There is something wonderful about living in a brand new piece of Chicago real estate–call it that new property smell.
However, there are some precautions you should take before you purchase a newly constructed Chicago condo, so be sure to go through this checklist before you sign on the dotted line.
Research the Developers Background– Has the development company ever had to return a project the bank? How are their recent projects selling? Take the time to examine the firms background and previous projects (the internet makes this easy) before you fall in love with their new buildings.
Work with the Right Realtor– When you are purchasing new construction, it is important to work with a realtor who has experience in that area and understands its idiosyncrasies, because there are key details like layout plans, finish selections, and other nuances that only come with a background in new construction.
Compare and Contrast Cost per Square Foot– Comparing the cost per square foot to other, similar new construction projects will give you an idea of the relative worth of your unit, and ensures that you are getting a good value for your money.
Floor Price Differential– It is important to recognize that the price of otherwise identical units changes per floor. This will give you insight about the views and how the existing buildings surrounding the property might affect a future resale.
Neighbors– The buildings surrounding your new home not only have an effect on your current view, but other new developments may appear in the future. So be sure to inquire about the zoning and any future construction nearby.
Keep in mind that buildings with views that will forever be unobstructed usually have fantastic resale value. Two examples are 2520 Lakeview and 340 On the Park. Be aware that if a unit is located just one or two stories above the rooftops of neighboring buildings, this may be an aesthetic issue that affects resale as well.
Height Matters– A ceiling height of at least nine feet is preferred, however, you can expect to find ten and eleven foot ceilings in luxury new construction developments. Also, notice the units entry door height – eight foot doors are typically found in the more expensive luxury units, and if the condominium has larger doors, the finished product will feel more elegant.
Open the Door– Many of the sales center model units do not include doors, because the lack of doors make the unit look larger – so it important to ask if the doors in your unit are going to be solid core. If yes, you will know that your doors will be more soundproof and that the unit has superior finishes.
Look for Millwork– This is one of the many important fine points that separate mediocre construction from a luxury product. Custom-made nine inch high baseboards with architectural detailing is a definite sign of luxury, while finely crafted custom crown moldings and door casements make a luxury statement.
Examine the Appliances and Cabinets– Upscale brand names are obviously the most desirable. The big names certainly help identify the quality level of a new construction development. Snaidero cabinetry, SubZero refrigerators, Wolf ranges, Viking microhoods and Miele dishwashers are names associated with high quality and luxury. Many developments feature alternative brand names so be sure to consult your realtor for the particulars of the appliance and cabinet packages offered.
Look At the Windows– Will the size and shape of windows in the model reflect exactly what will be in your unit, or will there be variations within the building? Some buildings do have variations in window height, so it is important to find out which floors exceed the average because these apartments will ultimately be worth more (and larger windows are more aesthetically pleasing for you).
Look Up at the Ceiling– Ask what kind of ceilings will be in your unit. If they are reinforced concrete, it is essential to determine whether the concrete will be finished or if the ceiling will be showing the rough seams.
The Finishing Touches– If you enjoy the look and minimalist feel of rough concrete finishes, go for this design feature. Also, be aware that if you paint the concrete areas post-purchase, the value of the unit may be compromised.
Appraisal Research– When purchasing newly constructed property, it is important to work with a realtor who has access to the new construction information from the Appraisal Research Counselor compiled report. This contains a wealth of information about all the developers and their finishes as well as the percentage of units sold. In addition, you can also determine sales velocity for a project, and when the development started its marketing campaign.
Heating and Air Conditioning– Ask if the building is going to be on a four pipe system, and where the ducts (ceiling or floor) will be for both the heating and air.
Where to Park– If the building is already constructed, check the exact location of the parking lot. Make certain you can park without being forced to back into a spot, or if it is up against a wall or any columns. Remember that ease of entry and exiting are critical. If purchasing parking off of construction plans, try to stay away from walls unless the parking spot is extra wide.
Escrow Money– Most developer contracts require ten percent of the entire purchase price down, including the cost of the parking. On the contrary, your objective should be to put as little money down as possible. Try to have the contract written with five percent down, at least initially. If the developer will not accept the smaller escrow, you may try an incremental dollar strategy over a period of six months, or five percent immediately after attorney approval and then five percent once construction begins. Note that all escrow money should be provided only after your own attorney has approved the contract. Their offer should be modified to state that the escrow money should be provided one or two days after you and your lawyer have agreed to all the terms.
Contract Modifications– If you want to be more conservative, you should consider possible “what if scenarios”, namely loss of your job, or another catastrophic situation which would change your ability to move forward with the closing of the property. Have your attorney examine the contract to see if there are any written provisions and if the developer is willing to make these modifications.
Property Report and Condo Declaration – This is a document that you will receive and you will have to sign a receipt for. You do not have a contract with the developer until you receive and sign for this document. It is essential that you review this material because it provides important information about what you can and cannot do once you own the property, such as whether you can rent the condo out and what procedures and fees are involved if you do. Or, how soon you can sell the unit after you close, and if you can sell the parking to an individual who does not reside in the building.Last but not least, you also want to make sure that your parking is stated as garage coveredparking.
For more information on these Chicago condos or other luxury Chicago real estate call Sheldon at 312.264.5853 or email him at SSalnick@Rubloff.com