Buying a pre-construction condo can be a risky business. But, as Sherry Dabir, broker of Homelife/Bayview Realty Inc explains, a little due diligence can go a long way:
1. Talk to experienced buyers
No marketing effort can beat the power of word-of-mouth. Ask people around you who have bought a pre-construction condo in Toronto before. Ask them about their experiences, fees, connections and who they recommend. There is no shame in learning from other people’s mistakes, especially when money is involved.
2. Research the builders
You can follow the advice you get from your friends or do your own research on builders who are in the pre-construction business. It cannot be emphasized enough how important it is to find a good, reputable builder. You will be investing your money in a pre-construction home that is essentially not even there yet. Therefore, it is crucial to find a company that is reputable for completing projects and handling problems effectively.
3. The earlier you buy…
…the cheaper a pre-construction condo can be. The more units are sold, the more they increase the price of your future condo.
4. Study your floor plan and inspect your unit
Even though the floor plan can change eventually, it is recommended to examine the floor plan for the pre-construction condo that you are buying. At this point, you still have the freedom to choose whatever you like and even if you change your mind, and you had already signed the papers, you can pull out of the agreement within 10 days for free.
5. Check out the location
When buying a pre-construction condo, some things are very similar to buying a resale condo: you should explore the neighbourhood in which it is going to be built. You can’t possibly know how the area will look like in a couple of years, but things like schools, shopping malls and other amenities don’t tend to move very often.
6. Know your fees
When selecting your pre-construction condo, you will have to pay the deposit to the builder which is usually 15 per cent of the whole amount and is paid in three installments within a year (unless otherwise stated). When the building is finished, you will have to pay closing costs such as land transfer tax, development and legal fees.
7. Understand the risks
Buying a pre-construction condo can be a great investment or a pleasant future home. But you have to understand that even if you carefully select the perfect builder, location and floor plan, there can be unforeseen events that can cause the development to delay or shut down and you can lose your money.