5 essential tips for buying a pre-construction condo in NYC now
A rendering of 125 Greenwich St., a new 88-story luxury condo tower in downtown Manhattan. Studios start at $1,200,000 and occupancy is expected in late 2019.
We all know it's generally a bad idea to make a big-ticket purchase sight unseen. But there is one group of savvy New York City apartment buyers who have long done just that, buying condos in new developments before construction has wrapped. The way it works is this: In exchange for getting in early and putting down a deposit, buyers score the opportunity to purchase a preferred unit in a new building, and sometimes the ability to choose finishes and other features for the apartment.
Developers help prospective buyers visualize un-built condos using floor plans, model residences, and 3-D renderings. Buyers will sign a contract and put down a deposit up to three years before a building is finished, sometimes even before there is anything in the ground. These buyers know that prices will go up later, as the developer is trying to create buzz through signed contracts.
There is risk involved for buyers who put down a large deposit. They are demonstrating their faith the building will be finished on time and to the specifications the developer promised. And with so much new development in New York City already completed, pre-construction condos face serious competition for buyers, especially for those who may not want to wait to take occupancy.
1) Do your homework
If you have money to spend and time to wait in service of a deal on a pre-construction condo, you can do your homework on a building by researching the Department of Building's Building Information Search website, where developers file their intent to build with the city. And you can also enter the address of a construction site in the state Attorney General’s condo offering plan database to find out about the site and the developer, as well as other sites that a developer has worked on. The rest of our tips come from brokers who are versed in this world, which brings us to our next one:
2) Work with a broker
"The best advice truly is to work with a broker. New development buyers can strike the best deal when working with a broker who can gain inside information on individual project and the developer's negotiability. For example, we recently negotiated on price and free storage for one of our new development buyers, which a buyer working on their own probably would not have known was possible to secure."—Cynthia Jacinta Keskinkaya, Douglas Elliman
3) Do a lot of shopping around
“My advice to buyers is to shop, shop, shop. There are dozens of new developments on the market, and you now have time to make a decision. Don't let your agent steer you into one. Truly do your homework on what you like and what pricing works for you, but don't be afraid to pull the trigger."—Ian Slater, Compass
4) Don't expect the developer to customize for you
"It is not frequent that a developer is willing to do customization to an apartment. What you may see them offer is to deliver an apartment 'white box,' i.e., with gas and water lines studded out but no finishes delivered, for the buyer to design out themselves (at a major discount from the asking price, often). However, I do not encourage buyers to think they can go into new developments now and ask a developer to build to suit—it just isn't economically feasible for the developer and a difficult deal to get done.—Ian Slater
“Customization depends on the developer. Some will allow buyers to purchase a unit in raw form, in compliance with certificate of occupancy requirements, and complete it on their own. Some will offer several finish options, usually cabinet and flooring colors, and others will not allow any modifications at all. It is common for buyers to combine units pre-construction, and when doing so, a buyer might be given the opportunity to customize the layout to their specific needs. Minor upgrades are also popular, so for example, if a buyer wants custom closets or a lighting package, developers will usually offer them the ability to have everything installed prior to closing.”—Andre Rouach, Douglas Elliman
5) You may be able to negotiate add-ons
"Buyers right now simply have more options available to them, with an excess of new development projects coupled with a softer resale market. It is harder to close deals on new construction in early phases of completion, because the buyer may not have the option to wait up to two years if they’ll be using the apartment as a primary residence. Buyers also want to see a finished product, or at least walk through a construction site. Sales offices are helpful but people want to see things firsthand when they’re spending millions of dollars. We are always in the mindset of negotiating on new developments, perks like storage cages, parking spaces, roof cabanas and decoration allowances are ways we have been able to negotiate for our buyers."—Stephen Dartley, Douglas Elliman
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