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F.A.Q |
PRICE
When a developer plans a new project he has many hurdles to overcome,
not the least of which is financial. Regardless who the developer may
be, financial backers want to gauge the interest in a project and in
many cases require the developer to have reservations on a certain
percentage of units before the project is given the green light. This
translates into savings for the real estate investor. The developer
needs these presales to prove his project and secure his financing and
he will give incentives to the early buyers.
PRICE
APPRECIATION
In many cases the "first day" price will be lower than the price for the
subsequent purchasers. Many times a developer will give an extra
incentive to those that reserve a unit by placing a deposit ranging from
$10,000 to $25,000 with the title company to hold a particular unit. To
encourage further price increases he will program increases at scheduled
intervals throughout the project pre-sale stage. This does a few things.
It encourages people to buy early - because prices are going up, and it
is a self-serving prophecy - buyers see the price of the unit going up,
they want to get in on the increases, it creates more demand - and
indeed may increase values of the pre construction units.
FURTHER PRICE
APPRECIATION
We like projects that are done in phases. These are normally condo
buildings one, then condo building two, etc. In the past the best
opportunities have been in buying the earlier condo buildings. Property
values in our area counties have gone up nearly 15-20 percent a year for
the past 5 years! Couple this potential appreciation with the planned
developer increases and price increase could be considerable. For
example, when condo building three, unit 801 is ready for sale it may be
priced at $880,000, when the same condo in building one sold for
$714,000, less than one year earlier. The unit 801 in building one has
not even closed yet!
LIMITED SUPPLY
/ INCREASED DEMAND
There is a limited supply of buildable waterfront land. Developers can
build golf courses and lakes, but it's pretty difficult to create
oceanfront or gulf front - or even riverfront - land. Many people move
to Florida to be on the water. Over the next eight years the baby boomer
flood will start to peak. Demand is expected to be even greater - and
waterfront supply will be limited. If you want to fine-tune your
opportunity, buy penthouses. There are certainly fewer of them and
buyers will pay a premium to "be on top".
NO CARRYING
COSTS
Lets examine how this works. On December first you decide you want a
condo in building two. You put $10,000 reservation deposit on the unit
since it is a new development and the condo docs and permits are not
ready. Three months later these items are ready and it goes to contract.
You decide to proceed. (By the way, if you decide not to proceed, you
can get your $10,000 back). On February first you put a total of 10%
down to bind the contract. It will now take 18 to 24 months to build
your condo (This will vary from project to project). This 10% is held
with a title company - not the builder. (This is an important point.
Your money will be secure and can be returned to you in the case of
nonperformance by the builder/developer. You have, in effect, tied up
this condo for two years with just 10% of its value. You still get two
years of potential appreciation.
THE
BENEFIT OF WORKING WITH REAL ESTATE BROKER
As in any service related industry, finding the right person to work
with is key. What to expect of your broker?
KNOWLEDGE:
In pre- and new construction, knowledgeable
brokers advise their clients of upcoming buying opportunities and enable
them to purchase early during the "Pre-Construction" phase, often saving
them thousands of dollars. Some well connected brokers have access to
pre-sales events and can secure units in desirable properties, a major
benefit to their clients.
HONESTY:
Real estate professionals are often looked upon with suspicion. Sadly,
this reputation is deserved more times than not. The truth, and direct
honesty are not virtues often associated with our profession as too many
brokers shy away from the truth, and in their effort to make sales,
deliberately "mislead" the public.
We represent you -
the Buyer - absolutely free!
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