Money: Pros And Cons Of New Condos
Scott Arkills's newly built, two-bedroom condo in Cleveland is stocked with every urban amenity: floor-to-ceiling windows with panoramic city views, granite kitchen countertops, gleaming hardwood floors, a roof deck and a gym. "With a new development, you have the ability to design a place that really reflects your choices," says Arkills, a portfolio manager who paid $500,000 for his triplex penthouse in The Condominiums at Stonebridge. "And there's more of an assurance that the building, the entire design, is going to be really good."
Long deemed undesirable, new urban developments have come into vogue in the last several years, thanks to the high-profile designs of star architects. Between November 2005 and November 2006, new-home prices rose 6 percent, while existing-home prices fell, according to the National Association of Home Builders. "Their prestige value drew in a whole new audience of buyers," says Pamela Liebman, CEO of the Corcoran Group, a real-estate brokerage in New York City. With the real-estate market in a trough and interest rates still low, buyers may be able to snag some good deals if they start shopping now. But new construction isn't for everyone. Some advice:
Google the developer. Read about its other projects online, visit the Better Business Bureau's bbb.org or call your attorney general's office to make sure no serious complaints have been filed against it. If anyone has already moved into the building, "knock on their door," says John O'Brien, chair of the Illinois Real Estate Lawyers Association. Ask how residents feel about the complex and how quickly the builder has addressed residents' complaints.
Be flexible. Though the developer may give you an exact move-in date, expect delays. "Timing is the first thing that buyers need to think about," says O'Brien. "Is there something that makes it crucial to be in by that date? If so, you may think about an existing home instead." Also, ask about the completion schedule for all the amenities. "Many buyers are disappointed to find that the gym isn't ready on move-in day," says Liebman.
Read the fine print. Hire a real-estate attorney familiar with new developments to help you understand the contract and the building's offering plan (see the Ameri-can Bar Association's abanet.org ). Some things to look for: does the condo or development have a well-subsidized budget for capital improvements? Is the developer bound to pay condo fees on his unsold units? If not, your condo charges could climb quickly, says Marjorie Bardwell, who chairs a committee in the real-property section of the A.B.A.
Negotiate. It never hurts to offer a lower price or ask for a perk. According to a survey conducted in November by the National Association of Home Build-ers, 60 percent of developers are offering sales incentives like free granite countertops and help in paying the closing costs.
Don't expect perfection. Anticipate glitches on move-in day. "It's not unusual for a doorknob to be on wrong or for a faucet to squirt the wrong way," says Liebman. "Don't allow yourself to get upset. Stay friends with the people who work with the developer, and they'll be more likely to address your concerns right away." For some, it's a small price to pay to be the first person to leave a fingerprint on that stainless-steel fridge.
