Tips for Buying Pre-Construction Properties

Pre-Construction Sales are sales prior to the beginning of construction.



Savvy investors of South Padre Island property realize the value of buying pre-construction. Getting in "on the ground floor" is a wonderful opportunity to save thousands of dollars. We have access to all pre-construction developments. Please email, stop in, or call us to find out the latest details on current pre-construction opportunities.
 
 
Questions and Answers
Q. What is the benefit of purchasing during the pre-construction phase?
 
A. Prices generally lower than those of existing condos. Buyers have a chance to purchase tomorrows construction at today's prices. This is not dissimilar to buying futures.
Q. Why does the developer discount these units?
 
A. Discounted prices are given to the buyers as an incentive to purchase something they cannot see, touch, or feel.

 

Q. Why do the developers sell pre-construction rather than build first?
 
A. Developers sell pre-construction, at lower prices because they need pre-sales in order to secure their construction loan. Most lending institutions will require 60%-80% of a project to be sold before construction can begin.
 
There are Four Phases to Pre-Construction Sales:
1 Reservation Agreement
2. Right of Recision Period
3.Contract for Sale
4.Closing the Sale
Lets look at each phase in further detail:
1 Reservation Agreement:
The developer has preliminary floor plans, site plans, amenities and prices. All are subject to change. Buyers reserve unit(s) with a minimum "intent to purchase" deposit- usually $5,000-10,000. The deposit is made to an interest bearing trust account. The Deposit does not go to the developer. Buyer's deposit can be refunded on demand at any time prior to conversion to Contract for Sale. There is no risk.
2. Right of Recision Period:
Also known as document examination period. The developer will deliver to the buyer the approved Condominium Documents. The "condo-docs" contain the final, exact details including the site plan, floor plans, amenities, rules, by-laws, budget, etc. The buyers then have 15 days in which to review the documents and make the decision to go forward with the purchase or request a refund of the deposit.
3.Contract for Sale:
Buyers are presented with the purchase agreement and are required to put up the balance of the earnest money deposit (usually 20% of the contract price). At that point the contract becomes binding on both parties. When enough of the reservation agreements convert to contracts for sale, the developer proceeds to get the construction loan for the project.
4.Closing the Sale:
When the condominium is completed, a Certificate of Occupancy will be issued. The buyer then performs a walk-through inspection and then goes to closing where they put up the balance of the purchase plus closing costs are paid.

Although this information is believed to be accurate, it cannot be guaranteed.Price and terms subject to change without notice.
Principle Broker: Troy Giles
License Number: 0482551