A second 10% downpayment is required at groundbreaking.
(Purchasing post-groundbreaking means a 20% good faith deposit, upfront.)
Of that 20% earnest money deposit (escrow), the developer can use half of it toward construction costs.
Prices often increase once construction begins… and then again upon project completion … so buying pre-construction can be financial incentive for investors.
In a market “upswing” – locking in a pre-construction price can be smart move.
One thing to consider though is that any lender financing is secured just prior to closing … rather than at the time of the initial purchase agreement.
Contacts are not generally contingent upon the buyer being able to obtain financing.
Interest rates are locked in near the actual closing date.