ALL THAT GLITTERS IS NOT GOLD
Are you considering buying a pre-construction property as your next home?
It's an exciting endeavour, and the prospect of buying a home that’s shiny and new can be very enticing. However, all that glitters is not gold, and this can be true about real estate. It's important to understand the pros and cons before making a decision. Let’s explore the advantages and disadvantages of buying pre-construction, where we’ll give you valuable insights to help you make an informed decision.
Pros of Buying Pre-Construction:
Customization and Personalization:
One of the key advantages of buying pre-construction is the ability to customize and personalize your new home. You have the opportunity to select finishes, fixtures, and materials that align with your personal style and preferences. In some cases, you may even be able to alter the configuration of the living space to better suit your needs. This level of customization ensures that your home reflects your unique taste and lifestyle.
Potential for Appreciation in Value:
Buying pre-construction can offer the potential for a fast return on your investment. Sometimes, the earlier you commit, the better, as many developers, especially in multi-unit projects, will increase prices as units sell. As the construction progresses and the development nears completion, the market value of your property may have already increased. This can be advantageous if you plan to sell in the future or use the property as an investment. Certain investors may even choose to assign their pre-construction purchase to another buyer before completion if there is enough profit to be made.Old vs. New:
When shopping for an older home, many buyers are discouraged by the often overwhelming laundry-list of maintenance and repairs. The roof needs replacing, the French drains aren’t functioning properly, or the furnace is reaching the end of its life. Maintaining an older home can be stressful and it’s not for everyone. A newly built house or condo offers a break from most of these worries for at least the first 5-10 years of ownership. Furthermore, newly built homes come with modern features and energy-efficient technologies. From smart-home capabilities to energy-saving appliances and building materials, buying pre-construction allows you to enjoy the benefits of contemporary living and potentially reduce long-term energy costs.
Warranties and Guarantees:
Finally, with new construction, there are warranty obligations that commit the builder to many guarantees. It’s important to note, however, that not all newly built homes are covered. It is the buyer’s responsibility to perform their own due diligence. As always, we recommend hiring a broker to assist. Please see the link below for greater detail: https://www.garantie.gouv.qc.ca/en/
Cons of Buying Pre-Construction:
There are several additional costs associated with buying new construction. Often the biggest up-front expense is a hefty deposit, which can be anywhere from 10-20% of the purchase price and is usually non-refundable. In addition to this deposit, there can be incremental payments due at various stages of construction, which help the developer to finance the project. Then there are the taxes! Unlike a pre-owned property, new builds are subject to GST and PST, which means a cool 15% added to the purchase price for those of us in La Belle Province. Furthermore, some developers include sneaky fine print in their purchase contracts, which stipulate that if construction costs increase after you sign your agreement, the price may be adjusted accordingly. This is why we encourage all buyers to seek professional advice and representation, rather than relying on the developer’s inside sales team, who may not have your best interests at heart.
One of the main downsides of buying pre-construction is the uncertainty surrounding the delivery timeline. Various factors such as weather conditions, labour shortages, supply-chain disruptions, economic factors, municipal bureaucracy, or even global pandemics can cause construction delays. It's important to be prepared for the possibility of extended timelines and be able to adjust your plans accordingly.
Lack of Immediate Possession:
Another potential downside to a newly built home is that you won't have immediate or reasonably fast possession, as you would with an older home, even after you’ve forked over thousands of dollars up front. Depending on the stage of construction, you may need to wait several months, or even years, before you can move in. This can be challenging if you have a specific moving timeline, and especially if you need to sell your existing home and want to time the moves accordingly.
Limited Visual Representation:
Unlike purchasing a re-sale property, buying pre-construction means you're relying on the developer's plans, renderings, and model units to visualize your future home. While these representations offer a general idea, they may not fully capture the actual look and feel of the finished product. It's important to carefully review the developer's track record and seek clarification on any uncertainties before proceeding.
At TEAM BROADY, you will work with experienced real estate professionals who understand the ins and outs of buying pre-construction and can help you navigate any challenges to ensure a smooth buying experience. Contact us today at 514-613-2988 or by email email@example.com to assist you in finding the perfect property that meets your needs and aspirations.