If you're looking to buy a pre-construction condo in the GTA, it's important to do your research and be prepared for a potentially complex process. Here's a step-by-step guide to help you navigate the process:
Work with a pre-construction broker: It's recommended to work with a realtor who specializes in pre-construction condos, as they can negotiate beneficial terms for you.
How Pre-Construction Condos Are Sold: The suites are released in two phases - General Broker Release and Public Release, with the lowest launch prices available in the former.
Your Deposit/ Down Payment: You will need up to 20% (or more depending on the development/builder) of the purchase price, spread out incrementally over time.
ex. Requires 5% at signing, 5% 6 months in, 5-10% 1 Year in, and 5-10% at time of closing (or some structure resembling this)
Research: Research the developer's reputation, location, pricing, and other factors that can affect the value of the condo in the future.
Review the Agreement of Purchase and Sale: Ensure that the agreement includes all critical elements, such as deposit structure, unit price, closing costs, and other fees.
Land Transfer HST: HST is actually built right into the builders price. So the builder does the market research on what prices should be and right off the top buries HST 13% into the purchase/ advertised price. If it is not for personal use as a principal residence at closing the buyer will face paying the HST credit they would have received if it was principal residence (+$25,000 approx).
Closing Day: On this day, the property officially becomes yours, and you will need to provide the balance of the purchase price.
Additional Factors to Consider: These include interim occupancy timelines, rental allowance, Tarion warranties, development fees, land transfer HST, closing date, deposit structure, assignment allowance, and the sales procedure.
Benefits of Working with a Realtor: They can provide invaluable guidance, support, and advocacy throughout the purchasing process, ensuring that your best interests are taken care of. Inspection: Have a home inspection done after approximately six months of owning the property to take care of any covered items under the Tarion warranty.
When choosing a realtor to work with, it can be helpful to look for someone who has experience specifically with pre-construction properties. This can help ensure that they are familiar with the unique considerations and potential pitfalls of buying a property that is not yet built.
When reviewing the Agreement of Purchase and Sale for a pre-construction property, it's important to pay attention to details such as the deposit structure, potential fees or charges, and any restrictions on making changes to the unit or choosing finishes during the pre-construction phase.
Buyers should also be aware of the risks involved in buying pre-construction, such as the possibility of delays or changes to the development plans. While a reputable developer will typically work to minimize these risks, it's important to be prepared for the possibility that things may not go exactly as planned. It's also worth noting that pre-construction properties can be a good option for investors, as they offer the potential for appreciation in value over time. However, it's important to carefully consider factors such as location and the overall demand for the property before making an investment.
Finally, buyers should have realistic expectations about the timeline for a pre-construction property. While some properties may be completed relatively quickly, others can take several years to be built and occupied. Buyers should be prepared for a potentially lengthy interim occupancy period, during which they will need to pay monthly fees to the developer before the property is officially transferred to their ownership. Make sure to ask if you can rent the unit out during interim occupancy.