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Originally Posted by Bigtime
Apparently the backers of the University City project can build the thing with their pocket change. So it may be a completely different beast than Midtown/Skytower/Union Square v1.0 and all the others that priced too low to start.
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Their personal wealth has nothing to do with it unless they are self-financing it. Even if they are, would they eat the cost if they're priced too low and have underestimated their budget? Or would they pass that cost back to buyers?
Buyers should be asking about the developer's financing requirements for construction.
Are they using lenders?
How many sales are required by the lenders before construction starts?
What down payment do their lenders need to see in contracts to finance the development?
How are they financing with such small deposits?
Unfortunately, people don't ask enough of the right questions or use a qualified Realtor who is experienced with pre-construction. They just see a big line, and small down-payment and jump in.
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Originally Posted by Realtor 1
I personally think its to large of a risk to purchase a brand new condo that has not been built. I would want the place to have been around for a few years and have a much better idea on the financials and reserve fund.
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I almost only purchase pre-construction. There is risk, but also reward. And most of the risk is due to a lack of experience, education and research about the process.
I have no problem recommending pre-sales to my clients, but I've sold enough of them to know all of the good and bad of it.