I’ve had enough of these builders and you should really beware before buying a new build.
Over the past 10 years I’ve been selling Real Estate, I’ve had one bad situation over another with my clients. The past two years, I’ve reached my limit and I’m here to say don’t buy a new build, you’re better off buying something that is built already and let somebody else deal with the stresses that come along with closing a house.
I will play devils advocate and say that if for some reason you find a reputable builder and have dealt with that builder, than you could actually make some money, and have a great experience. On the other hand, in my experience, I have been seeing one bad situation over and over to warrant that most builders are not doing a great job and really screwing the end user you at the end. Here are all the things I’ve had to deal with my clients that should not be happening.
1. Closing Cost: While most lawyers will put a clause to cap certain costs, (which I make sure that are in there) There are builder levies that can reach thousands of dollars. I recently had clients see closing costs from the builder hit over $10,000 for a 1 plus den & $19,000 2 bedroom plus den. My clients were not happy and were scrambling to find money.
2. Delays: I’ve have not seen a condo builder close on time. I believe they are allowed to delay up to three times. I have also seen a builder not even start a project, and it has been 3 years and there is nothing anybody can do about it. Also deposits, and occupancy fees must be paid during these delays. These delays can mean a lot of things, no payment to your mortgage, and no increase in value if the project altogether is delayed.
3. Not being able to rent or sell: Most builders are not allowing you to rent or sell units until the final closing. If you want to sell, you will have to pay huge assignment fees. There goes your profit. I had a builder tell my client a few years ago that he couldn’t rent his unit. So he got the unit, and was planning on renting it, then it had to sit empty until final closing, which was months. Think about it!
4. Workmanship: One of my clients recently purchased a new build house that was so poorly constructed that it had to be renovated when it was moved into. I couldn’t believe the work, with my family being in construction for so many years. (Don’t get me started on condos) Also good luck in getting these builders coming back to fix anything. They have up to a year while you look at your wall which is crooked.
5. New development cheaper than your unit: A few years back, I went to a new phase launch. The builder released the prices and I was astonished when the builders prices were 20% cheaper than the last phase. I spoke up at the meeting and said, hey, we are selling a unit in phase 2, how can you sell it 20% cheaper, now my client can’t even sell the unit. They did not answer me. The truth is, the builder wanted to get his units sold quick and didn’t care about the previous buyers or the market in that building.
6. Assignment fees: Builders can charge whatever they want for assignment fees. They can typically say no to any assignment fees. What if the mortgage rules change and you don’t qualify anymore since you are waiting for two years for this condo to close?
I can make this list 10 pages long, but I will stop there. While I might sound like I’m complaining, the honest truth is, I want my clients to succeed, make money and not get hit with any surprises. While many agents out there have great stories, these experiences are mine, and my opinion. I’m sure there are great stories of people buying cheap new builds sitting on it for two years, and making a ton of money. Yeah that is out there, but my clients are just trying to get ahead and buying that first investment or first property. Those things have not been my experience, so my advice to you is… Call me, let’s talk! 🙂
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