Buying New Construction Real Estate

Like any new thing it is easy to see why it might appeal to people. Untouched and unspoiled it offers the ability to make something one’s own.

When it comes to pre-construction real estate it is important to watch out for a few issues that might arise. Unlike regular real estate re-sales new construction projects are mostly sold with “developer contracts”. Drafted by the attorneys working for the developer and worded to the benefit of the developer.

Have the contract reviewed by your attorney. This is money well spent in the light of a major purchase like a home or condo. Make sure you understand if the earnest money is held in escrow or is released to the developer.

If the price tag warrants it hire an independent building inspector. It is much easier to find defects during the building process then when everything is completed and sealed. Make sure you have the ability for a third party to inspect the property on a regular basis. You might need approval from the developer and the contract is the perfect place to arrange for this right.

You want to be able to assign your contract without extra costs. Whether this is to an entity you control or an outside person, you want to be in control what you can do with your contract before closing.

Visit the building site. Understand the layouts of what you want to buy. Find the best units not on paper but in real life. Discovering a unit that is better in comparison to other units in price and location can make the best deals. There is real value in finding this type of property.

Have a clear understanding about financing. If you are a cash buyer ignore this step. If you will need financing to close this transaction understand what it will take and be prepared to have the necessary funds.

Last but not least make sure that your earnest money is the only thing you can loose in the deal. You do not want to be responsible for liquidated damages or be open to other forms of recourse of the developer.