Purchasing in a Pre-Construction Development

I received this email this morning from a regular reader of TrueGotham:

Good morning Mr Heddings,

I would like to start off by saying that I love True Gotham and I read it every day. Your insights, tips, and advice really help someone like me who is totally new to the real estate game.

The reason I’m writing is because I’ve been looking to purchase a condo in the NYC area for quite some time. Earlier this week, I found what seems to be the perfect one. The one caveat is that the condo is still under construction.

I realize that in this crazy market, purchasing a home even before the construction is complete is commonplace. However, I’m a bit apprehensive about making an offer just based on the floor plans and the designer’s renderings. Don’t get me wrong – the floor plan and the renderings are fabulous, but just how accurate are renderings? Have you seen instances where renderings are completely different from the finished product? Are they generally pretty on target?

I will be attending the first open house for this condo complex this weekend. Because the building is still under construction, the broker warned us that this open house is just to check out the neighborhood and to get any other information. Are there any questions you recommend that I ask?

Thank you so much for reading this and I’d appreciate any insights you have into my questions.

Thanks,
Jenny

My response is below and would be my advice to anyone purchasing in a new development project.  Keep in mind that the reputation of the developer, architect, designer, and marketing agent are all important and that most of these parties want to continue their work in the city so it is unlikely that they will do anything on purpose to tarnish their reputations.  My response:

Good Morning Jenny,

 

Thank you so much for the kind words about TrueGotham.  Precisely the type of email that makes me feel like the blog is worth the effort.  Greatly appreciated!

 

If you actually let me know which project you are considering, I would be more than happy to give you my professional opinion of the project, developer, neighborhood, etc.  That said, is there no sales office yet showing finishes (kitchens, baths, common areas)?  People purchase off of floor plans all of the time.  I actually have a colleague who emails floor plans to overseas clients and they buy based on that and the agent’s analysis of the project.  But since it sounds like you will actually be living in this unit, here are some tips that i would recommend:

• It is imperative that you investigate the reputation of the developer and see how their previous projects turned out.  If this is their initial foray into Manhattan, see if they have a reputation elsewhere and what that reputation may be. 
• You should also investigate the architect.  A well-known architect is less likely to "embellish" a floor plan than a no-name (and I’m not suggesting that this would ever be done intentionally as everyone has their reputation riding on a development project). 
• This is also true with a designer.  In my 15 years, most building renderings are quite accurate but make sure that amenities that they are promising are actually indicated in the offering plan.  I know of instances where developers have promised a 4 star restaurant in the building and it never came to fruition. 
• Also investigate the company handling the marketing of the project.  How experienced are they?  What is their reputation as far as honesty and integrity in representing when a project will begin closing and how it will look upon completion (they obviously control neither of these elements but companies like The Corcoran/Sunshine Group, Brown Harris Stevens and Prudential Douglas Elliman have a lot riding on their reputation)?   
• And the last thing that I would recommend is to get the best grasp possible of how big the rooms will be in the finished project.  Perhaps laying out some of the dimensions in masking tape in the largest room of your current apartment.  Be mindful that floor plans can make a space look larger than it will upon completion and take into consideration things such as ceiling heights which can make a room look larger (a good thing).

 

I really hope that this is helpful to you and I wish you the best of luck with your search and this project should it come to fruition.  Again, feel free to provide me with additional information regarding the project, it’s developer, architect, designer, marketing agent and anything else you like and I would be more than happy to give you my opinion on the project as a whole.

 

Thanks again for reading TG and please tell all of your friends about it. 

 

All the best,

Doug