As a new development expert, in Harlem and elsewhere, I am always impressed with the creativity and ingenuity of New York City developers. While living in one of these gleaming, new, architecturally inspiring buildings can seem like a dream come true, purchasing these homes is very different than a resale purchase.
You are likely to buy off of a floor plan and never see the actual apartment until you are ready to close. Many developers will start selling apartments two years before they are built. As a result, you are likely to be purchasing off of floor plans. You will visit a beautiful showroom where you can see a model kitchen and bathroom built out with samples of the windows and flooring.
In larger and more expensive buildings where the developer has a larger marketing budget, they may even have drone shots of the view from the apartment you wish to purchase. There will also be a building model so you can see exactly where the apartment sits in the building.
The Offering Plan. The attorney general view the purchase of a new development as an initial offering — like an Initial Public Offering for a stock. Therefore the developer must file an offering plan and have it approved before they can publicly announce any apartments for sale. The plan will outline every detail of the development. What is promised in the offering plan is what you should expect to receive.
Before you sign your contract and hand over your deposit, your real estate attorney will read through the entire plan and advise you of any risks before you sign your contract and hand over your deposit. Should you wish to read it yourself, be aware that these plans can be up to 500 pages long!
There are additional closing costs. The biggest additional cost is the transfer tax. All new developments require the buyer to pay the city and state transfer taxes, which is typically a tax assigned to the seller. There are city and state transfer taxes on every sale and the total is calculated on the price of the apartment. The city transfer tax starts at 0.4% and the state transfer tax starts at 1%. That total is then added to the cost of the apartment and the taxes are recalculated on the new amount.
More on closing costs you need to know
The wait to close is frequently longer than the developer anticipates. The quoted closing date is based on the construction schedule assuming everything goes according to plan. Yet there can be unanticipated delays from materials taking longer to arrive to uncooperative weather making construction conditions difficult.
Additionally, there is city paperwork to complete including inspections which lead to the Temporary Certificate of Occupancy and the tax lots, which are required for closings. Coordinating with all of these third parties can lead to delays the developer cannot control.
The walk through and the punch list. One of the great benefits to purchasing a new development is having a perfect new home that no one has ever occupied. During your first walk through, the apartment may have flaws. Unlike a resale, where you purchase “as is”, in a new development sale you are entitled to go through the entire apartment, point out all the flaws and make sure it is perfect.
Learn more about new developments in Harlem
There is no need to be dismayed if a bathroom cabinet is missing or a tile was cracked during construction. The developer has a crew of specialists ready to sweep through and bring each apartment up to standard.