#1-Unless you have to, don't buy new construction. As stated below, you're paying both mortgage and transfer taxes which can literally be tens of thousands of dollars.
#2-You're also likely paying the fee of the Sellers attorney. The fees are ABSURD for sponsors attorney and can range up to $3,000(I'm an attorney and I am saying that is literally absurd).
#3-You don't know the completion date of the new construction. Typically there are serious issues surrounding Declarations with the City and other documents which need to be filed. Good luck waiting on the Department of Buildings while your money sits in escrow.
#4-You don't know the type of materials they will use. If the model apt has granite countertops, that doesn't mean you will. A little trick thats put into every offering plan is that the builder is required to use materials of similar or comparable quality. Is granite the same as limestone....is stainless steel the same as non stainless steel? Do you even want to go down that road?
#5-Tax savings are overstated. The price is usually much higher to purchase new construction anyway so any tax savings you were contemplating are usually eaten up by the purchase price.
#6-Inflexibility with negotiations- I am representing a purchaser at a brand new building in downtown Brooklyn and the sponsors attorney said that the contract is take it or leave it...no changes. You wont have that problem buying something that is not new construction.
There are many other issues to deal with here but the jist is dont buy it unless you're REALLY in love with it.
You've had a few answers, but let me put my 2 cents in.
1. The main difference is that frequently with new construction the buyer pays the deed transfer tax. The is $4 per thousand of the sale price.
2. New houses can and do settle. The most common result is spider like cracks above the upper door jambs going out at a 45 degree angle. Usually a builder will come back near the end of the first year and address these problems. In NY a builder must provide a 1 year warrantee on the whole house and a 10 year warrantee on the the structure.
3. Don't know, out of my area.
4. If the house is not built yet make sure everything that is included is clearly spelled out in the contract. Don't even assume that there is a sidewalk to the front door. Is there going to be grass planted in the yard? How about plantings? Exactly where will the hardwood floors be installed? Is the hardwood select, #1 or #2 grade? How many coats of finish? You get my drift. Spell out EVERYTHING!
I hope this helps. The cost many people fail to include in their purchase is the outdoor landscaping. A nice design with nice plants can add a lot to your overall cost. It can also add substantially to the value and enjoyment of a new home.
Other things to beware: exactly what is and is not included in the cost? What will your allowances cover? What kind of landscaping? Sod in front, or all around? ? Driveway/walkway paving? Fencing? A deck, or just a header for one? Patio(s)? You can easily run up costs by upgrading and thus exceeding allowances for light fixtures, flooring, number of paint colors, door hardware - the list is as long as the number of parts in a house. The more detailed your specifications (right down to part numbers), the more accurate your builder's estimate can be.
Enjoy the process - and best of luck with your brand new home!
1) Figure 8% for closing costs on new construction in NYC. Our place was a new two family. We walked into closing with 45k down and walked out after plunking 35k down on closing costs. It was disgusting, never again, I tell you. Of course we didn't expect that much of a shave, but live and learn. So 35/450 is 7.77777. I don't know what all the fees were, but higher closing costs in NYC for new construction is the standard operating proceedure, so now I can tell you with hindsight buy something recently renovated, not new. Your bank account will thank you.
2) You usually get like a 1-3 year warranty on a new house. After that, good luck.
3) Tax abatement program ended in I think July of 07, which means the foundation had to be in by then. Not in = no tax abatement, but that is ok since the price is lower. (Its usually built into the price.)
4) This is the BIG BIG ONE:
You are buying new construction in FAR ROCKAWAY!!! Why not spend a little more on the price, save a lot on the closing costs, and buy a nearly new one in Rockaway Park, anything anything anything above 98th street. Ok, maybe you grew up in FAR ROCKAWAY, but doesn't one tire of endless rows of dreary crime ridden projects? Our place that we bought is on Beach 101st, but you can find a bunch of homes for sale built within the last 5-10 years with good quality construction in Rockaway Park. If you want to be near family, you can always hop on the Q22, but for the kind of money you are about to layout, you will be wasting it buying in Far Rockaway.
Ok, maybe you think that I am being racist or unrealistic. My bet is that you are buying a two family, maybe a three. Go right now, before anything else, on CRAIGLIST and see how many places go BEGGING to be rented in Far Rockaway, and how few there are in Rockaway Park, and how quickly they go. Yeah sure, you might get a good "price" for your property, but you will overpay in terms of closing costs like we did, and then be hard pressed to find tenants to fill it. We were just lucky on that count, because we had many decent people from Far Rockaway find our place because they wanted better schools for their kids, but still be near family. We eventually got 1650 for the 3 bedroom, 2 bath, and 1600 for the 2 bedroom, 2 bath with back yard. Ask yourself, in FAR Rockaway, will you be able to get anywhere near these rents to sustain your investment? I seriously doubt it, especially with all the competition on Craiglist and the fact that those projects that clutter up Far Rockaway are going nowhere soon.
But considering that we paid like what, an extra 16,000 at closing for a 5,000 job, we still lost out. Plus, we only found out about the problem afterwards, so I still had to go down there, cover the crap, and chlorox the heck out of everything. So don't buy new construction, if anything I would pick up something maybe a year or two old, from someone whose hurting after buying new construction.