Finding the right New York real estate is never simple, but that is compounded with new construction condos, not only for the sheer volume of choice (nearly 3,000 new units expected to launch in Manhattan through 2024, and as many as 3,600 in Brooklyn and Queens) but for the extra considerations buyers are advised to take.
After finding an apartment, securing any required financing, and having an offer accepted, many think the next step is to move in and kick back. However, a few more steps are recommended, if not legally required, before one can take occupancy.
After finding an apartment, securing any required financing, and having an offer accepted, many think the next step is to move in and kick back. However, a few more steps are recommended, if not legally required, before one can take occupancy.
In this article:
Unit inspections vs. walkthroughs
Contrary to popular belief, new condos often have more problems than resale condos and coops because they haven’t yet been put to the stress test posed by daily living. As a result, buyers are advised to carry out a unit inspection (as advised in Part 2) and do a final walkthrough. It is also important to understand that inspections and walk-throughs are two very different types of inspections that happen at different moments.Walk-through
In addition to a unit inspection before the contract signing, you’ll likely want to do a final walk-through before the move-in date. In most cases, the walk-through is carried out by the buyer and their real estate representative, but some buyers also bring other experts along. Among other things, be certain to check for the following when you do your walkthrough:Repairs
- Ensure that repairs or installations that were promised to be completed prior to your move-in date have taken place
Appliances
- Ensure that all appliances have been installed - e.g., if your contract includes a washer and dryer, ensure that it has been delivered and is operational
- Ensure that the stove is working by turning all burners on and off. If you have a gas appliance, check to see if the gas is working; if not, find out why (n.b., if a gas stove is not turning on, it may point to a larger underlying problem in the building)
- Check the temperature of the interior of the refrigerator and freezer
Fixtures
- Ensure that light and dimmer switches are all working
- Ensure that all light fixtures are working
- Ensure that bathroom fixtures and faucets are all working
Water and plumbing
- Flush the toilet to ensure that it is working
- Turn on the shower to ensure that there is adequate water pressure and that the temperature controls are properly set
- Run all the taps to check the drainage
Finishes
- Ensure that the floors, countertops, and other finishes match the quality of those promised in the offer
- Check to see if there are any scratches or scuff marks on the walls, floor, and ceiling (note that these may occur during appliance installation)
- Ensure that all doors and door handles, including closet and exterior doors, are properly installed
- If windows are promised to open, ensure that they do
Electrical and HVAC systems
- Test all electrical outlets to ensure that they are working
- Ensure that all heat and air conditioning units are functioning
Electronics
- Test the intercom, door buzzer, and smart lock system (if applicable) to ensure that they are functional
- If smart home features have been incorporated into your apartment, test to be sure that they are accessible and working
Safety and security
- Check to see if your gas and fire alarms have been installed and are working
- If there is a home security system or video surveillance system, ensure it is installed and working
- Ensure that there is a peephole in your front door, as is required by the Housing Maintenance Code
- Ensure that the floors, countertops, and other finishes match the quality of those promised in the offer
- Check to see if there are any scratches or scuff marks on the walls, floor, and ceiling (note that these may occur during appliance installation)
- Ensure that all doors and door handles, including closet and exterior doors, are properly installed
- If windows are promised to open, ensure that they do
Electrical and HVAC systems
- Test all electrical outlets to ensure that they are working
- Ensure that all heat and air conditioning units are functioning
Electronics
- Test the intercom, door buzzer, and smart lock system (if applicable) to ensure that they are functional
- If smart home features have been incorporated into your apartment, test to be sure that they are accessible and working
Safety and security
- Check to see if your gas and fire alarms have been installed and are working
- If there is a home security system or video surveillance system, ensure it is installed and working
- Ensure that there is a peephole in your front door, as is required by the Housing Maintenance Code
Common red flags
A few common red flags to be on the lookout for include:- Reversed hot and cold water pipes and reversed water faucets
- Faulty ductwork
- Warped and scratched flooring
- Slow drainage in the bathroom or kitchen
- Incomplete work
- Unauthorized replacements of fixtures and appliances
Who and what to bring to a walk-through
- Your phone, to record damages and problems
- Your phone charger, to test electrical outlets
- An expert – if you and your agent are not up to the task, bring a professional inspector or trusted contractor or handyperson along to help identify potential problems
- A note-taking device – your phone or a pen and piece of paper are essential since you’ll also want to create a “punch list” of everything that needs to be completed or fixed before you move in
Next steps
If your walkthrough revealed any lingering problems (e.g., improperly installed appliances, scratched or damaged floors and walls, slow drains, or low water pressure) or missing features (e.g., installation of an unauthorized appliance), at this point, the repairs and replacements are still the responsibility of the sponsor. If you don’t want to wait for the unit’s sponsor to address the problems, estimate the cost of addressing the repairs and replacements yourself and ask that the amount be deducted from your closing costs.
Image by Gerd Altmann from Pixabay
Closing, Moving In, and Establishing an Outside Date
Closing
In most cases, sponsors expect potential buyers to close within 30 days of written delivery of the closing. This is known as the “30-Day Alert.” If a buyer fails to do so, sponsors will typically impose a penalty (in some cases, up to $1,000 a day). Since 30 days is a short time to close, many real estate attorneys insist on including a contingency clause that provides a 10 to 15-day grace period.Certificate of Occupancy
While closes often take longer than expected due to a delay on the buyer’s side (e.g., the financing approval is delayed), in many cases, the delay in new construction condos is the developer’s fault. This is usually due to the fact that the developer hasn’t yet been able to obtain a Certificate of Occupancy (CO) or Temporary Certificate of Occupancy (TCO). In most new construction condos, the close happens after a TCO is issued. A TCO is issued when the Department of Buildings has determined that a building is safe to occupy but still has one or more outstanding issues that need to be resolved before a final CO can be issued. Notably, you can’t close with a CO or TCO.The importance of establishing an outside date
From supply chain delays that slow construction and installations to Department of Building delays that prevent the timely issuance of the paperwork needed to declare a building inhabitable, it often takes longer than expected for a building to receive its TCO. For buyers, this can cause a range of problems, including with lenders. As a result, it is important for buyers to establish an outside date—an agreed-upon date by which the construction must be completed. In most cases, if the construction isn’t completed by these dates, the potential buyer is free to walk away without penalty or with only a partial penalty.Closing costs and fees
Closing costs are higher when purchasing a condo than a coop. In most cases, closing costs on New York City condos are at least 3% and may run as high as 5% of the unit’s value. Most of your closing costs will come in the form of transfer taxes, which is 2.625% on all units worth more than $500,000. If your unit costs more than $1 million, you’ll also be on the hook for an additional mansion tax. Other potential costs include a mortgage recording tax, though it is only applicable if your unit is financed.In addition to applicable taxes, there are several costs related to the move-in. For example, most condos will ask for a move-in fee to ensure they can cover the cost of any move-in-related damages (e.g., scratches and dents to floors, walls, and elevators). Depending on the building, the move-in fee will be anywhere from $500 to $1,000, though some buildings also ask for a larger damage deposit.
How and when to take possession of a new construction condo
Once you officially close, you will get the keys to your unit, but you may or may not move in immediately. In some new construction condos, your unit may be complete, but the unit may have a TCO due to ongoing construction in common areas (e.g., the units may be complete while the lobby or gym remains under construction). As a result, you may or may not want to delay your move-in. You may also want to hire an interior designer and your own contractors (e.g., painters) to do additional work on the unit prior to your move-in date. For all these reasons, how and when you take possession of your new construction condo and actually move in are usually different dates.After move-in
Common charges
After you move into a condo, in addition to covering your mortgage, you’ll have monthly fees. Common charges in a condo can vary widely, depending on the type of building and amenities. More information on the structure of fees may be found here.Warranties
When you buy a new construction condo, the appliances are new, which means most will be under warranty, at least for the first one to three years. After that, there are no guarantees, which is why buyers sometimes purchase a home warranty. In fact, home warranties not only cover major appliance repairs but also home-systems repairs for an extended period. If you don’t like surprises, investing in a home warranty may be a great idea.Assessments
While an assessment is unlikely during the first decade of your building’s life, if a major repair is needed, it is possible that the condo board will decide to implement an assessment to cover the costs. In most cases, there is little one can do when hit with a high assessment. Fortunately, in most cases, assessments are added as a monthly charge on top of one’s fees and spread out over several years.Unit appreciation and resale potential
While there are exceptions (e.g., small boutique condos in Manhattan have held steady over the past decade), condos tend to be an exceptional investment in New York City. Since 2010, many condo buyers, especially in Brooklyn and Queens, have seen their values double in just a decade. Location is often a key factor, but the resale value of condos is also determined by other factors, including how many units are owner-occupied. Unless the condo has failed to attract buyers or is failing to age well (e.g., is plagued by structural issues), it will likely yield an enviable return over its first five to ten years.Rules against flipping your unit
Some, but not all, condos and coops have a flip tax. While flip taxes on HDFC coops can be as high as 30% to discourage buyers from frequently flipping their units, condos that have flip taxes generally only charge between 1% and 3%. Also, in many condos, flip taxes only apply to buyers who flip within a certain timeframe (e.g., the first two to five years). But potential flip taxes aren’t the only reason selling after just a few years is not advantageous. Unless you’ve owned and lived in your unit for at least two years, you’ll also have to pay capital gain taxes on the sale of your unit.Renting your unit
While coops often have strict rules against subletting, especially in the first two to three years following the purchase, condos tend to be far more flexible. In fact, many condos are purchased as investment properties and rented out from day one. But that doesn’t mean that there are no restrictions. Depending on the condo’s by-laws, you may have to pay a monthly fee to rent your unit. In addition, most condo boards will want to screen your tenants (e.g., they may ask for credit and housing court checks). The condo board may also reserve the right of first refusal on the lease.
Image by Muhammad Abubakar from Pixabay
While much of the information presented in this article can be applied to condos that are still under construction, the following listings in new developments are open for immediate occupancy. However, they may not be available for much longer -- market data shows that the buildings are nearly sold out.
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Uptown
96% sold
378 West End Avenue, #7A
$7,925,000
Riverside Dr./West End Ave. | Condominium | 4 Bedrooms, 4.5 Baths | 2,888 ft2
378 West End Avenue, #7A (Alchemy Properties Inc)
Eleven Hancock, #708 (Brown Harris Stevens Development Marketing LLC)
Midtown
505 W 43, #10B (Douglas Elliman Real Estate)
86% sold
Aman New York Residences, #18C
$8,500,000
Midtown West | Condominium | 1 Bedroom, 2 Baths | 1,149 ft2
Aman New York Residences, #18C (OKO REAL ESTATE LLC)
Downtown
91% sold
130 William, #52D
$4,125,990
Financial District | Condominium | 3 Bedrooms, 3 Baths | 1,761 ft2
130 William, #52D (Corcoran Sunshine Marketing Group)
Greenwich West, #PH29A (Corcoran Sunshine Marketing Group)
83% sold
14 Clinton Street, #6A
$2,145,000 (-2.3%)
Lower East Side | Condominium | 2 Bedrooms, 2 Baths | 1,088 ft2
14 Clinton Street, #6A (Real New York)
88% sold
The Avant, #5A
$1,525,000 (-7.3%)
East Village | Condominium | 2 Bedrooms, 2 Baths | 955 ft2
The Avant, #5A (Serhant LLC)
458 West 20th Street, #4D (Coldwell Banker Warburg)
79% sold
The Gramercy North, #PH2
$2,775,000
Gramercy Park | Condominium | 2 Bedrooms, 2 Baths | 1,535 ft2
The Gramercy North, #PH2 (Douglas Elliman Real Estate)
Approximately 90% sold
277 Fifth Avenue, #34C
$4,250,000
NoMad/Flatiron | Condominium | 2 Bedrooms, 2 Baths | 1,397 ft2
277 Fifth Avenue, #34C (Compass)
Rose Hill, #5C (CORE Group Marketing LLC)
93% sold
Madison House, #52C
$5,500,000
Murray Hill | Condominium | 2 Bedrooms, 2.5 Baths | 1,788 ft2
Madison House, #52C (Douglas Elliman Real Estate)
Brooklyn
11 Hoyt, #50D (Corcoran Group)
86% sold
The Brooklyn Grove, #16A
$1,025,000
Downtown Brooklyn | Condominium | 1 Bedroom, 1 Bath | 715 ft2
The Brooklyn Grove, #16A (Nest Seekers LLC)
91% sold
Umbrella Factory, #PHB
$1,595,000
Williamsburg | Condominium | 2 Bedrooms, 2 Baths | 936 ft2
Umbrella Factory, #PHB (MNS)
97% sold
One Clinton, #26B
$4,495,000 (-3.3%)
Brooklyn Heights | Condominium | 4 Bedrooms, 3.5 Baths | 2,560 ft2
One Clinton, #26B (Corcoran Group)
50% sold
415 Degraw Condominium, #PH
$2,000,000 (-11.1%)
Boerum Hill | Condominium | 2 Bedrooms, 2 Baths | 1,334 ft2
415 Degraw Condominium, #PH (Park Property Advisors)
98% sold
111 Montgomery Street, #11E
$1,160,000
Crown Heights | Condominium | 2 Bedrooms, 2 Baths | 985 ft2
111 Montgomery Street, #11E (Compass)
93% sold
The Benny, #1D
$698,000 (-12.8%)
Prospect Lefferts Gardens | Condominium | 1 Bedroom, 1 Bath | 670 ft2
The Benny, #1D (Real New York)
Would you like to tour any of these properties?
Just complete the info below.
Or call us at (212) 755-5544
Would you like to tour any of these properties?
Contributing Writer
Cait Etherington
Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.
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