If you are in the market for a new home, particularly in today's current seller’s market, buying a new construction condo is the smart choice. Not only can you save a substantial amount of money on your investment, but you will also realize fairly immediate appreciation in value. In some cases you'll also get the opportunity to make personalized selections, such as preferred layout, colors, counters, and appliances.
Read on for a detailed guide on why buying a new construction condo is an obvious choice for savvy buyers and investors, how to navigate a new construction financing nuance, and, of course, the benefits of living in a maintenance-free, professionally-managed home.
Pros of Buying a New Construction Home
There are endless benefits from investing in a new construction condominium, but here’s a closer look at three eye-opening perks of buying a new construction condo over a pre-existing one:
1. No Bidding Wars
The housing market is experiencing a boom and has turned into a seller’s market – fundamentally, there are more buyers than homes available for sale. As a result, most buyers have to engage in out-of-control bidding wars in order to purchase a home or investment property.
Bidding on a home essentially entails making the highest offer and agreeing to compromises such as dropping your financial contingencies and skipping inspection. The negotiations can also get intense if that particular condo is in high demand and the other buyers are just as determined as you are. Most buyers wind up frustrated and disappointed when someone else wins the bidding war.
However, buying new construction properties doesn't involve bidding wars.
The developer presents prospective buyers with a price and contract that you can accept, reject, or negotiate. It’s a comparatively frictionless process.
2. Have Your Pick of Layout Plans
Your next home or investment property should be a space that’s just right for your needs.
When buying new construction, you can pick from a variety of floor plans to find the one that best suits your needs and preferences. The earlier a buyer engages in the pre-launch sales, the more opportunity they have to choose a preferred layout or influence finishes like floors, cabinets, countertops, and appliances.
Alternatively, when buying pre-existing inventory, buyers typically have to buy “as is,” and undertake disruptive, expensive, and potentially lengthy renovation and remodeling projects to personalize a dated property.
3. A Simpler Buying Process
Choosing to buy an older condo? Expect a long and tiresome process of filling out paperwork before you can close – if you are lucky enough to win the bidding war. Getting the title required for transfer of ownership can be particularly grueling, especially if there are underlying complications regarding the condo's ownership (which, unfortunately, is common).
Buying a new construction condo also obviously involves some paperwork. However, the process is purposely designed to be streamlined and super simple. The paperwork is far less complicated and will take up less of your valuable time and money compared to the alternative.
4. The Price Incentive
Most notably, you stand to save a lot of money! Typically, new construction buildings are offered at attractive prices early in the project's construction lifecycle to incentivize the pioneering buyers who realize the valuable benefits of being among the first to secure a choice residence. Particularly in today's environment of seemingly daily increases in material and construction costs, purchasing a property early unlocks immediate equity just as a result of the project’s materials having been purchased prior to sharp inflation presenting itself – let alone the rising appreciation of the property’s value.
It is worth noting that a pre-constructed condo's price increases as the construction progresses and nears completion. As such, buying a new construction condo earlier (during the early construction phases) will save you more money than doing so later.
How To Navigate Financing A Pre-Construction Home
There are differences between buying a new construction condo and pre-existing inventory with respect to financing. The most notable difference is that you will have limited financing contingency options.
The developer will require you to deposit earnest money as a show of good faith before closing on the pre-constructed or under-construction condo – which is no different than a standard down payment.
With a normal mortgage, there’s typically a mortgage contingency that gives a buyer up to 60 days to secure financing with a lender. If a buyer does not get approved for a loan, the contingency states they can choose not to close and receive their full down payment back.
Given the unique nature of purchasing a new construction condominium, this process works differently. When purchasing a new construction property early in the process, buyers are still required to make a down payment in good faith. However, it can often take several months for construction to progress to a point where developers are legally able to close on the sale of a property. This window is longer than the typical mortgage contingency allows for, which also means a mortgage contingency cannot be included in a standard contract.
For buyers unfamiliar with this process, it can feel unusual and even risky. However, this is a completely safe and normal process that both developers and lenders are aware of and have handled previously. Plus, in the extremely rare case in which a developer does not complete a project, buyers receive a full refund for any payments they’ve made.
The most prudent thing to do as a buyer is to ensure you're working with a team you trust and with which you can have open and honest discussions about the process. Having a great real estate agent to navigate you through the entire process is essential. In addition, working with a preferred lender who has an updated and accurate picture of your finances is key. These two individuals will be by your side throughout the entire process and work together to ensure you get the best result.
Benefits of Living in a Maintenance-Free Condominium
Undoubtedly, an ideal condo with your chosen floor plan and other preferences sounds perfect. It gets even better when living in a professionally-managed building with other resident owners. Some of the most notable benefits of living in a professionally-managed condo include:
- Focusing on yourself, and what’s important to you! You will have easy access to amenities such as walking trails, swimming pools, fitness centers, and more to support your desired lifestyle.
- The HOA creates a strong sense of community and lays the groundwork for knowing other homeowners and making friends.
- The HOA's rules will ensure that your neighbors are responsible and respectful, and you have a quick recourse for dealing with potentially difficult neighbors.
- Regular maintenance and reliable security will ensure that the community remains pristine and retains its initial appeal, which will help increase and protect your condo's value.
It is also worth noting that you will have a voice in the property’s rules because you will be one of the community's original residents, and perhaps even a part of the condo association.
What is the Process of Buying a New Construction Condo?
As previously mentioned, buying a new construction condo can be a fairly turnkey experience. Here is a brief overview of how the process works with CHARLESGATE:
- Agents will meet you at the designated location on the pre-arranged date and time.
- The dedicated sales manager for that specific property will review what's important to you regarding your next home.
- Your tour will begin with a detailed presentation about the building.
- The sales manager will then take you through a physical tour of the condo's model unit or sales gallery to give you a clear understanding of what to expect from your prospective future home.
- Finally, you'll discuss the condo's floor plans, and you can provide your input based on your unique needs and preferences.
It is important to have the following things ready at the appointment if you want to reserve a residence and take it off the market:
- A pre-approval letter from the project's preferred lender.
- Available funds for a reservation deposit. This can be as simple as wiring the funds, which are often as little as $2,000.
- Contact information for the attorney who will be representing you on the transaction.
- Any outstanding questions you need to be answered, which the property’s agents will answer during the tour.
Ready to Buy a New Construction Condo?
If you’re ready to invest in a pre-construction property, CHARLESGATE can help you find the ideal location for your future home or investment property. More importantly, our services are thoughtfully designed to benefit you – the buyer – and safeguard your interests. Please take a look at our incredible properties in some of Greater Boston’s most desirable neighborhoods and get in touch to learn more about how we can help.
A Sample Of CHARLESGATE's Exclusive New Condo Development Pipeline
- Mira, East Boston - 64 brand new style-forward condos for those looking for urban living in an authentic city spot. Ask about our exclusive low-interest-rate programs and buyer incentives! Email the Mira team for details.
- 50 Leo, Brighton - 49 sleek, modern, and meticulously crafted condominiums in one of Boston's hottest neighborhoods. Only a few units remaining!
- Walnut Crossing, Brookline - 14 luxury condominiums in a super desirable location offering the perfect blend of classic New England architecture with a sleek yet timeless European inspired interior.
- Gallery Residences at Arthaus, Allston - Boutique new construction living within a short walk to Boston landing in one of the most active development areas in the country with available garage parking. Only a few units remaining!
- The Pacer, East Boston - An incredible investment opportunity situated at the entryway to the New Suffolk Downs Only one unit left!
- Cadence on Leo, Brighton - A new standard of sophistication in one of Boston’s most alluring neighborhoods.
- Nevins Hill, Brighton - A refreshing retreat to call home with timeless design and impeccable attention to detail.