Making the choice to buy a condo in a new building or a building still under construction is an important decision, especially since it is not an ordinary condo purchase. There are unique elements to this purchase which should be researched – find out the risks and benefits before taking the leap.

First off- if you are determined to buy in an unfinished building, research the construction lender. Check for any media coverage on the commercial bank’s solvency as many are still a bit shaky. Utilize the Federal Deposit Insurance Corporation website to search for any potential actions taken against the bank in question.

Here are other important considerations to take into account:

• Read the condominium offering plan. This is a description of the project filed with the state attorney general’s office. If certain amentities are not up and were promised in the building’s brochures or other promotional material, make sure the plan explicitly mentions them.   

• Be wary of buildings that have big blocks of condos / apartments owned by investors. For example, if a single entity owns 20 percent of the building and cannot pay the common charge, the residents may have to make up the difference.

• If possible, get a mortgage contingency written into the contract. This way, if you cannot obtain financing, you can get your deposit back. If there is a long lag between signing of the contract and  closing of the deal, this can be difficult to get. If the building is in “move-in” condition and ready to close, you may have better luck.

• If construction halted as the building was going up, it’s important to ask when and why. The building might have sat open and been exposed to the elements for months.

• Before you close, be sure to walk through the condo/apartment. Ideally, this should be done with an engineer or inspector who can ensure that everything is in working order. Test all faucets, appliances, doors, and windows. Be sure the doors and windows open and close properly. If there is a
fireplace, test it to make sure it vents as well.

As there are many great deals available on the market for new and unfinished buildings, it can certainly be advantageous to shop for condos in this category. Simply do your homework!

Also, note that not all new buildings offer a lower price. Shop wisely and hire an agent to help you make the right decision.

Originally from Condo.com – Condo News