Updated: 8 hours ago
Purchasing a new development versus a resale property in New York City presents unique differences, especially in terms of closing costs, timelines, and financing options. Here's a detailed comparison:
1. Closing Costs: In NYC, closing costs for new developments are typically higher than for resale properties. For new developments, buyers often bear the responsibility for the NYC and NY State transfer taxes, which can add up to 1.825% of the purchase price for properties over $2 million. Additionally, buyers might have to pay for the sponsor's attorney fees and a portion of the building's title insurance. In contrast, in a resale transaction, the seller usually pays the transfer taxes, and the buyer's closing costs are mostly limited to mortgage-related expenses and title insurance.
*Depending on the size of the building, you may also be asked to contribute to the cost of the Super or Staff residences if they will be living on-site. *
2. Timelines: The timeline for buying a new development is generally longer and less predictable than for a resale. New constructions are subject to construction delays, and the closing date can be pushed back multiple times. This uncertainty can be challenging for buyers who have specific moving timelines. Resale properties, on the other hand, have a more straightforward timeline, usually closing within 60 to 90 days from the contract signing, assuming a mortgage is involved.
3. Financing Options: Financing a new development can be more complex. Some lenders are hesitant to provide mortgages for buildings that are not yet completed or lack a certificate of occupancy. Furthermore, lenders might require a higher percentage of the building to be in contract or sold before approving loans. For resale properties, financing is generally simpler and more accessible, with a wider range of mortgage products available. Because of this, many new developments will have a preferred lender who has already given the project a green light. If you use their lender - be sure to ask for a rate lock! When developments get delayed, one of the biggest sources of stress is the movement of interest rates after the rate lock expires. Many lenders understand that projects get delayed and will be more flexible on this- but you have to ask!
* Bonus Tip- Keep in mind that while the model units you see will probably have light fixtures, window treatments, and closet buildouts, most New Developments DO NOT INCLUDE them! Be sure for an exact list of what is included.
While new developments in NYC offer the allure of brand-new units, they also come with higher closing costs, longer and uncertain timelines, and potentially more complex financing options. Resale properties, meanwhile, offer more predictability in these aspects but lack the charm of being the first occupant of a brand-new home. Buyers should weigh these factors carefully to make an informed decision that aligns with their needs and circumstances. If you have any questions, please don't hesitate to reach out to me at firstname.lastname@example.org or call me at 917-975-9531. Good luck in your search!