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Comprehensive Summaries of
DC's Newest Condo Developments

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By Neighborhood

Buying Pre-Construction Condos The Process & The Pitfalls
Buying at Pre-Construction (click on the subjects below to view details):
• Price
• Potential Appreciation
• Ongoing Appreciation
• Supply and Demand
• Earnest Check Deposit
• Closing Costs

When a developer plans a new development of any nature, the firm has many hurdles to overcome, not the least of which is financial. Whether the developer is a major group or a local contractor, financial backers gauge interest in a project based on pre-sale reservations. Both commercial lenders and private investors ascertain the buying public’s actual level of interest prior to funding a project. With adequate interest, funding has a strong potential for moving forward. This can translate into potential savings for buyers who are willing to reserve a unit or make a purchase at this earliest stage.
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In past years, the "first day" prices were lower than the price for subsequent purchasers. This is still sometimes the case, but nothing is for certain; there are always pros and cons to buying early. Of course, as the project progresses from imagination to reality, interest by end-users can either increase or decrease...depending on the other factors involved.
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Many projects are developed in phases, especially in condo towers. For example, the developer will build the first tower, followed by a second, and sometimes a third or even fourth. Of course, the first tower prices tend toward entry level and each new tower shows an increase, in some cases significant.

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The economic rule of supply and demand certainly has been coming into play with Washington DC real estate, especially with those properties that boast the most desirable locations. Demand fluctuates a great deal, which is why you need to make sure you work with an informed real estate professional who can talk to you about all the factors in play for your building of choice.
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As a buyer, you will need to "secure" your residence with an earnest check deposit. The amount can vary quite -- anywhere from $5K or under to 5-10% of the purchase price. If you decide the purchase is not for you within the first 15 days, the earnest check deposit fee is refunded in full. In other words, during the 15 day rescission period, you have nothing to lose!
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Whether purchasing a new construction single family home, town home, or condo, you - unless otherwise negotiated - will be responsible to pay for unless your closing costs at settlement. These are all expenses that cover the fees associated with the transfer of property ownership, fees paid to state and local governments, and the costs of obtaining a mortgage loan. Some of these fees are negotiable, and could be paid by either the buyer or the seller. Some costs are one-time fees (non-recurring closing costs, such as title search, termite inspection, appraisal, etc.); while other fees such as homeowner's insurance or property taxes are things you will expect to continue to pay on a regular basis as a homeowner.

As part of the loan selection process, your mortgage consultant should be giving you some idea of how much money you should have in reserve to cover your end of these costs. The Real Estate Settlement Procedures Act (RESPA) requires the lender to provide you with a Good Faith Estimate within three days of the submission of your loan application.

RESPA also states that as a home buyer, you have the legal right to request a copy of the HUD-1 Settlement Statement 24 hours before your closing is scheduled. The HUD-1 clearly defines all closing costs, including those that are to be paid by the buyer and the seller. It's a good idea to have both of these forms before your closing so you can compare the estimated costs to the actual costs before you finalize your transaction.
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Rachel Valentino. Condo Washington DC, Condo in DC, Condo for Sale in Washington DC, DC Condo for Sale, Luxury Condo Washington DC, DC Real Estate,  DC Real Estate for sale, Georgetown DC Real Estate, DC Real Estate Agent
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