Thursday, May 17, 2007
How much more will it cost to buy into a new development? Is it worth the difference? Both are questions that will vary depending on the project and buyers. Developers pass along what would traditionally be a seller's closing costs, over to the buyer's side of the deal. In the strictest sense, condos are either new product, or resale. However, there is a middle ground that's emerged of recently developed properties, which may be the best option out there for those wanting many of the creature comforts of new construction, but want value, immediate delivery, and a more traditional re-sale transaction, with lower closing costs. The re-sellers may have a little more margin to work with too, as their cost basis may be a couple of years older, and there has been some room for appreciation. Each case is a little different. Helping buyers find them, and representing the owners of these units for sale or lease, is a niche that I like working in.
Readers have asked for more specifics on closing costs as cited in my recent post Buying in a new development: risk and reward. The story was about how the lag time to a project's delivery, combined with a fluctuating interest rate environment and higher closing costs, create some new risks which might not be quite so obvious to many. Here is a follow up that may help you to evaluate like a broker would, differences in closing costs when purchasing a condominium as a resale, or directly from a sponsor in a new development. I've created a hypothetical scenario for a couple evaluating the purchase of two highly comparable properties. One is being purchased directly from the sponsor at a new development, while the other is from an owner as a re-sale. I've prepared a sheet of typical real property closing costs that you can download here (pdf 324 kb) and save, so that you'll be able to model your own comparisons too.