San Francisco is experiencing a construction boom these days, with new developments going up in neighborhoods on a rolling basis—with many more to follow in the next five years.
There are two ways to handle contract negotiations if you’ve decided to buy a newly built—or not-quite-finished—condo. You can go directly to the sales office, or work with a local Realtor. Some buyers feel that they can handle things on their own, while others appreciate the guidance of a seasoned professional who’s negotiated contracts on other developments in the past.
Regardless of how you approach your purchase, here are five things to know before you sit down with the sales office to negotiate your contract:
1. We’re in a seller’s market, and developers are not discounting their list prices. Most developments are selling out quickly, and at prices that the developer wants. There will likely be another buyer breathing down your neck as soon as you decide which unit you’d like to buy. Of course, you may be able to negotiate a lower price on a less desirable unit that ends up sitting on the market longer.
2. Most of the contingencies are passive. The San Francisco Realtor Association (SFAR) purchase agreement allows for contingency timeframes that require the buyer to remove the contingency on a certain date. That’s usually not the case for the new-construction condo contracts. If the sales office doesn’t hear from you by the time the particular contingency deadline arrives, the escrow marches on and you technically do not have that contingency to fall back on anymore. I provide an escrow timetable to all my clients so everyone is aware of all deadlines, and no one risks losing a deposit.
3. Make sure the parking details in the paperwork match up with what you see in the garage. Will you own your parking space, or is it leased or assigned? Does your space show up on the condo map? Is there a separate HOA just for parking?
4. You should have a final walkthrough prior to closing. The SFAR contract provides for a walkthrough on the property within five days of closing. You’re able to ensure that what you’re buying is in acceptable condition. New home contracts sometimes omit that walkthrough, which can be particularly problematic if you’ve been promised that certain items will be installed by close of escrow. It’s a good idea to insist on a walkthrough.
5. You may be able to negotiate concessions. If the price is firm, has the developer been throwing in any appliances or upgrades? Typical concessions are refrigerators or upgrades on finishes if a unit hasn’t yet been completed. If you’ve decided to work directly with the sales office, they will not usually be forthcoming about concessions because they’re representing the seller and are trying to get him or her the best deal possible. On the other hand, a well-connected Realtor (like me) can confer with colleagues who have sold units in the building to see what you may be able to request and likely achieve.
Sales offices always require that your agent register with you upon your first visit to the building. So if you would prefer the benefit of working with a Realtor and want to see condos in a particular building, make sure to schedule a time to go to the office together.
There are probably another 20 items I could add to the list above, and I’d be happy to provide my guidance if you’re interested in one of the many new developments that are selling now or will be releasing units soon. Give me a shout at 415.823.4656 or firstname.lastname@example.org if you’d like to talk.