Miami Pre-Construction Frequently Asked Questions
May 22, 2017 May 22, 2017
- How much is the fee to have a knowledgeable and licensed Miami real estate broker help me select the right property?
- How much of my money does developer use during construction?
- What are the penalties if I decide to cancel my pre-construction contract?
- Is my money safe?
- Do I get to inspect the property before closing?
- Is there a warranty on the finishes and appliances in my unit?
- Why do developers offer pre-construction sales?
- Why should I buy a pre-construction property when I can buy a ready-to-go condo?
- Can I see what the finished product will look like before I make my purchase?
- How do I know what I am being shown is what is going to ultimately be delivered?
- Will my unit be delivered in ready-to-move-in condition?
- What will my association fees be?
- What are typical closing costs?
- What are the deposit requirements to secure a Miami preconstruction condo?
- Can I invest in and flip a pre-construction condo?
- Can I buy a pre-construction condo in the name of a company?
- Can I resell my pre-construction condo unit before or after closing?
- Why do I need a real estate agent to help me buy a pre-construction condo?
- When is the best time to resell my pre-construction condo?
In South Florida, your costs of having an agent help you with your purchase is competely free. However, selecting an agent that is not knowledgable about your options, the pre-construction process and does not have experience in smart real estate investing can lead to a very costly result for you. That is why at CondoBlackBook we will connect you with a knowledgeable and trusted agent to ensure that you get the best service and have all the information to make the best pre-construction purchase decision.
During the reservation phase the reservation agreements allow the buyer to cancel at any time for any reason. Once the buyer signs the actual purchase contract during the contract phase and receives the condominium documents, there is a 15 rescission period governed by Florida law that allows the buyer to back out for any reason. After those 15 days, the contract does not leave any wiggle room to cancel without penalty of losing the deposit as long as the developer abides by his written promises in regard to the property.
As with any investment you have the risk of a project not going the way it was intended, however this seldom occurs and if you go with a reputable developer with deep pockets you will significantly minimize your risks. If you work with an agent that is a pre-construction expert, he or she will guide you on the local and international reputations of the developers so that you can make an informed decision.
On another note, during the latest “Great Recession” in the U.S. where the Miami real estate marketing was heavily hit, even though many projects halted and many developers were foreclosed on or resulted in bankruptcy, we did not hear of a single instance where a buyer was unable to close on the ultimately completed product and with all of his deposit being applied. In other words, the only people that we know who lost were those that did not or could not close when the project was ultimately finished.
Yes, prior to closing you will be given the opportunity to complete a walkthrough inspection, during which your assigned agent and a developer representative will review the property carefully for any defects. They will be documented, and the developer will have a ”reasonable” time to correct them, typically around 30-days after closing to address all the defects. In our experience, this typically is a smooth process as the reputable developers have dedicated customer service lines to ensure the checklist items are taken care of.
Appliances have a warranty between 6 months and one year. Typically developers will warranty their work for a reasonable period of time. I have seen them be gracious enough to make repairs even many months after closing on a unit. This may vary from developer to developer, and developers are typically more gracious if they are still doing lots of closings and still have repair crews and open master permits on-site.
Developers essentially make you, the pre-construction buyer, their construction and financing partner in the project when they allow you to make a pre-construction purchase. In exchange for you splitting the risk with them on the project, they offer discounts off of the expected market price at time of completion.
The discount you receive mostly is based on the time you sign up for your unit. The sooner you get in on the project the bigger the discount you will receive, as the developer wants to create significant momentum at the initial sales launch, as they will be crucial to the viability of their project.
Historically pre-construction development projects provide an excellent opportunity for a buyer to get a solid discount off market prices for a brand new property in exchange for waiting for a finished product and essentially helping to fund some of the construction costs. Many buyers also buy pre-construction as a way to partake in the growth momentum of a city without having to manage the property the first couple years of the investment (i.e. while it is still under construction). Many end-users who will live in the finished product love being the first to live in a brand new property with all of the most modern features and amenities.
Already-built condos are excellent opportunities for buyers who plan on using their property right away or prefer to have full visual certainty on what they are purchasing. Already-built properties offer the visual and spatial clarity some buyers are looking for.
You will certainly know your floor plan, unit location and the majority of the expected finishes of your unit prior to signing the purchase contract, and you will be given an opportunity to visually inspect the property prior to closing day.
By going with a developer with a good track record and reputation you can be more certain that you will receive what you have been promised. A good pre-construction real estate broker can guide you on the history of each developer, and you can factor that into your final decision on which project is right for you. Since a pre-construction real estate broker does not work for any particular condo developer and only has incentive to find you the project that suits your needs best, they should be able offer the honest opinion on which projects will be more likely to deliver than others.
Some projects are delivered 100% complete and ready-to-move in. Others offer optional finishes and design services at an additional cost. And most projects are delivered “designe-ready”, which means that they are delivered fully functional with complete kitchens, appliances and bathrooms, but floors, wall paint, light fixtures and other finishing touches are left to the buyers to complete. We have trusted local vendors that we can refer to you as needed, and we are always happy to help our customers complete design/renovation projects here locally if it is not convenient or possible for you to be in town to oversee.
Association fees are around $.70/ square foot per month on average, however projects can start as low as $.60 per square foot and up to $1.30 per square foot per month depending on the level of services, luxury and exclusivity of the property.
Developers usually charge 1.7-2% fee at closing to cover the sales taxes and other administrative and closing costs. In addition to that, you will be required to pay the first month of your association fees, plus the equivalent of two months of association fees into the reserve account of the condominium association for the purpose of a fund for future common area repairs and replacements.
Deposit requirements start at 10% of purchase price. Depending on the phase, the requirement can be up to 50% of the purchase price. Please see Miami Pre-Construction Phases for more detailed explanations.
Most developers strongly discourage condo flipping and have created various clauses in their contracts and sales processes to prevent it. Many also require that if you want to find a buyer prior to closing that you get their approval and even possible sell through their official resale service and pay a predetermined real estate commission for their resale services. That said, it is definitely possible and can be lucrative in the right situations.
We can certainly help you find buyers who are ready and willing to purchase your property at a great price. Depending on the developers rules, we can either sell the property prior to closing, complete a “simultaneous closing”, or prepare your newly finished condo for maximum appeal and put it on the market to sell directly after you close on the property. A simultaneous closing is when the prospective purchaser of your condo purchases the property the same day of your closing.
There are a large number of options for pre-construction properties in Miami, and each developer is eager to convince you that theirs is the best. In fact, the developer representatives are professionally trained to mesmerize you into buying their project over all others. Making the wrong decision can be a costly mistake for you as a buyer. At CondoBlackBook and HB Roswell Realty, we do not represent any one developer, and we have significant pre-construction sales experience. We know the reputation of each developer, understand the benefits and risks of certain locations, and we also understand what products and features will offer you the safest investment in terms of rentability, resale and overall enjoyment. As they say, “it’s the details that count”, and we can provide the details you need to make the right decision.
Typically, you will get maximum return on your investment 1-2 years after the project is complete, as that is typically when overall available inventory in a property has decreased, other owners have completed and upgraded their units which makes the property more valuable, and the condo association and amenities will be most organized and at maximum efficiency. However, depending on the market and specific condo building, the best selling times may vary.
Do You Have More Questions?
Contact Us / If you'd like personalized help purchasing a preconstruction or new construction condo unit, call us, the Miami pre-construction condo experts, at 786-930-4220.