With Seattle housing continuing to boom, we are seeing this condo era continuing to take shape...
The typical way...
When most people buy a home they are most likely buying what is referred to as "resale". This means that you are buying a home that has been previously lived in before, not directly from the builder. In Seattle, the oldest homes you will come across were built around 1910, over 100+ years old. Given that much of our housing inventory has been built since then, you can imagine that most homes for sale are resale homes.
If you are not buying a resale property, the other option would be what is called "buying new construction"...unless you want to build the property yourself. Which 9/10 times is a big mistake, but that topic is for another newsletter...
Buying in a New Construction Condo
When you buy new construction condos, it is typical that the builder puts the project up for "pre-sale". Pre-sale basically means that before the building is completed you can make an offer on a specific unit and lock in your price prior to building completion. This happens, normally, just over a year out from building completion. If the offer is accepted, all you put towards the purchase is 5-10% earnest money, which ultimately gets applied to your downpayment. You won't pay towards anything else until the building is complete and you can move in.
This is an advantage for buyers who buy early enough because if the market goes up between the time they sign the pre-sale contract and completion, they stand to have already gained equity before getting their keys. Of course, the opposite could happen as well. The advantage for the builder is that they can sell units before even completing the building which nearly "guarantees" they will get their return and money.
My Experience with New Construction
As many of you may already know, I just moved into my condo. Given my network, connections, and research, I purchased as a very early pre-sale. The site where the condo is built was nothing but a parking lot when I signed my contract. This project was particularly unique in the sense that early pre-sales started in May 2016. Signing the contract over 3.5 years ago there was a heightened risk associated with that time frame, much more than your typical 1 year that most pre-sales have.
I spent hours upon hours and weeks learning as much as I could about the building, neighborhood, floorplans, and views so I could be strategic with my choice, as well as helping my clients who bought in the building, so they could be as successful as possible. If you are interested in the risks associated with new construction highrises, in more detail, please see my blog HERE where I discuss some pros and cons in relation to the new construction condo "The Emerald".
In the case of my building, The Nexus, the market has gone up nearly 10-25% for many of the units. Owners who bought early enough are now sitting on a fair amount of equity before even getting their keys.
New Construction Opportunities
If you are interested in new construction, please let me know. There are a number of new condo projects going up around town and there are major differences between each one. It is critical you have an agent representing you when buying a new construction condo. The sales team representing the builder only has one priority which is to sell any and all units. They will not go out of their way to help you evaluate all the risks of the different sides, views, layouts, if it makes sense for you, and so forth.
Here is a list of a handful of new construction buildings going up in Seattle and Bellevue:
- The Emerald (downtown, next to Pike Place Market)
- Spire (Denny Triangle, two-blocks to the Space Needle)
- Koda (International District)
- First Light (Downtown Seattle)
- Seattle House (Denny Triangle, near Seattle Center)
- One 88 (Downtown Bellevue)
- and others that haven't been publicly announced...
Let me know if you have any interest in learning more about any of these!