that those perks don't come cheap. Not only will you pay a premium to buy new, you'll also take a risk on the unknown and untested, especially if you commit well before your place gets built.
To boost your chance of getting what you pay for - and ward off any nasty surprises - read on to our guide of the 16 essential questions you should ask while shopping for a new construction condo.
1. What's the exact plan for the building?
Aside from you and your broker doing much research and reading, there are also certain things you should take a look at early on. One of those is the offering plan's "special risks" section, which covers things like reserve-fund requirements and terms for purchasing a super's unit. You'll also be able to find out if the developer has reserved the right to refrain from selling any units, which could mean the building would end up as a hybrid rental/condo if the market takes a turn for the worse. This is especially important if you are particular to residing in a residence-only type of development, and would not want any transient neighbors.
It's also important for prospective purchasers to check the offering plan for its engineering report. You want to make sure the building construction details were developed by reputable and experienced architects/engineers and that a licensed professional has put their name to building. The offering master plan will also contain budget reports from the engineers that will lay out the first year's operating utilities costs - a large part of the buildings operating costs. If the information is missing or inaccurate, it's a problem, because those budgets will relate directly to your common area charges, and, unfortunately, first-year operating budgets, which in our experience are often off by as much as 20 to 25 percent.
Before you make a deal, find out as much as you can about the developer. Are they involved in any lawsuits? What other buildings have they completed? Have buyers generally been happy? Use Google, and search through Yelp and other see if their other developments are up to par with what you are looking for. Most importantly, try to find out if your broker has dealt with them in the past to get feedback with how previous clients like or dislike the developer's workmanship, turnover, and management of the property.
Keep in mind that there are always people who write bad reviews, so you need to do your homework to decide what's a legitimate complaint. Be sure to look up the backers of the project, often affiliated with a development firm --as well as the principal architect and construction company contracted to build the project. Again, all of these details you'll be able to find in the master plan offering.
3. Any weird closing costs?
Though not a common case, developers sometimes will pass on unexpected extra expenses to buyers, including part of the cost of the supervisor's apartment, the building's insurance costs for its first year and attorneys' fees for preparing and filing the offering plan. You want to make sure you're not surprised by any of these. They'll all be listed in the offering plan.
4. How about concessions?
Concessions are almost like hidden perks or bonuses developers will give to a buyer. They don't affect the sales price, but they can save the buyer some money (think things like closing rebates and free storage or parking spaces). While concessions aren't anywhere near as prevalent as they were during the post-2008 market downturn, it's worth asking your broker about. You never know, you might get some great freebies with your property purchase - which is always a great thing.
In an effort to lure buyers, some developers have packed their projects with over-the-top amenities. If your heart is set on that doggie swimming pool, go for it - but you'll be paying for it in the form of monthly common charges, so be sure the amenities you're getting is more than worth it.
A tip we always give is for buyers to think about what types of services they'll really need. Some, like swimming pools, cost a lot. Something like a wine cellar can be good since there's almost no maintenance on it, and the developer is just using space that's already there. It's the relative value of it. Also, keep in mind that developers tend to lowball the ongoing costs of amenities in their offering plans. Once the first year is up and reality sets in (and building management realizes that they may need more doggie lifeguards), expenses tend to go up, taking common charges with them.
6. What does the model apartment look like?
For buildings that are still under construction, developers often create off-site sales offices that feature sample bathrooms, kitchens and other elements to give you a sense of finishes, appliances and bathroom fixtures. When the building is closer to being done, they'll often dress up one of the units as a model apartment to show you a version of the finished product.
Just always remember that in a demo sales unit, you can see the quality, pretty much, of what you're going to get. What you won't be able to see are the windows or views, but you get an idea of the finishes. Set your expectations to that frequency and you should be fine.
7. Does the design fit my lifestyle?
When you're looking at the model apartment, don't be afraid to get into the nitty-gritty. Open the drawers and really take a look. If you rarely cook, a small kitchen with limited cupboards may be just the kind of sleek, space-saving layout you're after. But for the gourmet family of five, you may want to make sure you have small conveniences like a place to put a pull-out trash can or enough drawers.
Also, pay particular attention to light. In our experience, some buyers are not sensitive enough - they just want to know that when you turn them on, they work. But you should also be judging whether there is the right amount of light, that there are lights in the bathroom, or under the counter if that's what you want. With concrete slabs up above, lighting isn't going to move, so you need to be okay with what you have.
It's not impossible to get a loan when buying in a new development, but it can be a bit trickier than one for an existing apartment. Banks are wary of lending to buyers in under-construction buildings because of housing lender guidelines; they often won't issue mortgages unless the building is already at least 51 percent sold and meets certain minimums for owner-occupied units, among other requirements.
Some financial institutions cannot do new condominium financing until the building has two years of financials with the homeowners paying common charges. Luckily, Boston developers deal with this all the time--usually by teaming up with a "preferred lender" that will line up mortgages until the building meets Fannie Mae's or other lender's specifications, and stay on afterward.
If you buy when the building is only 25 percent sold, your rate will be higher than if you buy when it's 50 percent sold (it can vary by about 0.5 percentage points). However, typically, you'd also get a lower price on your apartment, and you could refinance down the road.
As for getting approved, it can often be quicker and more straightforward than getting a loan for an existing apartment because the bank has already approved the building. To see if you qualify, get in touch with the preferred lender directly.
9. When can I move in (for real)?
In a new development, it could be 12 to 18 months before the building is ready to close and you can move-in. While the sponsor can give you a target date, even the most experienced developer who runs on schedule can run into delays which are out of their control. Our recommendation is to plan for a buffer of at least a two-months delay from the target closing date, so you don't find yourself moving out of your old place before the new place is done.
In the past, you could also try to negotiate a "drop dead" date by which you'd be entitled to cancel your contract and get your money back if the unit isn't ready. However in a strong seller's market like the one we have one, you may not have enough leverage to make this happen. Ask your broker to check on this - there's no harm in trying.
Mixed-use buildings - which combine residential apartments with offices, hotels, stores or restaurants - are common in Boston. It's worthwhile to ask what your developer has planned for any space in the building set aside for commercial use so you don't get stuck with something noisy, stinky or otherwise unpleasant.
In some cases, a building will prohibit less desirable establishments from opening up. In other cases, the developer could use the space for a high-end gym or grocery store--which may feel like another amenity. But it's possible you'd get stuck with a fast food restaurant or loud nightclub.
11. Who are the neighbors?
Take a look around the building. Are there empty lots? If there are, there will likely be construction, and you need to think about how that will affect your quality of life, your views, and, also, your resale value. Your broker will usually let you know this in advance when you go to preview the property.
In neighborhoods that are booming and gentrifying, this may be even more of an issue. We'd recommend taking a look at Google Maps, and walking around the project radius at different times during the day. Remember that the building might be going up soon, but that doesn't mean you'll be insulated from what's going on around you.
Ask your broker or the sales office staff as many questions as possible about the neighbors. Who lives next door? Is it the owner of the house or a renter? What about things like dry cleaners and supermarkets? Are they close by?
12. What's the source of heat and air conditioning?
Some systems have drawbacks you wouldn't think of, aside from their relative abilities to heat and cool your place. Just to give you a little engineering education:
On the lower end of the scale there are PTAC units which are heating and cooling systems. While some of these can be attractive and even efficient, others can be noisy, so make sure you turn them on to see how you feel about the noise level. They also stick out into the room so you want to make sure you account for that when you are planning where your furniture goes.
Meanwhile, heat pump units inside the wall are typically quieter and more efficient, and their placement can permit larger windows. In ultra-luxury buildings you may have even better systems - true central air systems - with very sleek vents and possibly humidity control to protect your artwork. Make a value assessment based on your own preferences: if forced hot air is something you don't like, and you prefer radiators, be sure to ask about it.
13. What's the soundproofing like between apartments?
This can be a little bit trickier to check in an empty building (and impossible in one that's not yet completed). But you can always have a friend go upstairs to the apartment above you and walk around in high heels or with a heavy step to see if you hear anything. If it's still not built, then ask about the materials - in between walls and floors - being used in the development. A simple search online, or through an experience engineer friend of yours would yield good to accurate estimates. You should also considering asking about how many panels the windows will have, so you an make sure noise from the outside stays outside.
14. What's the experience of residents so far?
If people have already started moving in, they can be a wealth of information. If permissible, visit the building during the evenings and try and reach people in the amenity spaces or even knock on doors. You really want to ask someone who's actually lived through a rain storm, used the facilities, turned on the shower and used the garbage disposal.
We also suggest asking your broker if they have had past clients who currently reside in the building. We've introduced clients to prospective buyers before, and they've gladly shared their whole purchase and living experience. Don't forget to ask about the small things, too. Certain "small" red flags can indicate that a building has structural issues, including leaks through the heating/cooling systems and windows; ventilation problems; and mechanical noises or pumping sounds.
Some developers prohibit renting out a unit for up to a year after closing. Others limit the use of amenities to owners. If you may find a tenant down the road, double check the building's policy on renting your unit - whether it's for a prolonged period of time, or just for a short AirBnb getaway. In some instances, developers have already earmarked certain units in certain floors to be a "flexible" unit that makes it attractive to both the investor and the condo home hunter.
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