If you are looking to purchase a condo, buying presale or pre-construction, can be an attractive option. After all, it can seem like you might have some input in the design of the structure, and the pricing can seem like a deal. However, there are certainly major risks involved. Here are some of the most important things you should (and should not) do when buying a presale condo.
The Dos of Pre-Construction Condos
There are many advantages to a pre-sale condominium purchase. A few of these are as follows:
- Do ask for what you want: You will be able to get exactly what you’re looking for with a presale. If you want special parking or a specific view, you can ask for these when negotiating the sale. If you need specific amenities, you can choose specific presales that will have these amenities.
- Do take advantage of easy buying: Put down your security deposit and go on living in your current home until the new condo property is done. You can depend on your warranty to cover you after you move.
- Do take advantage of the market: You can buy when the market is low, and bank on a higher market by the time you move in, giving you an instant equity.
- Do look into your government warranty: The BC government mandates a 2-5-10 year warranty, which can protect you from defects in construction.
- Do go green: Newer buildings are energy efficient and lean towards green construction, meaning the cost of ownership remains pretty low overall.
The Don’ts of presale condos
Just as there are advantages, there are downsides to purchasing a pre-construction property. Beware of the following:
- Don’t forget about the Goods and Services Tax (GST): This is payable on all new properties.
- Don’t think you can easily back out: If there is a market collapse, you cannot back out of the purchase.
- Don’t assume your mortgage will go through: You may be able to get a mortgage, but there is no guarantee.
- Don’t assume every request will be met: Even though you have input on the planning, the final outcome may not be what you were looking for. Read your contract carefully for fine print and go with a reputable developer.
- Don’t assume home value appreciation: Just as the market could go up by the time you move in, it can also go down. There are financial risks of loss involved with buying a presale condo.
- Don’t assume an easy sale: Often, once you buy a condo, you are in. Many developers will use contractual obligations to prevent you from selling, and to restrict marketing of sales, before the developer sells the development.
Other Tips for Purchasing
- Shop around to be sure you know the market value and the comps in the region. Don’t be afraid to comparison shop. Have a clear idea in mind of your budget and how much you can spend.
- Account for closing costs and fees associated with the presale. Avoid spending extra money on upgrades if you are looking at the purchase as an investment.
- Do not allow others’ opinions to cloud your judgment; educate yourself and form your own opinion.
- Have patience and don’t ever count on a specific move-in date on presale properties.
Following common sense and applying a few best practices will ensure that your presale purchase will be a pleasure to complete.