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Tips on Buying
Pre-construction Properties
Savvy investors of Emerald Coast property realize the value of buying pre-construction. Getting in "on the ground floor" is a wonderful opportunity to save thousands of dollars. We have access to all reconstruction developments. Please email, stop in or call us to find out the latest details on current pre-construction opportunities.
Pre-Construction Sales are sales prior to the beginning of construction
Questions and Answers
Q. What is the benefit of purchasing during the
pre-construction phase?
A. Prices are generally lower than
those of existing condos. Buyers have a chance to purchase tomorrows construction at
today's prices. This is not dissimilar to buying futures.
Q. Why does the developer discount these units ?
A. Discounted prices are given to the
buyers as an incentive to purchase something they can not see, touch or feel.
Q. Why do the developers sell pre-construction rather than
build first?
A. Developers sell pre-construction, at
lower prices because they need pre-sales in order to secure their construction loan. Most
lending institutions will require 60%-80% of a project be sold before construction can
begin.
There are four phases to pre-construction sales:
1. Reservation Agreement
2. Right of Recision period 15 days
3. Contract for sale
4. Closing the sale
Lets look at each phase in further detail:
1 Reservation Agreement:
The developer has preliminary floor plans, site plans, amenities and prices. All are
subject to change. Buyers reserve units with a minimum "intent to purchase"
deposit- usually $5000-10000. The deposit is made to an interest bearing trust account. It
does not go too the developer. Buyers can get their money back on demand at any time.
There is no risk.
2. Right of Recision Period:
Also known as document examination period. Developer will deliver the state approved
Condominium Documents. The "condo-docs" contain the final, exact details
including the site plan, floor plans, amenities, rules, by-laws, budget, etc. The buyers
then have 15 days in which to review the documents and change their minds.
3.Contract for Sale:
Buyers put up the balance of the required earnest money- usually 20% of the contract
price. At that point the contract becomes binding on both parties. Not all reservation
agreements convert to a contract for sale. If enough of them convert, the developer
proceeds to get the construction loan.
4.Closing the Sale
The condominium is completed and a Certificate of Occupancy will be issued. The buyer then
performs a walk-through inspection and then goes to closing where they put up the balance
of the purchase price including closing costs.
