Most of my customers look at their real estate purchases as investments. Much of the conversation during the home inspection process revolves around the purchase price of the property, how much it will appreciate over the next five years and the return they can expect on their investment.
Other clients are more concerned with purchasing a “home,” in the warmest, fuzziest sense of that word. They certainly don’t want to lose money, but their focus is on the quality of life in a place where they plan to live and often, to raise children, on a more long-term basis.
The first type of buyer is frequently drawn to the “pre-construction” sale at a new development. In the earliest phases of a project, developers tend to offer reduced prices to build momentum and meet “pre-sale requirements” imposed by lenders, who want to see that a project is viable before they release money for construction. Such units are attractive to “investor-buyers” because they will likely see rapid appreciation. The value of such units can rise significantly even before buyers have moved in.
But life is not all roses for the investor-buyers who move early into a new development. Such buyers should be ready for the day-to-day interruptions, noise, dust and debris of the construction site where they’ll be living.
Common areas are never complete before the units themselves are complete. Central building systems, such as hallway heat, stair and elevator installation, and window installation are typically ongoing projects that can remain under construction after you have taken possession. Plan on dust and debris being as much a part of your morning routine as that first cup of coffee.
Consider: you have just bought a new condominium at pre-construction prices and the developer wants you to close because your unit is ready. The bank releases the money for your unit when it is considered “substantially complete.” The city has not issued a certificate of occupancy for your purchase because certificates are often waved for new construction.
When you move in, you can almost guarantee that the hallway heating system will be pumping dust all over the place. Some demolition and reconstruction of the exterior roof and walls will take place during the installation of carpeting, sprinklers and elevators. This process circulates large amount of fine dust, which gets pushed beneath your door, and stackable debris on every level.
Workmen routinely lug materials from one floor to another, audibly passing in front of your front door, usually before 7 a.m. Paint buckets, powdery drywall compound, insulation materials, windows and doors, as well as electrical, plumbing and heating equipment can be heard, smelled and felt as they bang, spill and waft through the halls and into your unit.
Like a contestant on “Survivor,” you are expected to endure it all. In addition, elevators and exit stairways may be blocked with debris and equipment, and it’s quite possible the electricians will not have not had time to install the emergency exit signage necessary to light up the exit stairs for safe egress. During this period of construction, there is no “owners association,” so concrete contractors, plumbers and other trades-people are free to come and work at the site whenever they please. It is not uncommon to see drywall hangers and painters on the job at 6 a.m.
Construction accidents sometimes deposit large amounts of water, dust or paint in occupied units as a matter of course. Remember, it was your choice to move in early! Window washers, sealant companies and bricklayers greet you in the morning as their cheery rap-tap-tapping on your bedroom window announces their trades. It’s hard to think of toddlers living in this environment, among the debris and odors that collect during construction.
I interviewed a husband and wife once while they lived in a house “under construction.” Our coffee cups sat on the island countertop as we heard the painter use the upstairs toilet. As the wastewater splashed down from the light fixture, it barely missed our coffee cups, and the wife threatened to move out that afternoon unless the toilet was fixed.
If they can weather the construction storm, “Investor-buyers” who purchase early at new developments stand to make a profit. The gain might be worth their while if they’re willing to pay the price.
“Home buyers,” tend to want a stable neighborhood for their kids. They are typically risk-adverse. They experience the vicissitudes of life, as do we all, but without that gambler’s instinct. Their kids grow up in toxic-free environments in neighborhoods like Old Town, Beverly, Sauganash, Lakewood and Marquette Park.
Are you an investor-buyer or a home buyer? You make your choices, and you pay your prices.
Thomas Corbett is president of Tomacor, Inc. a professional property consulting company specializing in commercial and residential property inspections and expert witness work.