One of the differences between buying a resale home and buying new construction is the contract used. The Multi-Board Residential Real Estate Contract used by Chicago area Realtors for resale properties provides several contingencies for buyers including attorney review, inspection, homeowners insurance and mortgage contingencies.
New home contracts are typically unique to each developer and written by their attorneys to their advantage. A real estate attorney for a client of mine recently tried to negotiate a mortgage contingency for a new condo purchase in the South Loop, but the developer refused. My client was confident she would get financing and agreed to go ahead with the purchase. If for any reason, she can’t get a mortgage, she’ll lose her earnest money.
I worked with a couple last fall who made an offer on a new condo in Uptown contingent on selling their condo in Lakeview. The developer would only agree, if the couple was willing to forfeit their earnest money should they not be able to sell their condo within a month. The couple wisely withdrew their offer. The risk was too great.
Minimize your risk when buying a new home. Use a Realtor to help point out the risks with developer contracts. If you are considering buying a new home in a specific area, contact me before you visit sales offices. I’ll be glad to refer you to a Realtor who has experience helping buyers with new construction in that area. If the Realtor accompanies you on your first visit to a sales office, the developer will typically cover the Realtor’s compensation.
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