New Home Sales Reps Won't Tell You

Author: Susan Isaacs | The Isaacs Team

DC new home sales and marketing firms may overpromise on settlement dates to promote sales, then underdeliver on timelines and more. Worse, they won’t disclose that you’re never going to settle until you’ve lost time, money and patience.

Get The Information You Need ASAP


New home sales representatives may quote unrealistic projections for project completion and delivery to spur sales, leading to fallout when buyers are stretched to the limit with long-delayed closings. Revised promises, claims of being ‘almost there!’ or ghosting you when you press for answers won’t help when your quoted delivery date comes and goes—four or five times–as rates rise, alternatives become more expensive and your current living situation becomes untenable. And what if the developer decides not to deliver at all? It happens. Buyers assume risk in contracting to purchase pre-construction homes. Here’s how to get informed and minimize loss.

Press For Facts, Reject Hyperbole

It is to your advantage to have as much information as possible if you’re planning to buy a pre-construction new home in Washington DC, and to separate facts from salesspeak.

When development salespeople are vague, unknowledgable, or spouting wishful thinking instead of verifiable intel, you may need to take it upon yourself to flesh out details.

We explain key factors in project progression and suggest points you can research to provide insight into your timeline and delivery date.

Key Factors Likely To Impact Your DC New Condo Delivery Date:

  • Construction timeline
  • Project Compliance FNMA
  • Certificate Of Occupancy
  • Pre-Sale Requirement
  • Your location in the building

New construction timelines are not unbreakable codes, universal mysteries or transcendental equations. Penciling costs and scheduling is part of the initial development process. Sophisticated software and services exist to handle it, and experienced developers already understand the process and potential pitfalls.

Sales & marketing companies review the goalposts when negotiating for the right to sell the project. They read in their senior sales staff, who make it their business to know what the delivery timeline looks like at various stages, if only because settlement is when they’re paid.

When It Gets Iffy:

If the project is just beginning construction and is projected to take 8 months or longer to complete, there are many variables and outside influences that make delivery projection more difficult. If the developer’s financing or underwriting guidelines require sales milestones, it is more difficult still.

The sales team incurs some liability if they quote hard dates that turn out to be way off the mark, so representatives are coached to provide a general timeline, but caution that they can not guarantee it, or be more specific. Accept the explanation, but try to obtain written agreement that you’ll be provided with informative email updates at key points during both the construction and sales processes that impact the delivery timeline.

Begin your own due diligence. Start tracking your timeline with the ‘outside date’ (the contractual deadline by which the developer must complete and deliver or refund your deposit) as a guide. Then, investigate these considerations:

Brian Says

“Susan tapped into her network and went out of her way to get me in on a new construction condo in a popular neighborhood in NW DC long before it even hit the market. I had the floor plans, pricing, and videos of the units before they went public.”

Potential Financing Considerations

The timeline for new condos depends on the size, scope and property attributes of a project. From land purchase to design, zoning/ANC/HPRB and/or review board approvals, permitting, environmental issue mitigation, razing, demolition and the actual constriction process including any design changes, variance needs and inspections, the construction timeline for a new condominium can take anywhere from eight months to five years or more. Developers should know at sales release time if any of these are likely to cause delivery setbacks.

The construction timeline for new condos can also be impacted by unforeseeable occurances such as the Covid pandemic in 2020-21 that slowed supply and construction for several years.



FNMA Pre-Sale Requirements

Even if the condominium construction is completed and units are ready to deliver, the sales team and preferred lender may not be. In many cases, Fannie Mae sets pre-sale requirements the developer must meet before deliveries can commence.

For new or newly converted condo projects at least 50% of the total units in the project or subject legal phase must have been conveyed or be under contract for sale to principal residence or second home purchasers.

  • For a specific legal phase or phases in a new project, at least 50% of the total units in the subject legal phase(s), considered together with all prior legal phases, must have been conveyed or be under contract for sale to principal residence or second home purchasers.
  • For the purposes of this review process, a project consisting of one building cannot have more than one legal phase
  • According to our source (a DVM lender), qualifying contracts don’t have to have passed the right-of-rescission period.


FNMA Pre-Sale Link

Do all units count toward the 50% presale requirement?

  • Doesn’t Count: Investor Units
  • Does Count: IZ Units or ADUs

FNMA Waivers

Your developer and lender may negotiate a waiver to allow 30% pre-sales instead of 50%

For project requirements to be eligible for a review waiver, see B4-2.1-02, Waiver of Project Review .

  • Refer to the Eligibility Matrix for the maximum allowable CLTV and HCLTV ratios. (For example, a mortgage loan for a unit in a PERS-approved project can have a CLTV ratio up to 105% if it meets the Eligibility Matrix and Community Seconds requirements.)
  • The CLTV and HCLTV ratios in this column align with the maximum CLTV and HCLTV ratios that are permitted for projects outside of Florida, as described in B4-2.2-01, Limited Review Process.


B4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo Projects (06/05/2018)


This topic contains information on the Full Review of units in new and newly converted condo projects, including:


The table below provides Fannie Mae’s requirements for the review of the condo project’s legal documents for units in new and newly converted condo projects containing more than four residential units.

Condo Project Legal Document Review Requirements – For Units in New or Newly Converted Condo Projects
Limitations on Ability to Sell/Right of First Refusal

Any right of first refusal in the condo project documents will not adversely impact the rights of a mortgagee or its assignee to:

  • foreclose or take title to a condo unit pursuant to the remedies in the mortgage,
  • accept a deed or assignment in lieu of foreclosure in the event of default by a mortgagor, or
  • sell or lease a unit acquired by the mortgagee or its assignee.
Rights of Condo Mortgagees and Guarantors

The project documents must give the mortgagee and guarantor of the mortgage on any unit in a condo project the right to timely written notice of:

  • any condemnation or casualty loss that affects either a material portion of the project or the unit securing its mortgage;
  • any 60-day delinquency in the payment of assessments or charges owed by the owner of any unit on which it holds the mortgage;
  • a lapse, cancellation, or material modification of any insurance policy maintained by the homeowners’ association; and
  • any proposed action that requires the consent of a specified percentage of mortgagees.
First Mortgagee’s Rights Confirmed No provision of the condo project documents gives a condo unit owner or any other party priority over any rights of the first mortgagee of the condo unit pursuant to its mortgage in the case of payment to the unit owner of insurance proceeds or condemnation awards for losses to or a taking of condo units and/or common elements.
Amendments to Documents

Required provisions related to amendments to project documents are as follow:

  • The project documents must provide that amendments of a material adverse nature to mortgagees be agreed to by mortgagees that represent at least 51% of the votes of unit estates that are subject to mortgages.
  • The project documents must provide for any action to terminate the legal status of the project after substantial destruction or condemnation occurs or for other reasons to be agreed to by mortgagees that represent at least 51% of the votes of the unit estates that are subject to mortgages.
  • The project documents may provide for implied approval to be assumed when a mortgagee fails to submit a response to any written proposal for an amendment within 60 days after it receives proper notice of the proposal, provided the notice was delivered by certified or registered mail, with a return receipt requested. Notwithstanding the foregoing, project documents that were recorded prior to August 23, 2007, may provide for implied approval to be assumed when a mortgagee fails to submit a response to any written proposal for an amendment within 30 days after it receives proper notice of the proposal, provided the notice was delivered by certified or registered mail, with a return receipt requested.


Full Review Requirements – For Units in New or Newly Converted Condo Projects
The project, or the subject legal phase, must be “substantially complete” unless other completion arrangements have been approved by Fannie Mae through the PERS review process.There may not be more than one legal phase per building.

“Substantially complete” means that

  • a certificate of occupancy or other substantially similar document has been issued by the applicable governmental agency for the project or subject phase; and
  • all the units and buildings in the legal phase in which the unit securing the mortgage is located are complete, subject to the installation of buyer selection items, such as appliances.

Note: Fannie Mae does not require the installation of typical buyer selection items such as appliances, floor coverings, counter tops, or light fixtures that are common and customary for the market, although buyer selections that involve the modification of a unit floor plan must be complete. Lenders are expected to obtain appropriate documentation to verify that all buyer selection items for the unit being financed are properly installed prior to closing.

At least 50% of the total units in the project or subject legal phase must have been conveyed or be under contract for sale to principal residence or second home purchasers.

  • For a specific legal phase or phases in a new project, at least 50% of the total units in the subject legal phase(s), considered together with all prior legal phases, must have been conveyed or be under contract for sale to principal residence or second home purchasers.
  • For the purposes of this review process, a project consisting of one building cannot have more than one legal phase.
Individual units in new condo projects must be available for immediate occupancy at the time of loan closing. If the project is part of a larger development, and the unit owners are required to pay monthly assessments of more than $50 to a separate master association for that development, lenders must review the overall development plan for the master association to evaluate the acceptability of the project. The overall development plan of the project must be reviewed and the following must be acceptable:

  • consistency of future and existing improvements,
  • time limitations for expansion, and
  • reciprocal easements between legal phases.
For projects (or the subject legal phase) that are only substantially complete rather than 100% complete, lenders must determine that acceptable completion assurance arrangements that guarantee the future completion of all project facilities, common elements, and limited common elements have been provided. These assurance arrangements may include

  • cash deposits,
  • letters of credit,
  • assignments of certificates of deposit, or
  • assignments of other assets that can be easily converted to cash.

Similar arrangements must be provided to support assurances against construction and structural defects. The assurances must

  • protect each unit against defects that become apparent within one year from the date of its settlement, and
  • cover all common facilities for one year from the date on which units that represent at least 60% of the votes in the HOA have been transferred.
The developer or sponsor should provide for and promote the unit owners’ early participation in the management of the project. The project must meet the condo project legal document requirements in the following section.

Certificate of Occupancy



For new buildings, there are three (3) CofO subsets:

  • Conditional
  • Completion of core and shell
  • Establishment of a new occupancy

New Construction, Use Change, Occupant Load Change:

  • If a new building or addition is constructed or there is a change of use, a building permit application with plans is required to be approved, constructed and inspected prior to the approval of a C of O.
  • A building permit may also be required to change the occupant load, as determined by the Permit Operations Division.
  • C of O for a new construction and load occupancy change (over 5,000 square feet) will be reviewed by District of Energy and Environment (DOEE) Stormwater Management. Failure to request a final inspection of storm water management facilities, and submittal of as-built plans of the completed storm water facility, may result in the denial of the C of O application.
  • Revision: If a typographical error was made in a previously issued C of O, the applicant should apply for a revision to the issued C of O. Note that no substantive changes to the use or occupancy are permitted as a revision to an issued C of O.
  • Temporary: For use of a building or outdoor event on a temporary basis. Conditions may be imposed as necessary and will include an expiration date. A building permit may be required prior to the issuance of a temporary C of O.
  • Completion of Core and Shell: A means to recognize that the core and shell of a building have been substantially and materially completed in accordance with the DC Construction Codes. It does not allow occupancy of a building. A core and shell must be obtained prior to a Conditional Certificate of Occupancy for a new building.
  • Conditional Occupancy: A conditional certificate of occupancy may be issued for part of the building before completion of the entire work covered by the building permit.
  • Review the Issuance of Conditional Certificates of Occupancy Guidelines and related checklist for more information about the application submission, review and approval process.

Other Factors



Developers generally deliver from the ground floor up. If you’re on the top floor of a new condo building,  you can expect to be at the back of the queue for walk-through dates and settlements. Some factors can change this; for instance, buyers who may be traveling internationally during the time they were to settle in order, or those with urgent need for another reason, may be moved ahead in the schedule.

Project Modification



On occasion, a developer may decide to change course and convert the project from a for-sale property to a for-lease property. The developer is likely to keep quiet about this intention as they complete the necessary regulatory steps. Even the sales and marketing firm may be kept in the dark.

In this event, the developer enacts the section of the contract commonly known as ‘Termination Option,’ notifies the sales and marketing team of the decision, requests that they cancel sales and withdraw active listings on the MLS. Buyers are compensated only as the contract section states, along with the release of their Earnest Money Deposit. This is a worst-case scenario for buyers, who may have been under contract for a year or more and find themselves in a completely different market when they are forced to start their home search anew, and at a loss for all mortgage and inspection-related fees.

So, if sales seem to be lagging, sales representatives are keeping mum, walk-throughs and inspections aren’t being scheduled, and the developer is not as communicative and/or productive as would be expected when a building nears completion, start asking questions and digging into SCOUT to view unusual activity such as additional zoning reviews, etc.

An example of this is the Tribeca Condominiums (dba prior to termination), which had just met pre-sale requirements in late 2021 but developers decided to convert the project to rental apartments. All buyers, who had been under contract for as long as 13 months, had contracts canceled. They saw mortgage interest rates rise four times during that period, home prices rose, and also they lost money on inspections and lender fees. Losses can be significant and developers do not compensate for them.

This can also happen in the reverse, when the developers of a for-lease project decide to convert it to condos, as occured in 2003 at Gallery Place in downtown DC. The 192 unit complex was well into construction above the Metro station in Chinatown when developers decided to make the switch due to a weakening rental market and glut of new rental projects planned for the neighborhood.

Mixed projects with one association and significant retail space can also pose a warrantability problem.

Before You Sign



Arm yourself with information as early as possible in the process. The sales team is never so motivated to provide answers as they are when they’re trying to get a contract signed. Key: Get responses in writing. Have your agent email a list to the sales team and ask that the developer reply in writing:

  • Are the project units all market rate? If not, how many ADU/IZ units are there and how/when will they be sold? Will a different sales team be handling these sales? Will those sales count toward the developer’s financing requirements, if any?
  • Do you cap investor purchases? If so, what’s the cap? How many investor units are sold todate?
  • What percentage of sales, if any, must be achieved to deliver units? Did the developer request and receive an FNMA pre-sales requirement waiver? (*Confirm the developer’s response with the project’s preferred lender, also. You may get different replies!) Confirm the number of units already sold that qualify for the pre-sale requirement. Will the sales team provide written updates on this as requested?
  • What is the target sales pace (number of units to be sold monthly/quarterly)?
  • If it’s necessary to lower prices to spur sales pace, will existing contract sales prices be adjusted down commensurately, or other compensation be provided?
  • Are there any environmental, supply chain, financing, approval or other issues now affecting materials delivery and/or construction? If so, will they alter the delivery timeline?
  • How many projects does the developer currently have in development?
  • When do you expect to have condo documents available to buyers?
  • What is the term of your contractual right-of-rescission period?
  • What is the contractual period the developer has to complete the project and to deliver units? Are those deadlines different from one another?
  • What is the possibility that the developer will convert the project to for-lease if sales don’t go as projected?
  • What is the compensation offered buyers if the developer doesn’t deliver? Is it negotiable?


With few exceptions, you should expect that the timeline for delivery of your new construction home will be longer (sometimes much longer) than projected by the sales team when you purchase.

This expectation will allow you to remain calm through the construction process and plan accordingly for  rate locks, moving arrangements and rental extensions.


We compile this information to make our buyers aware and to provide an easy review, we didn’t write it. If you have questions about FNMA rules & regs pertaining to new condo pre-sale requirements, please contact your lender. Also be aware that this information may be incomplete or updated by FNMA at any time, and that there is no guarantee the latest version of requirements is displayed here.



1313 14th St
NW DC 20005

error: This content is copyrighted and protected