When buying a newly built condo or one in the pre-construction phase in New York City, you’re inherently taking on some risk with an unknown and untested building.
For example: Will the result match the marketing materials that initially caught your eye? Will the condo be finished on time? What if there are problems with the construction? Will these become your headaches?
You can assess the developer’s track record by doing some homework and seeing how their other buildings have turned out. It is also essential to pay close attention to the offering plan (and have your lawyer review it).
[Editor’s note: An earlier version of this post was published in November 2023. We are presenting it again with updated information for September 2024.]
Either way, if you’re in the market for a new-development or pre-construction condo, it’s more important than ever to know what questions to ask so you can make the most informed decision about your purchase.
1. What’s the developer’s track record?
Before you make a deal, you’ll need to find out as much as possible about the developer. Are they involved in any lawsuits? What other buildings have they completed? Have buyers generally been happy?
Be sure to look up the sponsor—the legal entity building the condo, typically the developer—as well as the principals of the development firm, who will be listed in the offering plan. Take a look at their past projects. You can also ask for the names of the contractors and subcontractors and get information on who has or will be doing work in the building.
An online search is important, however, the city’s database is not geared toward the consumer and can be tricky. Check out Brick Underground’s step-by-step guide on how to navigate it.
2. What’s in the offering plan?
Before a developer can start selling new condos, the New York State Attorney General’s Office must approve the offering plan, which describes the development in detail and is often hundreds of pages long.
This document includes details on all aspects of the development, such as what materials the developers will use for the facade and how many trees they’ll plant on the grounds. The idea is to protect buyers from surprises and hold the developer accountable. Buyers can complain to the attorney general or initiate a lawsuit if the developer doesn’t deliver as promised.
You can obtain a copy of the offering plan from the sales office. Your attorney should review it carefully, looking for unusual provisions, costs, and other details an inexperienced eye (i.e., yours) might miss.
“There are certain things you should look at early on,” says Robert Braverman, a co-op and condo attorney at Braverman Greenspun. For example, the offering plan’s special risks section covers things like reserve-fund requirements and terms for purchasing a super’s unit.
Braverman says you’ll also be able to find out if the developer has reserved the right not to sell some of the units, which could mean the building will become a hybrid rental/condo.
If a new condo building has slower sales, the sponsor is more likely to remain in control of the board for the maximum period allowed by the offering plan. Braverman says this could be five years or even longer.
“Prospective purchasers should be factoring that into their decision—do they want to live in a residential condominium managed and operated by a developer for the foreseeable future?” he asks. Getting independent control of the board is an important step in a condo building’s structural and financial health.
Daniel Bekteshi, a portfolio manager at NYC property management firm Maxwell Kates, recommends checking the plan’s engineer’s report. Granted, the sponsor provides the report, so spotting latent defects in the building is often challenging. Still, your broker and attorney should be able to identify a quality property versus a property with issues, he says.
The offering plan contains budgetary reports that outline the first year’s operating utility costs.
“Often [the sponsor] will put a bare-bones budget in the offering plan to make it look attractive,” Bekteshi says. He suggests asking questions about the figures, warning that—in many cases—these numbers are so far off that “common charges go up between 5 and 10 percent after years one and two.”
Another consideration is whether or not the building employees are outsourced. Bekteshi says there’s a trend among new developments to have a live-out super, but that can be a problem if the building’s computer-based control systems fail.
“You want a skilled resident manager in-house for these moments,” he says.
3. What’s the outside date?
If the building is not completed by the scheduled date, you can usually get your security deposit back. This is called the outside date and will be laid out in the purchase agreement, but Debbie Zolan, an agent at Compass with new development experience, says it’s worth asking ahead of time.
“Sometimes buyers can negotiate a slightly earlier outside date,” she adds.
4. Is the price negotiable?
Condo developers typically avoid outright price reductions on apartments. Price cuts could hurt future sales, so sponsors tend not to offer discounts. However, every deal is unique, and your leverage will depend on market conditions, the developer’s construction timetable, and the number of units that have already been sold.
For example, you may have more leverage near the beginning or end of a project. That’s because, during the pre-construction phase, the sponsor will want to get 15 percent of the apartments under contract— the magic number at which the offering plan is declared effective by the attorney general and closings can legally begin.
You might also have more room to negotiate toward the completion date, when a sponsor may be eager to close down the sales office and move on to the next project.
The best way to ask for a price cut is to come armed with information and comps to use as supporting evidence. The more educated you are, the better your chances of getting a lower bid accepted.
5. Are there concessions?
Concessions are perks or bonuses developers offer to buyers. Even if a developer refuses to lower prices, it sometimes provides inducements, including closing cost rebates, lower common charges, free storage or parking spaces, and coverage of transfer taxes, the mansion tax, and mortgage recording taxes. You may also want to ask the seller to buy down your mortgage rate.
It never hurts to ask; read Brick’s guide to negotiating price, concession, and other terms for brand-new condos.
| Top 5 key questions to ask | |
|---|---|
| 1. How is the developer’s track record? | Research the developer’s past projects, find out if buyers have been generally happy, and whether the developer is involved in any lawsuits. |
| 2. What’s in the offering plan? |
The offering plan has details on all aspects of development inside and out to prevent any unwanted surprises later. |
| 3. When is the outside date? |
If the building isn’t completed by its scheduled date, you can usually get your down payment back. |
| 4. Is the price negotiable? |
Condo developers typically avoid outright price reductions, but you may have more leverage at the beginning or end of a project. |
| 5. Are concessions available? |
Concessions can save buyers thousands of dollars on closing costs, or amenities like free storage or parking spaces. |
6. Are there additional closing costs?
Sometimes developers will pass on unexpected extra expenses to buyers, including part of the cost of the super’s apartment. (That expense, which can be well into the thousands of dollars, tends to come as a surprise to buyers, according to Zolan.) Other potential surprises could be the building’s insurance costs for its first year, and attorneys’ fees for preparing and filing the offering plan—which will list all of these extra costs.
You may also be able to negotiate on the deposit for the unit. The amount of leverage you have depends on market conditions and whether you are an early buyer.
7. What are the amenities?
In an effort to lure buyers, some developers have packed their projects with over-the-top amenities. If your heart is set on that doggie spa, go for it—just remember you’ll be paying for it in the form of monthly common charges, so be sure it’s worth it.
Adam Rolston, a designer and architect who has worked on projects like The Vanderwater and The Sutton for Toll Brothers, says the amenities in some buildings require high staffing levels that can drive up your monthly costs. “I think that’s an important question to ask—what is the effect of these highly amenitized buildings on the common charges?” he says.
Also, keep in mind that developers tend to lowball the ongoing costs of amenities in their offering plans. Once the first year is up and reality sets in (and building management realizes that they may need more doggie wellness experts), expenses tend to go up, taking common charges with them.
8. What does the model apartment look like?
For buildings that are still under construction, developers often create off-site sales offices that feature sample bathrooms, kitchens, and other rooms to give you a sense of finishes, appliances and bathroom fixtures. When the building is closer to being done, they’ll often dress up one or more of the units as a model apartment to show you a version of the finished product.
Bring your A-game when checking out the details. Does the kitchen have soft-closing drawers? Are the hinges on the cabinets substantial? Are the cabinet doors level? Are grout lines even?
But remember, it’s likely not the same layout as your apartment. Ask the listing agents for specifics on how your kitchen or bathrooms, for example, may differ from the model unit.
You’ll also need to avoid being sold on the staged furnishings and artwork. Picture instead how the unit will look without all those designer-chosen distractions.
9. What will the view be like?
Beware of killer views in model apartments, too. The view from your chosen unit could be decidedly different. Rolston says the better developments often use drone photography to give buyers an accurate idea.
“You should ask for that and if it’s not available, ask for a hard hat tour,” he says. “There’s nothing like standing in the space, even if it is a raw concrete space, and looking at the view.”
10. Does the design fit my lifestyle?
If you rarely cook, a small kitchen with limited cabinet space may be just the kind of sleek, space-saving layout you’re after. But for an epicurean family of five, you may want to make sure you have thoughtful conveniences like a pull-out trash and recycling station and enough drawers for all your supplies.
Standard new construction has concrete ceilings, making it difficult to change the overhead lighting. If it’s something you feel strongly about, it might involve installing a dropped ceiling or needing to swag a plug-in model.
Rolston says one small detail he loves to include in his designs is a light switch right near the entrance, so when you walk into the apartment, you can easily adjust the lighting, say by turning on a lamp in the corner from the main switch by the door. Smart lighting systems are also convenient, and something many high-end developments are offering these days.
11. If there’s a tax break, when does it expire?
Some new condo buildings benefit from tax abatements—which, for the buyer, means a lower monthly property tax bill for a certain period of time—typically 10 (especially in Manhattan), 15, or 25 years. This kind of perk is often described in the marketing materials; if not, the sales manager won’t hesitate to let you know about it.
The real question to ask is how much you’ll be paying in taxes down the road when the abatements gradually phase out. Depending on how long you plan to stay, they can also affect the resale value. And note: Tax abatements don’t go into effect until the first closing in the building.
12. Can I get a mortgage?
It’s not impossible to get a loan when buying in a new development, but it can be a bit trickier than one for an existing building. Banks are wary of lending to buyers in under-construction buildings because of Fannie Mae guidelines, unless the building meets certain minimums for owner-occupied units, among other requirements.
“Some financial institutions cannot do new condominium financing until the building has two years of financials with the homeowners paying common charges and is 51 percent sold,” says Ryan Greer, senior vice president at National Cooperative Bank.
Luckily, NYC developers deal with this all the time, usually by teaming up with a preferred lender who lines up mortgages until the building meets Fannie Mae’s specifications and stays on afterward.
On average, mortgage rates for new developments aren’t any higher than for existing apartments. That said, if you buy when the building is only 25 percent sold, your rate will reflect that risk and typically be slightly higher than if you buy when it’s 50 percent sold. That excess cost is usually balanced out by getting a lower price on your apartment—and you can always refinance in the future.
As for getting approved, it can often be quicker and more straightforward than getting a loan for an existing apartment because the bank has already approved the building. To see if you qualify, get in touch with the preferred lender directly.
13. When can I move in?
In a new development, it could be 12 to 18 months before the building is ready to close and you can move in. Although the sponsor can give you a target date, even the most experienced developer who runs on schedule can hit delays that are beyond their control.
If you expect to close on the building’s target closing date, it’s worth having a back-up plan so you don’t move out of your old place before the new place is ready. You could also try to negotiate a drop-dead date by which you’d be entitled to cancel your contract and get your money back if the unit isn’t ready.
Be sure to stay in touch with the listing agent and regularly check on the status. You’ll also be notified when you are 30 days away from closing.
14. Will the building have commercial space?
Mixed-use buildings, which combine residential apartments with offices, hotels, stores, or restaurants, are common in NYC. Ask what your developer has planned for any space in the building set aside for commercial use so you don’t get stuck with something noisy, smelly, or otherwise unpleasant.
In some cases, the developer might use the space for a gym or grocery store, which may feel like another amenity. But it’s just as possible that you could get stuck with a fast-food restaurant or a loud nightclub.
It’s also important to find out whether the building’s finances are dependent on its ground-floor retail. If it’s a small percentage (the usual seems to be 10 to 15 percent), then there’s less to be concerned about, since most of the building’s costs will be covered by common charges.
15. What’s the neighborhood like?
Take a look around the building. Are there empty lots?
“If so, there will likely be construction, and you need to think about how that will affect your quality of life and, also, your resale value,” Braverman says.
This may be even more of an issue in neighborhoods that are gentrifying. Do your homework and walk around the project at different times to get a feel for the area, what’s happening, who’s there, and what businesses might be moving in.
Ask the sales office staff as many questions as possible about the neighbors. Who lives next door? Is it the owner of the house or a renter? What about things like dry cleaners and supermarkets? Are they close by?
16. What’s the source of heat and air conditioning?
Ventilation systems can have aesthetic or practical drawbacks you should be aware of.
On the lower end of the scale are PTAC units. Some of these can be attractive and even efficient, while others can be noisy; make sure you turn them on to see how you feel about the noise level. They also take up space below a window, so account for that when you are planning where your furniture goes.
Mini-split systems are typically quieter and more efficient, and their placement can permit larger windows. Some systems, known as heat pumps, provide both heating and cooling. In super-luxury buildings, you may have even more true ducted central air systems with very sleek vents and possibly humidity controls to protect your artwork.
Similarly, if forced hot air is something you don’t like and you prefer radiators, be sure to ask about it.
17. What about soundproofing?
This can be a little bit trickier to check in an empty building, and impossible in one that’s not yet completed. The only solution then is to ask what kind of soundproofing is being installed. Also inquire about the plan for sound reduction between apartments.
If you’re buying in a completed building, find out if anyone has moved into the apartment above. If so, spend time listening for footfalls. If not, have someone walk around there and see if you can hear anything. Do the same for adjoining units.
You can also ask about how many panes of glass the windows will have—triple-pane windows are considered the best for soundproofing, ensuring noise on the outside stays outside.
18. What’s the experience of residents so far?
If people have already started moving in, their input can be invaluable. It’s helpful to ask someone who has used the kitchen appliances, turned on the shower, lived through a heavy rainstorm, experienced the on-site amenities, and dealt with the building staff.
You can absolutely ask the super if owners have been complaining about anything in particular. Certain red flags might indicate structural issues, including leaks through the heating/cooling systems and windows, ventilation problems, and mechanical noises or pumping sounds.
19. Can I rent out my place?
Developers sometimes prohibit renting out a unit for up to a year after closing. Others limit the use of amenities to owners only. Double-check the building’s policy if you might be in a position to sublet at some point.
Find out if there are any building-imposed limitations on short-term rentals, too. There might be restrictions or fees aimed at dissuading owners from putting their apartments on Airbnb or similar platforms. (You’ll also want to stay on the right side of the law by knowing the rules in NYC.)
20. Are there any special restrictions?
Some buildings will specify that you can’t sell your apartment within a certain amount of time to discourage flippers who may end up competing with the sponsor for unsold units. Ask the listing agent if any rules like this are in effect.
—Earlier versions of this article contained reporting and writing by Lucy Cohen Blatter, Mimi O’Connor, and Emily Myers.
