In modern-day Canada, and Toronto to be specific, one in three homes is purchased directly from the builder. The truth is, not many property investors would consider buying a home while it is in its pre-construction stage, but when it comes to Toronto, which is one of the most stable real estate markets in Canada, buying a home at this stage is pretty beneficial. From saving on costs to getting a great return on investment, the convenience of having a new home, as well as the possibilities of customizing it to your liking, you sure can’t ignore such an opportunity. Now, in this article, we will tell you how you can buy your own pre-construction condo/home in Toronto. But first:
What is a pre-construction home?
A pre-construction home is basically a home that is yet to be constructed. These kinds of homes are quite popular among homebuyers who would like to buy a brand new home that they could still customize to their own specifications. In most cases, the developers sell pre-construction condos in Toronto in the early stages of the development process for them to be able to finance the project to completion. Sometimes, the project is still in the planning stages, it could also be that the developer just has a vision of the entire project, and at other times, the plan could have already been approved and the project has started.
How to buy a pre-construction house in Toronto
Get a reputable and reliable estate agent to represent – before you start looking for your preferred pre-construction home, you need to get a good agent, with experience in the pre-construction sector. Normally, most local agents do have working relationships with the developers, as most of them are actually acting as the seller’s agents, which means they are very much involved in the pre-construction business. Remember though, when looking for an agent, look for one that will not only be looking after the developer’s needs, but also one that will be looking after your interests.
Get to know the developer’s reputation as well as completion record – if you get a property that really interests you and is in the pre-construction stage, before you put your money on it, it is important that you investigate the completion rate and the reputation of the developer/builder. You can do this by visiting their previous development and speaking with the homeowners or going online for reviews and testimonials. Just find anything that will tell you the developer’s work ethics.
Visit the pre-construction home – the next step would be to visit the location to know more about the property and the neighbourhood. You have to know what the place you are about to settle is like, and you can even find out from the designer what the plan for the future is, in terms of development – if any. When it comes to the home’s model you must remember that the models you see will always look more beautiful, and everything in it does not necessarily represent what a normal home has. This is something you have to keep in mind, and you have to ensure that all the features in the model can come in a standard home.
Negotiate for a good deal – once you get the property of your choice, it will now be the time to negotiate for a good deal. Your real estate agent will help you with this. Now, the thing with pre-construction buying is that it won’t be easy to try and bring the prices down, as that’s something developers avoid so as not to set a bad precedent for the future. However, you could ask for a few discounts here and there. Remember also that everything you agree upon with the developer/builder should be put down in writing. Since you are buying a home that is yet to be completed, the contract must spell out when it is to be completed, plus what happens if there are delays. Basically, everything has to be in writing, for reference, and to use in case there are legal proceedings.
Sign the agreement – this is the stage where you will be required to sign off the purchase agreement for your future home. There are a few things that you will be required to bring at this stage, including a valid national ID – could be your driver’s license or passport – and you also have to bring your chequebook. Your estate agent should help you through this process too and will tell you everything you need to know for this process. This includes explaining every section of the agreement so that you don’t sign substitutions, inclusions, or exclusions that you are unaware of, and haven’t agreed to yet.
Now, when the property is still being constructed, you can always contact the developer if you want to customize and design the property in a certain way. This includes the colours, upgrades, and finishes, allowing you to create your dream home
Here is what you need to keep in mind
When it comes to buying pre-construction homes in Toronto, there are a few things you must keep in mind, beginning with the tax considerations for new homes in Canada. You need to note that for a new home in Toronto, there is a Goods and Services Tax or a Harmonized Sales Tax that is applied to the price. It could be 5% of the total purchase price, although you could receive a 2-3% rebate from the amount paid.
The other thing you need to keep in mind is that there could be a possibility your home won’t be complete for quite some time. In construction, delays are very common, and so, you have to be prepared for them, by being patient and also flexible when it comes to your moving schedule. The other thing is about how you are going to finance the project. You have to be prepared that there is a likelihood of your money being tied up for quite some time. And so, you have to start thinking about your mortgage qualification status. Essentially, just be prepared even for the worst scenarios.
The thing about buying pre-construction condos in Toronto is that even though it’s largely a great idea, it also comes with a few risks. This means it requires courage, patience, or gumption on your part as the investor. However, with proper research, and a reputable local agent, this could be your perfect investment. Just do your due diligence and everything should turn out fine.