You see the skyline of San Francisco changing every day. New high rise condominium complexes whose shiny glass exteriors reflect the fog back at you. Beautiful buildings with stunning views, European style kitchens, radiant heat, Cat 5 wiring, ipod docking stations with integrated speakers, pools, concierges, spas, wine cellars, restaurants, dog walkers, and amenities you never realized you needed so badly; until now. Seems easy enough to purchase your new home – walk into the sales office and you’ll be introduced to a charming sales representative, she’ll show you your options, have you sign a contract (or a reservation) and then you hand over a deposit of $3,000-5000 to hold your jewel-box condo. There are thousands of them all over the city, why bring a buyer’s real estate agent? You think you can negotiate a better deal with out a Realtor representing you, right? Well…
First, the contract you sign was created by the developer’s attorneys to protect the builder’s best interests, not yours. All new construction contracts are reviewed and approved by the state but that doesn't mean they are fair or have the built-in safeguards that might be found in our SFAR Contract. You need to have a Realtor accompany to you the development the first time you decide to visit it. You’ll both register and then the Realtor can represent you going forward if you decide to purchase. So, what are we looking for and how are we protecting your interests?
Number one, we’ll take the contract away with us, review it and discuss it with our brokers if there is any unusual language. We’ll point out to you possible problems and suggest solutions. For instance, all of the following could give you a headache or cause you to spend thousands in litigation, depending on the circumstance.
1) Is the contract written with a “hard earnest money” deposit? That means after a certain date your deposit is non-refundable, regardless of the situation.
2) Does the contract allow for a “punch list” inspection prior to the close of escrow?
3) Does your inspection contingency allow you to release yourself from any financial obligation to purchase the property and will your earnest deposit be fully refunded if you are not satisfied with your inspection results?
4) Are there passive contingencies concerning automatic approval, unless you object by a certain date?
5) Does the contract assume the buyer is going to pay the transfer tax (in Northern California typically the seller pays the transfer tax)?
6) What about that much coveted parking spot – is it leased, exclusive use, or deeded? And do you truly know the difference?
7) What are your rights to your – pets, storage, common space?
8) If it is a “mixed use” development does the contract specifically address how conflicts should be resolved? Are you truly wondering, “What conflicts could I have with the Three Star restaurant eight floors beneath me?” Noise, crowds, smells, deliveries at 4am, and the list goes on…
9) Most new contracts require that you acknowledge receipt of a list of documents (CC&R’s, Certificate of Final Completion, Title report, budget, etc) even though they are not completed and not in the disclosure package yet. Your agent will advise you not to sign for documents you haven’t received.
10) Is there a caveat for price decreases? For example, if the developer lowers the price on all the units by 10%, but you already signed a contract at a higher price, can you get the new reduced price?
11) Do you know about Senate Bill 800 and how that protects your interests in new construction?
12) Is there a final walkthrough provision in the contract?
13) Lastly, has the “white paper” been approved by the DRE? You can’t close without it, so it’s good to know when your building is “yellow”, “pink” or “white”.
These are just a few of the reasons why you need and want proper representation. An experienced Zephyr Soma Realtor can define much of the above real estate jargon and walk you through the process; so your silk purse doesn’t turn into a sow’s ear.
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