In Real Estate The Early Bird Gets The Bargain
By Jana Danger
Special to the Home Guide -Miami Herald
June 25, 2004
With the real estate market positively molten and no sign of it cooling any time soon, condominium prices continue to rise as fast as temperatures in July. Is there any possible way to find bargains? The best possibilities are at the very beginning, and sometimes the very end, of a project.
One tried-and-true method for bargain hunters is to buy during the pre-construction phase-earlier the better.
"The real bargains are the first month that any project is out, even before it hist the streets," said Rosalia Picot, president of a realty company that carries her name. "If you know someone involved in the project, that's where the bargains are. Pre-construction sales create momentum and excitement for more sales."
Over the two years that usually elapse between the announcement of a project and completion of the building, prices rise because of normal property appreciation. "The first presale prices are usually 25 to 35 percent lower [than after construction]," said Jacobo Cababie, developer of Everglades on the Bay in downtown Miami.
Those who purchase condos for investment, purposes generally know this, but consumers who are actually looking for a place to live are sometimes reluctant to buy something they can't see or touch for as long as two years. Or they simply may not be able to wait that long. For those who can, however, preconstruction prices can represent significant savings.
For the developer, presales are a necessary part of the process. "It's really like buying property wholesale," said Krystal Marcus, a real estate broker in Aventura. "The developer needs investors to help get financing, so he's willing to give them a wholesale price."
Bargains can sometimes be found as a project nears an end. "If a developer has only 20 units left, he still has administrative, legal and advertising costs," Picot said. "Instead of spending six months selling them, he might offer those units at a discount."
At Atlantic One at the Point of Aventura, there's a different kind of value-added opportunity. Coscan Homes is offering for sale models decorated by interior designers, and is willing to lease the furnished units back from the new owners.
While this practice is not unusual for single-family homes, it rarely happens with condominiums. Condo developers usually put together just a kitchen and bathroom rather than provide complete, furnished models. Although Atlantic One is now about 90 percent sold, Coscan had decided early in the sales process to have models. "It takes considerable lead time to do models, and we had substantially more units to sell when we committed to them," said Ron Kenner, Coscan's vice president of sales. "Since we were committed, we decided to try to use them to get more traffic into our sales center, because usually at this time of year things slow down."
Some buyers prefer buying turnkey-ready units, Kenner said. "The buyer gets a design services and furniture at a substantial discount to retail, and there's promotional value for the designer," Kenner said.
If the models sell quickly, Coscan will pay the new owners to allow the company to allow the company to continue to show the units. "We're willing to lease them back from the buyers, because we want to keep the models for several months, "Kenner said. "They're a big advantage for us, and if they sold tomorrow (without leaseback) we wouldn't get the original benefit intended.
Occasionally, someone's change of mind or financial situation can result in a good deal. "Sometimes people don't close on a unit," Cababie said, "Then you get a real bargain, because you get something that's two years [into the construction process] for the pre-construction price."
The last units to sell in a building might be on less desirable floors or areas of the building. A buyer who can put up with that, however, may get a bargain in a building where he or she really wants to live. "Sometimes a developer is left with units in a bad location and he might have a closeout sale," Picot said..
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