Buyers who purchase apartments in unfinished developments have more information at their fingertips than ever before, with third-party listing sites offering instant access to online regulatory filings and other public records.
“Buyers are equipped as never before knowing practically every aspect of a property before having to commit,” said Erin Boisson Aries. “Everything—from airplane tickets to cars, to art, to disposable household goods—is purchased with fair-market value readily ascertainable, with a few swipes on their phone.”
But some developers, feeling more vulnerable to legal action if their projects don’t meet expectations, have responded to greater consumer scrutiny with obfuscation, withholding information where legally possible or padding it with disclaimers and wordiness. Nevertheless, buyers and their advocates can leverage abundant public info—and even the lack thereof—to identify the best home that both suits their lifestyle and is a safe investment.
The depth and kinds of information developers disclose to the public vary greatly among states and countries, depending on the local laws and standard industry practices.
No matter where you’re house hunting, however, become familiar with what most developers choose to disclose about their unfinished projects and let that standard be a guide. A developer that obscures significantly more information about a building than its peers—such as availabilities, the number of units already in contract and at least some prices—should throw up a red flag.
New York City
New York state law requires developers to file a novel-sized document called an offering plan detailing the building, its common spaces, each unit and its specifications.
Buyers should read the offering plan carefully for disclaimers on square footage, ceiling heights and other physical attributes, which could be subject to a 5% variance or more. Developers can also severely underestimate property taxes for each unit by thousands if not tens of thousands of dollars by qualifying their data as subject to change, Ms. Olshan said.
In most cases, developers are not required to disclose a schedule of which units are in contract and negotiated prices, but some developers do through the multiple listing service and their eagerness to report such activity early on is often a good sign.