Are you searching for a new, move-in ready condo in Oakville but feeling priced out by typical market rates? Following the significant market downturn, many original buyers of preconstruction condos have defaulted on their purchase. Those default purchases have to be sold again, and to do so, builders are willing to offer incredible deals. Some of these projects are selling at more than 35% off their original sales price, leaving a huge savings for buyers.
Below, we’ll explain how you can capitalize on direct-from-developer final closeout sales to land your dream home or investment property at wholesale real estate prices.
What is “Builder Leftover Inventory” and “Failed-Close” Real Estate?
When a major project finishes, developers usually keep a few units on hand for future resale. However, since our market run-up (and the subsequent crash), there is a new stream of inventory for developers to resell once the building registers: failed closings. These are units that were purchased by investors who either planned to flip the contract (a process called assignment) before the final occupancy, or buyers who purchased the property but then could not afford to close because of life circumstances.
When a buyer fails to close on a preconstruction condo, it is the developer’s legal duty to minimize the loss. To do that, they have to resell the property. They will then usually pursue the previous buyer for any deficit between the original sale price and the new sale price.
While the circumstances of the failed closings are unfortunate, it is in the builders and previous buyer’s best interest to resell the property as soon as possible. (The first buyer is responsible for all carrying costs post-closing, so if the property takes 6 months to sell, the first buyer will be sued for the deficit in purchase prices, plus 6 months of maintenance, taxes, utilities, and mortgage interest).
Because of the mounting pressure to sell these units quickly, developers price the units extremely well. You’re getting a brand new condo, at distressed property prices, and often in some of the best neighbourhoods (like Upper Oakville).
Distressed preconstruction condos for sale come with these benefits:
- Move-In Ready, Preconstruction Condos
- Full 1-7 year Tarion Warranty, covering everything for the first year, and covering major structural components for up to 7 years.
- Flexible closing: Dealing directly with the developer, instead of an individual selling their own home, means more flexibility in choosing a closing date.
- Below-market purchase price: New homes generally come at a premium, and take anywhere from a few months to several years to be completed. Buying existing condo inventory means getting that new property but without the wait.
- Less risk: preconstruction purchases usually come with the risk of the developer cancelling the project and returning deposits anywhere from 1-8 years after initially taking deposits. By waiting to buy existing inventory, you ensure you don’t miss out on a purchase because of a cancellation outside of your control.
How to Access the Best Price New Build Condos in the GTA
These direct developer clearance units are highly coveted, and because they are sold directly through the developer’s exclusive brokerage, they are rarely posted on realtor.ca. If you want direct access to distressed builder clearance, you need to work with an agent who is active in that market. We have direct, insider access to many developers and can help buyers negotiate terms, including capping development levies, work on more flexible deposit schedules, and help pick the best buildings and units.
If you’re looking for personalized advice on buying remaining inventory in a preconstruction project, reach out to us! We’re happy to discuss neighbourhoods, buildings, terms, and how we could help you find the perfect fit.
