“It almost pays you to finish the suites off because if you’re selling from a little satellite somewhere you don’t get the benefit of seeing the finishes [that were in] the model,” explains Dan Flomen, director of sales at Empire Communities’ highrise division. “You’re creating a competitor to a resale in the area, except that it’s a brand new unit that has never been lived in.”
Another benefit of a wait-and-see attitude is that the buy is cheaper. Dominic Tompa, broker of record at Citylife Realty that is representing Daniels’ The Bayview, says inventory units usually require only a 5% down payment while pre-construction sales call for 15% to 20%.
Mr. Crignano says it is rare that investors buy inventory units. Rather, they buy at the beginning of a project to make money. As he puts it: “The longer it takes for delivery, the better it is for the investor because time is on their side with respect for appreciation and value.” Still, there are cases where an investor “feels strongly about the project” and has someone lined up to rent the unit so will buy a remaining suite. Although contracts state that investors cannot list their units for sale until actual closing “because we anticipate having inventory and we want to be able to sell our inventory before purchasers sell their inventory,” says Mr. Crignano, he admits he might allow sales “if we’re out of that unit type.” It is not standard policy but depends on the situation, he explains.
So, is it worth waiting until the last minute to cash in on the leftovers? While it might mean compromising on layout and floor and being prepared to move in almost immediately, it could make for a great bargain. Look for promotions, says Mr. Mass, and be sure to ask for better terms and larger discounts.
“As long as they qualify and can meet all of the requirements of the builder, which is typically a fully approved mortgage, there’s a good chance the builder will negotiate with them,” he says. “If a builder is selling a $600,000 unit, giving up an extra three, four, $5,000 is not going to make a difference to them anyway. They’re happy to make the sale.”