Pre construction condo or Resale condo?

Trying to decide between buying a pre construction condo or resale condo? Here are some things to know when buying a pre construction condo. Buying a pre-construction condo has many benefits such as:

• Everything is brand new, never been used!

• Since everything is new it is less likely that there will be any major special assessments. This is a charge on top of your regular monthly fees to cover unforeseen expenses such as balcony repairs, siding falling off, lawsuits, etc.

• You get to pick out the finished YOU like. In resale, you are often paying for upgrades the previous owner did that may not necessarily be your style.

• With the right research & realtor buying a pre-construction condo can be excellent value. Typically by the time you move in your unit will be worth quite a bit more than you purchased it for.

Sounds great, right? Before you race out to purchase a pre-construction condo here are some things you should take into consideration.

• You will have to pay more money upfront. You can typically purchase a resale condo for 5% down (if this is your primary residence and you do not own another property). Whereas a pre-construction condo will usually require 15-20% down or more. In most cases, you’ll be required to pay a 5% deposit, then pay additional instalments up to the closing date.

• Expect delays! Unfortunately, one of the drawbacks of going with pre-construction is there is no guarantee the building will be ready on time. Often it can be months behind schedule. In some cases it can be delayed years. If you have a timeline with very little flexibility, resale may be a better option for you or make sure you have a back up plan. Even if the building is complete on time some of the amenities may take a long time to be completed.

• If they don’t sell out a certain percentage of units they will be unable to form a condo corporation. They will typically still let you move in although you will be renting off the developer rather than paying your mortgage.

• When purchasing a pre-construction condo you are often looking at floor plans and renderings. It can be hard to get a good idea of what the finished unit will be like without seeing it in person. Sometimes when people move in they’ll realize the closet was smaller than they thought it would be or the bathroom has an awkward layout, etc.

• The condo fees the builder originally tells you is not necessarily the condo fees you will be paying. Occasion they will quote them on the low end to entice buyers.

• Read the fine print about the right to assign your unit. Assigning your unit is the ability to resell it before you close on it. A lot of the time even in there is an assignment clause the builder still has the right to refuse it. There also might be a fee for you to assign the unit.

• It can be harder to know the demographics of people moving in. When you move in the building could be mainly seniors, students or renters. A good tip is to ask the builder what the demographics have been for the units they have sold. With resale condo you can usually pick up on the demographic when visiting the building. If not, your realtor should be able to let you know.  If part of the appeal of condo living is the community vibe this is something you should consider.

If you are someone who is looking for a good deal & who is quite flexible then a pre-construction is a great option for you. On the other hand, if you are someone who needs to know exactly what they are getting themselves into then a resale condo may be the better choice.

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