Learn More About New Construction in NYC
Hey guys it is me Erin Wheelock of the Wheelock team, your favorite real estate associate broker at Keller Williams in New York City. We are helping families and people from all over the world, all over the entire world to relocate to New York City whether it’s for your first home full-time relocation or just a second vacation home we look forward to helping you. And today we’re going to go over one of my favorite topics; new construction. We’re going to go over the pros and cons of buying a new construction.
New construction it’s fabulous it’s beautiful especially right now in New York City it’s like every architect is thinking how much higher can we go, what design can we get away with, it’s fabulous I love it. And, there’s a lot of pros and some cons when you’re going to buy in some new development and new construction so let’s go over those today shall we?
Let’s start with taxes get it out of the way right okay so when the developer is building this new property what happens is the tax assessor comes by right? Every year in July they come and they reassess the building for taxes now the thing is when it’s being built that’s the state it’s in so when they end up getting their taxes for the unit it hasn’t been reassessed yet for the completed product which means you should always make sure that you are double checking to see if they have projected taxes because sometimes it can double the closing process in new development there’s a lot of pros and cons here.
Alright a big pro is you don’t have to do a board package. I know that it’s not the hardest thing in the world and quite frankly we’re the ones that do most of it for you but you do have to supply a lot of documents so after you end up going into contract for new construction you’re really just waiting for your bank to approve for it to be able to close which brings you to a con; closing date. That can be a con or it could be a pro if you get in early while the building is still being built. It could be a con especially if you have a deadline to get in and here’s why. Just like I’ve said in previous videos, the closing date is not the closing date. I know I don’t make the rules but a new construction attempts to make more sense and here’s why, during the process of the developer building you know these 85-90 however many stories tall building there’s going to be things that change in terms of the rules and regulations that they have to follow for your property to be signed off on by the department of buildings which might mean that they put everything in and all of a sudden oops something’s changed so when the inspector comes back they have to redo everything because at the end of the day they can’t close until everything is signed off on by the department of buildings and then you’ve got to go in, do a punch list to make sure it’s beautiful and perfect and then go in make sure all that beautiful and perfect punch list was taken care of and then you get to close. But, when I say delay I mean you can expect sometimes for it to take four five six seven months, usually it’ll be one to two months after a lot of times when you’re purchasing a new construction and you give a closing date will say q1 of 2023 or Q4 of 2022 they’re not going to tell you December 15th of this year so just be aware that that closing date especially new construction is not the closing date and could be pushed out for some time.
Pro, if the building is already built and you’re getting new construction you can have one of the fastest closings in New York City especially for cash you could actually close within 30 days because again there’s no board package all you’re doing is getting your money together and if it’s already done and built that’s a pro you can close right away and move on into your new home.
Con, when you are buying a new construction in New York City the sponsor of the building does expect you to pay their closing costs. That is approximately two percent in taxes and for their attorney fee. There’s also going to be some other costs usually there’s going to be a contribution to the reserves which is you know one to two months could be more depending upon the building. There also may be a fee that you have to pay towards a management apartment or a super’s apartment. Every building is going to have different closing fees depending upon how big the building is, how many amenities they have, what this staff is going to be like, however just know that your closing costs are going to be higher.
Now, when you work with the professionals at the Wheelock team we will do everything we can to make sure that that seller is paying their own closing costs but you do have to go into it just with the understanding that the sponsor is expecting you to pay. Of course we’ll ask if not more and all of their closing costs financing when you’re financing in new development just be prepared that if you’re one of the first people getting in they’re going to have their own banks that they are recommending to you because they already have an agreement and the bank is funding it’s down payment.
Kind of a con, they’re usually going to require 20 down 10 a contract signing and they’re going to ask for another 10 percent. They don’t always give you that standard condo down payment of just 10 a lot of them are requiring closer to 20 down.
Pro and con, it’s new development which means you are the first person living in it so this is going to be one time when you go through a walkthrough, you’re going to make a punch list and you can say there’s a knick here, this isn’t working, there’s a knick here, a scratch on the floor here, etc etc and guess what? They’re going to fix it for you. Why? Because it’s brand new construction it’s going to be gorgeous when you move in and you’re the first person living there and just like buildings anywhere else in the world sometimes they settle, sometimes things happen, sometimes budgets change during the construction process so you could end up getting into a building where six months down the road you’re starting to have elevator problems, you may be in a building where three months down the road the HVAC system is having issues. You just have to be aware that a new construction building in New York City is just like a new build anywhere there’s going to be some settling. There’s going to be some things that happen from it being used and you may end up having to pay for it or be without an elevator for a little bit or have some AC or heat problems for a little bit, that’s just the nature of the beast of new construction.
If you are getting into a new construction project early enough and you want to be on a board well that’s great news because you have the opportunity to step up and get on the board a bit easier than if you’re getting into a resale property, that way you can help make up what the rules are going to be for your building and I always think if you’re somebody that wants to be a part of it, help make the rules, help make the decisions of how your building is going to run then it’s a great opportunity to get on that board if you’re purchasing in new construction.
Well thank you for listening in on the pros and cons of new development and if you want to look we have more videos that are showing you what you can get at 100 Barclay, The iris, The Jolie, there’s lots of new development on there for you to check out and of course if you want to see any of it reach out to us we would love to help you!