How is buying a condo from the developer different from a typical resale?
I get this question frequently these days, thanks to the many residential condo development projects underway across Colorado, in places like Steamboat Springs, Telluride, and Snowmass. Every project is different, but I explain how it works in Snowmass. Since 2017, East West Partners has rolled out several new buildings successfully, with hundreds of happy new homeowners to show for it. This has created great momentum for the neighborhood, which adds new shops, restaurants, activities and events into the fold every year as the Village energy grows.
Some buyers shy away from the fast-paced pre-construction sales process, but they’re missing out on an exciting and rewarding experience. There are often early-purchaser discounts and other perks. Another advantage is the increase in market value between the time you sign the contract and the actual closing. This was recently demonstrated at buildings like One Snowmass and Electric Pass Lodge, where values nearly doubled between groundbreaking and completion. This year, East West Partners broke ground on the final phase of the Snowmass Base Village development, Stratos. Sales launch this winter.
New construction may at first seem like a waiting game, with the fluffy teaser campaigns and limited details. The development’s website might only feature one or two renderings, introducing the team of architects and designers involved in the project. But the purchase process will sneak up on you. If you don’t get on the list, you won’t be notified when the details are released. Naturally, I would recommend working with a knowledgeable buyer’s agent who can anticipate each step for you.
Once the tidal wave of information does become available, immerse yourself in the experience. Visit the sales gallery, ask your realtor to arrange a hardhat tour, and really get to know the building. They should have dimensional floor plans, interior renderings, and design finish books available to you. There should be few, if any, unknowns about the property by the time you sign a contract.
In a normal home sale, there’s room for negotiation, but in the high-energy world of pre-construction, it’s all about strategy and timing. Because of the frenzy of interest on a new development, the seller will roll out a clearly defined buying process. What this usually entails is a set date and time to reserve a spot for the selection of units. Pay attention to this upcoming date, because in my experience, prospective buyers will be on the website the very millisecond the reservations button becomes available. Think of it as securing your VIP pass to the most exclusive real estate event in town.
Bold italics, and underline: try to be first on the reservations list. Your place in line could mean the difference between snagging your dream unit or settling for your second, or third choice. But I wouldn’t stress too much either. There may be many ambitious ladies at the ball, but also several eligible bachelors to choose from (Bridgerton, anybody?) Once you’ve secured your place in line, the developer will schedule your selection appointment. Queue the first round of champagne!
Another big difference with buying from the developer is the contract. Commonly in a residential real estate deal in the state of Colorado, you can expect your agent to use the latest commission-approved Colorado form. Far from this standard template, the developer will provide a carefully crafted document containing sections specific to the project. With the relevant construction disclosures and special closing procedures, I find it much easier to navigate. Buyers often enlist the help of an attorney to review this unique contract, and the due diligence documents provided. Pay special attention to things like the deposit schedule, warranties, assignability, and any clauses about the marketing of your unit for resale during construction.
It can take 2-3 years from start to finish for a large-scale condo project to reach completion, but watching your new home rise from the ground up is one of the most thrilling aspects of buying pre-construction. Along the way, you’ll receive updates from a homeowner liaison, keeping you connected to every construction milestone. If you’re lucky enough to get in early, you might even have a say in some of the finishes.
As closing approaches, expect to report back to the developer about whether you are financing the purchase or obtaining an appraisal. When it comes to financing in new construction, mortgage rates may change significantly between the time you sign a contract and the weeks leading up to closing. This is a reality that every pre-construction buyer should be aware of. In the weeks leading up to closing, you’ll also be asked about whether you and/or your realtor plan to be physically present for your punch list walk through and closing day. Unlike a typical resale, you won’t be the only one moving in. Expect a flurry of activity as your new neighbors all prepare to furnish and decorate their brand-new spaces. Pro tip: schedule your furniture delivery early to avoid the rush.
Final step: enjoy your brand-new condo, reflecting the latest in architecture and design. There’s no question that purchasing pre-construction is different from the standard resale. Now that you’ve been provided with a little more clarity on the process, here’s to a smooth closing!