New construction risk is different rather than absent. Read the written specification rather than the show home, establish exactly where your deposit sits and what protects it, have an attorney review a contract drafted for the developer, and inspect it anyway — new does not mean correct.
Nothing is worn out and it comes with warranties, so it feels safer. The risks are different rather than absent, and they are less familiar to most buyers.
Buying new construction feels safer than buying an older property. Nothing is worn out, nothing is hidden behind decades of alterations, and the whole thing comes with warranties. Some of that is true. The risks are simply different rather than absent, and they are less familiar to most buyers.
These are three different transactions.
Completed. You can see and inspect what you are buying. Closest to a conventional purchase.
Under construction. You can see the shell and the site but not the finished result. Specification and finish are decided from documents.
Off plan. You are buying a description. This carries the most risk and generally the best pricing, which is the trade.
Know which you are in, because the diligence differs entirely.
The single most common disappointment.
Show homes and marketing renderings are frequently finished to a higher standard than the base specification. What appears as standard may be an upgrade, and the difference between the two is where a great deal of budget disappears.
Obtain the written specification and go through it line by line. Fixtures, appliances, flooring, cabinetry, glazing, landscaping. Ask specifically what is included at the stated price and what costs extra.
Then ask what the developer's upgrade pricing looks like. It is frequently well above what the same work would cost independently, and on a large property those choices add up quickly.
Matters more than anything on the specification sheet.
Look at completed projects, not current marketing. Visit something they finished three or four years ago and see how it has held up. Speak to owners there about defects and how they were handled.
Check the builder's financial position where you can. A developer who runs into difficulty mid-project is the risk that dwarfs every other consideration on an off-plan purchase.
On anything not yet complete, establish precisely where your money sits.
Is it held in escrow, released on milestones, or paid directly to the developer? What happens if the project stalls, is delayed substantially, or does not complete? Is there any bond or insurance backing?
This is the question buyers most often accept a vague answer to, and it is the one where a vague answer costs the most.
New construction contracts are drafted for the developer and generally favor them heavily.
Look carefully at completion date and what happens on delay, the developer's right to substitute materials, tolerance on stated dimensions, what triggers your obligation to close, and how disputes are resolved.
Have an attorney review it. This is not a form contract with standard terms, and the areas of exposure are not intuitive.
New does not mean correct.
Commission your own inspection before closing, and where possible during construction at key stages. Defects in workmanship are common in new buildings and considerably easier to have remedied before you have signed off than afterward.
Understand the warranty properly: what it covers, for how long, what is excluded, and what process you follow. A warranty that requires you to pursue a developer who has moved on is worth less than it appears.
On a phased development, construction may continue around you for years. Ask what remains to be built and when.
Where an association is being formed, the developer typically controls it initially. Find out when control transfers, and what the budget assumptions are — dues set artificially low during sales frequently rise sharply afterward.
And ask what is planned on adjacent land. A view sold as permanent is worth checking against what the developer or anyone else may still build.
Completed lets you see and inspect what you are buying. Off plan means buying a description, which carries the most risk and generally the best pricing. Under construction sits between the two.
Because it is frequently finished above the base specification. What appears standard may be an upgrade, and developer upgrade pricing is often well above what the same work costs independently.
Where it is held, whether it is released on milestones or paid directly, what happens if the project stalls or does not complete, and whether any bond or insurance backs it. Buyers accept vague answers here most often, and it costs the most.
Yes. New does not mean correct, and defects in workmanship are common. Inspect before closing and ideally at key construction stages, since remedies are far easier before sign-off.
Continuing construction on phased developments, association dues rising once the developer transfers control, and building on adjacent land that was not disclosed as a possibility.
A select network of the nation's most accomplished luxury real estate professionals.