Why you may want to wait when the project is complete

Considering the courts are flooded with complaints against developers and buyers end up on the road every Sunday protesting late delivery of their homes, there are plenty of reasons to make your purchase after the projects are complete. 

Sometimes, condos don't actually end up getting built. One of the first steps a developer takes when launching a condo is getting the offering plan—the document that spells out the specifics of a project—approved by the authority, a lengthy revision and approvals process that must happen before a developer can start making deals with purchasers. But a developer is only required to build as planned once the offering plan is cleared. But if the offering plan is never cleared, the developer may never be able to close. So the apartment you expected to buy won't get built, and it could take months or even years to get your deposit back.

• You can't always get what you want—and may not

You're looking to live in a building with other owners, not a rental, right? It's possible you'll end up in one anyway, by default, should you buy early. The more units that are sold, the more insurance you have that the development will take shape the way you expect. If only half of the units are taken, for example, a developer could decide to hold onto them, especially if sales are flagging. (This is a particularly widespread strategy these days when developers across the country are unable to sell the condos they were building.) Also, if a developer plans to hang on to the condos, it may be more difficult for buyers to get home loans since banks are often wary of issuing loans in buildings where investors own a large portion of the units. A large number of investors can lead to negative image of the project as their interests may not line up with those of the individual condo owners. They could shoot down important votes to keep the building running well [and] add needed improvements​. They could decide not to pay common charges which would negatively affect the finances of the condominium, obviously.​

• You'll know what you're buying

Buying later in the sales process goes hand in hand with buying later in the construction process, which means that you'll have a better idea of what the building and apartment actually look like, rather than having to imagine them from floor plans or mock-ups in an off-site sales office. If you buy off a floor plan and you don’t like it for whatever reason, you can’t do anything about it because you’re liable for the deposit even if you’re not happy with the final product. Of course, developers are required to meet certain construction standards and to follow through on the specifics set out in the offering plan. But there’s enough wiggle room that you could be disappointed if you buy well before construction starts. If you buy later, you have more options. Even if you can’t tour the apartment itself, you may be able to see a comparable layout on a lower floor, check out the lobby, walk through a model unit in the building, or even have a home inspector check the roof and windows for signs of seepage etc.

• You'll get (almost) instant gratification

If you sign a deal before construction has started, it could easily take three years to close on your purchase and move in. (Aside from constructing the building, developers have to get a slew of approvals before they can start with closings, all of which take time.) But if you’re buying when the project is done, you’ll be able to move in relatively quickly (fingers crossed), and save yourself some planning-related headaches.

• Cheaper and easier financing options could pop up later on

In new developments, most builders line up a “preferred lender”—a bank that takes on the risk of issuing mortgages for condos that aren’t built yet—​so that early buyers can get home loans. The downside for borrowers is that the lack of competition means steeper interest rates. But the more units that are sold, the more banks will be willing to lend; that means more competition and lower rates for you. In fact, by the time a building is 70 percent sold, pretty much any bank will be willing to lend there. That said, there are plenty of reasons to delay your purchase:

• You'll pay more

Though buying towards the end of a sales process removes a lot of the risks of buying in a new development (though, of course, not the possibility that construction defects will surface after you move in), there’s one major drawback: You pay for that security. For developers, the rule of thumb ​is to raise prices as sales pick up and the building rises. Indeed, developers often look at the first few apartments to hit the market as “loss leaders,” meaning that they’re offered at something like a teaser rate to generate interest in the building. While the timing and extent of price increases will vary from project to project, generally developers hike prices on unit types that are selling the fastest. So, for example, if three-bedrooms are flying off the shelves or if buyers are drawn to one type of layout, prices on those apartments might go up. What starts as a building with prices of Rs 4,000 a square foot could eventually cost Rs 4,800 a square foot, with the ground floor flats and  penthouses going on sale at the end for even more.

• You may not get the apartment you want

It almost goes without saying that if you’re buying close to when a building is sold out, you’ll have fewer apartments to choose from. But keep in mind also that developers tend to save their prized apartments—the penthouses, corner units and the like—for last. They want to get most money for these coveted places, and that means putting them on the market after all the prices increases have taken effect, and when a buyer with cash to burn can see the building, if not the apartment itself. The pro is that the best units are saved for last. The con is you’re probably going to pay more than anyone else in the building. By that time, as well, if it’s the best units that are left, oftentimes the [developer] has no incentive to negotiate. If you’re in the market for a penthouse, that means you’ll probably have no option but to buy towards the end of the sales process. But if your budget is more along the lines of a studio, or if you have your heart set on a high floor with a skyline view, you may be out of luck by the time sales are almost over.