As the housing market has cooled, the developer’s mindset has changed. Rather than construct new developments quickly and wait for the buyers to flood in, more developers are relying on preconstruction sales to determine whether or not to break ground.

Here’s some advice for any buyer contemplating a preconstruction purchase:
Negotiate an exit strategy in your sales contract, especially as lead times for construction grow longer in some markets. For example, state that if the builder doesn’t break ground by a certain day, you can get out of the contract.
If you’re deposit money is going to sit there for an extended period, as the developer to pay interest.
Get in writing what changes that can be made to the project once the sales contract is signed. Finishes and appliances might not be set in stone at the time you sign the deal.
Try to find out the current state of the local market and gauge whether the developer is offering incentives to lure new buyers – which, though attractive to buyers in the short term, can put a downward pressure on prices.

Source: The New York Times, Amy Gunderson (04/04/2007)