Buying a New Condo

 

Condo Plan           

You have probably heard the ads on the radio the newspaper and on-line with lots of hype on a new building release inviting you to register to purchase a unit. 

The truth is, the majority of units, and undoubtedly the best units are sold at the Broker event which is held before any remaining units go on the market. 

Most big name builders such as Amacon, Daniels, Monarch, and Empire all give Agents and their guests, the first chance to purchase units at these events. 

To ensure the success of these events, the builder generally offers a generous discount.  When the sales office opens to the public, not only are the best units already gone but pricing has already gone up.  

 Food for Thought

While buying new is great for buyers and investors who have time to wait for their building to be completed here are some things you need to consider when deciding to purchase in a new construction building:

While the builder may give a tentative date for possession, delays do occur. 

  • If you currently own another home you need to consider what the market will be like in a year or two when the building is scheduled for completion. Will it take longer than 3 months to sell?
  •  If I sell my house even with a long possession and the building is delayed, where will I live while I wait for my unit to close?
  •  If I wait to sell my house until the building is ready for possession, can I afford to carry both until I sell my existing home?  We know today's cost for bridge financing, but what if it goes up?
  • If the market is slow, you may have to sell your home for less than you might have in a good market.  You are actually buying your unit in today's market and hoping that you will be selling your current home in a similar or better market. 

Although some builders have model suites, are you comfortable buying from a plan?  

  • Bring a tape measure to the model suite and compare measurements to the plans ... The space always seems so much bigger on the plan

New buildings tend to offer smaller spaces.  It is important that you can feel comfortable in 500 or 800 square feet, as the majority of units are in this range.  You need to check out other units of similar sizes that are already on the market.

  • Will your furniture fit - is there room for a king size bed, a double or just a futon?
  • Since the building is not up it is hard to tell exactly what the view will be like
  • Do the bathrooms offer easy access from the bedrooms?
  • Is there enough cupboard space and storage?
  • Will the parking space be convenient?

The list price is just the starting price  

  • There are extras - these can run up the price significantly
  • $1000 floor premium can add up if you want to be on the 50th floor
  • Lockers and parking can be extras - you need to check the fine print
  • Most units have standard finishes but if you want something a little better or more your style it will cost more

  If I If I don't like it I can sell it.

  • Yes, but will you get your investment back?
  • For you to sell and get your investment back you need to consider, the cost of selling (real estate fees, legal fees) and those purchase costs (land transfer tax, legal fees) not to mention the cost of packing and moving and any improvements you made like window coverings.
  • The value of your investment will need to yield as much as 8-10% to recover your costs if you do not like your new home.
  • If the market does not increase by 8% by the time you take possession, you may have to sell at a loss

What if my circumstances change in the next few years while waiting for my unit?

  • Unless you have an agreement in place with the builder to Assign the Agreement of Purchase, you will have to complete the purchase or face the possibility of loosing your deposit
  • Since the builder will require you to put 15-20% down, this money will be held by the Builder until the unit closes
  • The potential for you to raise more money for a deposit on a second home is probably NOT an option

If you are considering purchasing a new unit from a Builder's plan, let me show you some existing units that would be comparable to the space you are interested in purchasing. Then be my guest at the next Agent Pre-Sale Event.  Buy before the sales office opens to the public and get first choice of suites at special prices. 

Why use my services when purchasing a new construction condo? 

 

If you miss the Pre-sale and decide to go straight to the Sales Office,  take an agent with you to any sales office and always have a lawyer read through any contract with a builder before you sign it!

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