How do the stages influence the price?

Properties on plans or pre-construction go through different stages. As construction progresses, prices tend to increase, as do deposits. However, not all developments have the same structure and many have incentives or attractions during the different stages of construction.

  • 1st. stage is known as “reservation” in which the intention to acquire a “style” of unit in a “price range” is expressed and reserves with only 10%.
  • 2nd. stage is known as “contract” in which a specific unit is reserved with a specific price. With the signing of this contract and a deposit equivalent to 20%, the 15 days of cancellation begin to count.
  • 3rd. stage, known as “ground breaking”, where construction begins and another deposit is requested.
  • 4th. stage is usually when reaching the middle of the building (exteriors only)
  • 5th. This stage is usually at the end of the top floor (exterior only)
  • 6th. stage, is the closing of the transaction.

Terms you should know before buying pre-construction

1.-Unilateral Contract
The Developer (Developer) is the one who writes the contract and establishes all the rules, the buyer does not have the right to make any changes.

2.-Cancellation period
Within this period (15 days from the signing of the contract), the buyer has the right (according to Florida law) to cancel the contract if he does not agree with any of the clauses of the contract, without penalty.

3.-It is not transferable
The contract is made in the name of the buyer or in the name of a company where this buyer is 100% owner. The property cannot be sold or transferred to a third person before the work is finished and the deed of the property is executed, unless you have the consent of the Developer.

4.-Payment method
In most projects a payment standard is followed, which may be different in some developments.

  • 10% upon signing the contract
  • 10% between 60 -90 days after the first deposit
  • 10% at start of construction
  • 20% halfway through the construction of the building (30th floor if it has 60 floors)
  • 50% the day of the deed of the property (closing day)

5.-Financing without contingency
If for the final payment of the project the buyer requested a loan and it is not granted at the time of closing, and he does not have the cash, the developer has the right to keep all the money delivered to date. In practice, the Developer suggests different lenders to facilitate this process.

6.-Breach of contract by the Developer
If there were to be a breach by the Developer (Developer), the latter must notify the buyers in writing, having a period of 7 days to solve it, if it were not fulfilled, the buyers would have every right to claim their deposit with interest.

7.-Delivery time
It can be from 2 to 3 years if the purchase contract is signed at the beginning of the project, this time can be less depending on the stage of the project at the time of purchase. The finishes with which the units are delivered also influence the delivery time.

8.-Finishes
It is important to make sure of the delivery conditions as this significantly influences the final investment; however, the “standard” in South Florida is for projects to be delivered, like this:

  • “Decorator ready”, which is known as “ready to decorate” and means that it is delivered without floors and without paint.
  • equipped with electrical appliances
  • equipped with kitchen cabinets
  • Full bathrooms with and without floors.

9.-How to estimate closing costs when buying a pre-construction?
The expenses to be paid at the time the deed of the property is made vary if the transaction is cash or financed:

    • Cash between 3% and 4% of the purchase price:
      • Developer’s Fee 1.75% to 2%
      • Contribution to the 2-month condominium
      • Documentation stamps on transfer
      • Owner’s Insurance Policy Title
      • Other transfer costs
    • Financed between 6% and 7% of the purchase price:
      • Developer’s Fee 1.75% to 2%
      • Contribution to the 2-month condominium
      • Documentation stamps on transfer
      • Owner’s Insurance Policy Title
      • Registration and issuance of mortgage
      • Lender commission
      • Other transfer costs