Buying New Construction in Chicago

Buying New Construction in Chicago

Purchasing a New Construction Condo or Home

Whether you’re purchasing a home in a brand-new condo development or building a home from the ground up, purchasing a new construction home in Chicago can seem quite daunting.

But buyers today certainly see the advantage of a brand-new home, and many are gravitating to new or newer properties in their home searches. There are many important considerations when purchasing new construction in Chicago, including:

Considerations when purchasing new construction in Chicago

Your Overall Dollar Budget
In order to know your budget, your first step should be to speak with a mortgage professional prior to looking for a property. The best way to establish a budget is to determine your down payment amount and your monthly payment amounts. Real estate taxes are generally included in your monthly mortgage payment and should be calculated at a minimum of 2% of the purchase price. You may also need to include private mortgage insurance if you lender requires it.

For new construction Chicago condos, remember that parking is usually not included in the purchase price quoted by the developer, and in today’s market, that purchase price is often not negotiable.

Location
In Chicago, the denser a neighborhood is, the more expensive a new construction condo will be. Less dense areas of the city might be considered if you need to adhere to a certain budget, since these properties are usually less expensive than those in more developed areas. And, as an area grows and becomes more populated, it’s highly likely that your property will raise in value and earn you a higher return on your investment.

Cost per Square Foot
The best way to compare values between new construction properties is looking at the cost per square foot. This is what developers use to price their developments. Sticking to this method will let you compare properties on an equal basis and determine if you are purchasing at a favorable price.

Other things that may be factored in are what the developer might be including such as high-end finishes (marble bathrooms, granite countertops), luxury appliances or other features that come “standard.” In Chicago, the price per square foot can range anywhere from $324 up to $1,200 in neighborhoods like the Gold Coast.

Upgrades
Upgrading a new construction property can be pricy, but the costs can vary considerable. A developer usually charges their costs, plus a 20 percent markup, though some can charge more than that. When you and your realtor are writing up the initial offer, try to determine these costs to reduce the chance that upgrade costs will put you over your budget.

Because many new construction properties are not ready for occupancy until 1-2 years after they’ve been purchased, it’s incredibly important to have the upgrade costs in writing in the initial contract. Those prices will easily be inflated one or two years down the line.

Finishes
A buyer will want to take a careful look at the finishes the developer of a new construction property has included in the base price and which are considered upgrades. More expensive finishes like granite and marble are usually not included in the base price of smaller condos, but could be standard in larger, more luxury units.

It’s important to get a detailed list of specifications in writing from the developer. This should include details like the brand and model number of each appliance that will be in your unit (which could differ from what is shown in the model).

Parking
Having a parking space is an important factor when it comes to a property’s resale value. In a loft conversion or a high-rise building, a parking space might start around $25,000 up to $60,000, depending on the level of luxury in the building and how available parkin is in the surrounding area.

Even if you don’t own a car, it could be valuable to purchase a space. Not only have spaces dramatically increased in value (so you could potentially rent out your spot if you aren’t using it), it will make the later sale of a unit much easier if parking is included with the price.

Delivery Date
Your contract will specify a deliver date, but provisions will often allow the developer to go beyond that date without a penalty. If you have a hard and fast date for occupying your new construction home, it’s crucial to keep in constant contact with your realtor during the construction process to stay on top of what is happening. Delivery dates can be delayed for as long as a year or even beyond that. It may be a good idea to talk to your attorney and incorporate terms into the contract that protect your interests if your delivery date is not met.

Working with a Chicago Realtor
The reward from buying new construction is great, but there are also several nuances that need to be considered along the way: the track record of the developer, the number of “flippers” purchasing in the same project and the percentage of sold units, to name a few.

That’s why it’s especially important to work with a realtor who is familiar with the new construction market, developers and their product. The right realtor will ensure your interests are protected along the way and spare you a great deal of aggravation that can come with purchasing a new construction home. Plus, that representation comes at no cost to you, because the developer pays the realtor’s commission.

 

Want to learn more about new construction real estate in Chicago? For more information or to see them in person, contact me at (312) 498-5080 or email me at [email protected].

Sheldon's Picks For the Top Chicago Luxury New Construction Buildings

1. VISTA TOWER – 363 EAST WACKER DRIVE

Coming in 2019, Vista Tower is slated to be a combination of a 5-star hotel and residences in Chicago’s Lakeshore East neighborhood. Designed by Jeanne Gang, the building will include 1- to 4-bedroom condos 90 stories into the sky, with a striking design that will leave a legacy on the city’s famous skyline.

View Active Listings in 363 East Wacker Drive

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