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How pre-construction Works
A pre-construction
development is a development that does not have ready to move in units.
Often sales for these units begin several months prior to clearing the land
for the project.
Often the developer presents the project to
key brokerages and give them information on units available. The brokerage
then presents this information to their clients.
This phase will provide first and best
pricing on the project. VIP brokerages and select clients may have an
opportunity to sign a reservation for a unit or register for lottery or VIP
opening event. The developer may require a refundable deposit to register
for a VIP opening event or lottery. This deposit is fully refundable if the
buyer does not purchase.
Most often projects in South Florida
increase in value so greatly, that even purchasing midway through the sales
process, will provide substantial equity in the property upon completion.
The next step would be reservation
agreement. At this point the buyer chooses the unit they desire and price is
locked in. Usually 10% deposit is required here (less any prior deposits
made). Most often in this step the developer will also require the buyer to
be pre-qualified through a lender or provide proof of funds (if cash
purchase).
Shortly there after, 1-4 months, the
developer will present a contract for sale. At this point the buyer will
make another 10% deposit for a total deposit of 20% and sign the contract
for sale on their unit of choice. During the period from when the
reservation is signed and the contract is signed, the buyer may cancel and
the deposit refunded. If the project is a condominium, the buyer also has 15
days from when the contract is signed to cancel.
Once all is put into motion by contract,
the developer will then allow choices for upgrades and colors. This may take
several appointments depending on the styles, size and options available.
Often the developer will require 25% to 100% of all upgrades to be paid for
at the time they are selected.
If the contract is transferable, the buyer
may market and sell his right to purchase the unit to another buyer. If the
contract is not transferable, the buyer will be required to close on the
property upon completion prior to selling the unit. From time to time the
developer may approach the buyer with an option to sell the unit prior to
completion.
Depending on the project and the stage the
buyer has purchased, occupancy and closing will be available from 18 - 24
months. Shortly before completion the developer will notify the buyer and
the buyer will need to finalize financing and closing process. A walk
through will be done to create a "punch list" of details the developer will
need to address for completion of the unit.
Upon closing the buyer will receive keys
and may occupy the unit immediately.
Although how a developer chooses to market
their project varies, this is basically the plan. Some developers may
require less or more of a deposit. Some may have restrictions on investor
contracts. Some may provide a contract with out the reservation phase. Most
contracts are “cash contracts” and are not contingent on the buyer receiving
financing.
The best plan of action is
for us to sit down and discuss your needs and options. We then can develop a
game plan that will get you into the right project at the right time.
It is very important that
you do not
register
directly with the developer. Registering directly with the developer may
prevent us from assisting you and providing you with first pricing
opportunities.
Condo
Conversions
The newest trend in
developer sales is condo conversions. Condo conversions are projects that
are currently rental apartments and are being converted to condominiums. The
process on these vary greatly from one development to the next. But there
many similarities to the pre-construction process.
Again,
either by announcement to key brokerages or by research we find out about
these conversions and the details of when VIP sales will begin.
VIP
sales start either with a lottery, registration or VIP event by invitation.
At
these VIP events, prices and floorplans are presented. The buyer will have
the opportunity to purchase a unit. There is no reservation process, only
contracts will be offered. Deposits vary from 5% (often for owner occupants
only) to as much as 20% for investors.
As with
pre-construction, buyers will have 15 days to cancel.
Closing
is often in 60-90 days.
If you
choose a unit with a tenant with an extended lease (beyond closing date),
you are required to honor the lease to full term. Renovations, if any, will
be done upon tenant vacating the property. The rent from the tenant will be
paid to you and deposits will given to you at closing. Whether you renew the
lease, raise the rent, find a new tenant or occupy the property yourself is
your choice.
Most
developers offer varying level of refurbishing. Some include a/c, water
heater, appliances, cabinetry and even light fixtures. Other may only offer
paint and carpet. Some offer upgraded finishing with granite counters and
stainless steel appliances other only offer laminate counters and standard
cabinetry. Many offer discounts or incentives for taking the unit in as-is
condition.
Again–
each project is presented differently. Some details will be released prior
to sales events, others will be detailed during the 15 day rescission
period. How these details effect you is where we can help.
Also,
as with pre-construction, it is very important that you
do not
register directly with the
developer. Registering directly with the developer may prevent us from
assisting you and providing you with first pricing opportunities.
We are here to help. Our
service is free to you, the buyer. We also offer rebates for investors
purchasing multiple units and discounts on marketing when you are ready to
sell your units.
Feel free to contact us with
you question.
For more
information on pre-construction click here
or contact
RSP International
Realty
954-632-5514
Price are subject
to change with out notice. RSP International Realty is not the
exclusive representatives of any development. Information
presented here is believed to be accurate but is not warranted.
Oral Representation cannot be relied upon as correctly stating
the representations of the developer. For correct
representations, reference should be made to the documents
required by section 718.503, Florida statutes, to be furnished
by a developer to a buyer or lessee. Prices, plans and
specifications subject to change without notice.
This page was updated
06/06/2008
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