Updated: Mar 14, 2019
For urban living at its best, you can’t beat a condominium, and Bostonians are seeing a boom in new construction of luxury and affordable condos. Many outstanding developments packed with on-site amenities are underway or nearing completion. But before you start meeting with builders and falling in love with a particular floor plan, be aware of the some of the pitfalls and extra costs involved in buying a new construction condo.
Here are just a few of the points to consider before rushing in:
This is probably the most challenging aspect of buying a condo. With new construction condominiums, bank financing might have additional complications. Government insured loan programs such as FHA will be difficult for most condo buyers, new construction or not. That means a larger down payment, perhaps 20 percent or more, from a conventional lender. Work with a broker who is an expert in condo financing and can seek out the best program for you. Or, consider working with local banks and credit unions who have strong familiarity with the neighborhood or city in which you are looking to purchase.
Most new construction condominium developers are well aware of the financing obstacles their buyers will face. That’s one reason many will work with a preferred lender to smooth the path. Naturally, your personal financials still have to pass scrutiny with the preferred lender, but the process will be less burdensome for you. Be aware, however, that you might be paying more for that convenience than if you shopped around!
We’ve all heard horror stories about new condo developments overpromising delivery dates and causing closing delays by many weeks or months. One of our clients sold a home expecting to have a short two-week window until his new condo was delivered, only to be forced into temporary housing for over three months while the developer missed deadlines and barely completed the project during that same calendar year.
Sometimes it’s due to bad management, but even developers with the most solid records in the industry are vulnerable to market forces. Make sure your contract allows you to get your deposit back should the project be delayed to the point that you need to back out. On the flip side, see if the builder will allow a delayed occupancy clause if you think your existing home won’t sell right away. Consult us at NextHome Titletown and we will advise you on contingencies you should insert into your Purchase & Sale Agreement before you sign.
How many times have you checked out an amazing listing for a condo that is within your price range only to realize that the Condo Fees are astronomical? It happens all the time. More amenities mean higher condo fees. If you’re moving into a new elevator building with a pool, fitness room, and front desk concierge, the budget to maintain those services will be pricey.
The good news is that with most new buildings, your condo fee will be a reliable measure of your monthly costs for building maintenance and likely won’t require special assessments for the foreseeable future (since everything is new). Conversely, older buildings might have many hidden costs (new roof, siding, building painting) that are infrequent expenses, but when they are needed, they are costly.
These are just a few points that barely scratch the surface of the many questions you need to investigate before committing to a new construction condo. Go into the process with your eyes wide open and always consult your own attorney before signing. If you do, you’ll be sure your next home will truly be home, sweet home!
At NextHome Titletown, we understand the nuances of new construction condos and can walk you through all of these options. Please reach out to us at NextHome Titletown. We’re available at 617.657.9811 or firstname.lastname@example.org.