The allure of newly constructed luxury condos in Manhattan is undeniable. These shiny new condominiums look great and offer a litany of amenities not found in older buildings. Plus, many luxury apartments in pre-war and older post-war buildings are badly in need of up-keep and may need extensive renovations, whereas newly constructed luxury condos are untouched and pristine. But before making the decision to purchase a new luxury apartment in hot neighborhoods like Battery Park City or Chelsea, there’s a few things you should address before you sign on the dotted line. While new construction buildings offer many benefits that range from new amenities, modern designs, and excellent locations, buyers should keep these new construction tips in mind when searching for a new home.
For example, buyers probably won’t know the details of the offering plan for their building. Moreover, when buying a new luxury condo, eager buyers may be entirely unfamiliar the ramifications of the contract they’re about to sign. In order to save money, avoid problems, and buy the best apartment possible, don’t jump right into a deal; take the time to check some of the basic features of the building and the apartment. There’s a lot more going on beneath the surface than you may realize.
First and foremost, let’s talk about that offering plan and what it means for you. This document - all newly constructed buildings are required to have one by the state attorney general’s office - contains almost every detail about the building and the apartment: what finishes to expect, how the size of the apartment was calculated, what the monthly fee will be, etc. The complexity of such a document may unnerve buyers attempting to sort out the details themselves, so we at New Construction Manhattan highly recommend hiring a lawyer who is familiar with new construction. Michael Moshan, a partner at Gold Scollar Moshan, told the New York Times that, “The offering plan is full of surprises that have to do with real costs... Any good attorney can save a client thousands of dollars.” In other words, this is not the time to go it alone. Almost all the hidden taxes and fees contained in an offering plan are subject to negotiation.
Here’s something else that you may not have known: closing costs are significantly higher for new construction than they are for resales in older buildings. In newly constructed luxury buildings, the buyer must pay both the transfer tax and their own lawyer fee, whereas in most real estate transactions the seller pays for both those costs. The transfer tax is usually about 2% of the purchase price, and the lawyer fee can be as high as $2,500. Most buyers fail to factor those costs into their calculations. Furthermore, if you are among the first to purchase a condo in a new luxury building in Manhattan, it may be difficult to get an appraisal that matches your purchase price, especially if there are a lack of comparable units.
Last but not least, don’t get swept up in the appearance of a new luxury condo; many of the high end finishes that make new luxury condos so appealing may in fact obscure structural problems. Since financing has been such a problem for developers of large condos since 2008, developers may succumb to the temptation to cut corners. Just because a building meets the building code doesn’t mean that all the elements are of good-quality. Before signing a contract, have your apartment inspected; if there are substantial problems, they can be addressed in the contract. If you sign the contract first and then discover problems, you’re on your own. Both large and small problems can take years to resolve if they’re not addressed before the sale. Overall, the operative word is caution. New construction condominiums offer myriad benefits and amenities that appeal to New Yorkers but -- like every major purchase -- they should be examined thoroughly before sealing the deal.