We help a lot of buyers purchase preconstruction, some of them as investors, some of them as homeowners. Here are the answers to their most frequent questions.

How do I know if it's a good price?

The best deals on pre-construction properties are in their very early stages after they just release. That is when builders offer the best units at the lowest prices. As the project sells out, the builder releases additional units at higher prices. Agents are often given first choice on new projects. (Selling through the builder’s sphere of influence, which is real estate agents that they work with often, is the builders cheapest means of advertising.)

How does the Deposit work?

The average down payment / deposit price in the city is 20% of the purchase price, but some builders offer deposits as low as 10%. The deposit is usually payable in four segments of 5%. The deposit is held by the builder’s lawyer in a trust account.

If you are buying from a reputable builder, your purchase price will include a Tarion Warranty, which covers your deposit up to a maximum of $20,000 in the rare chance there is a total loss.

The deposits goes towards your down payment when the condo or home is complete.

Can I buy it as an investment and sell it before it's complete?

If you sell your condo before the unit is ready, you avoid the closing costs which are as high as 5% of the sale price. But it’s important to have the resale clause in the contract. Sometimes builders also ask for a fee to allow you to resell it.

What are the out of pocket costs

If you’re buying the condo as an investment:

– The deposits (around 10-20% of the purchase price)

– The Lawyer’s fee (around $1300-$2000)

– The agent’s fees to resell (around 5% of the sale price)

– Half the profit is taxable at 25%, minus deductions like the agent fees and lawyers fees.

– Some builders charge a fee to the seller when they resell the unit. (around $2000 to as high as 1% of the sale price)

If you’re buying the condo as a home:

– The deposits (around 10-20% of the purchase price)

– The Lawyer’s fee (around $1300-$2000)

– The Land Transfer Tax (at $400,000 the LTT is $8200; but for a first-time buyer it’s $2475)

– The builder’s development levies and fees (Theoretically, these can be as high as $50,000 if you don’t cap them in the offer)

– The Nickle and Dime charges. (Some builders will add small charges like a fee for each time they cash one of your cheques, a fee for dispersing their building loans, or double maintenance charge for the first couple months to build up the reserve fund)

– The Tarion Warranty (maximum cost $1800)

Do I need a Real estate agent?

You need to make sure you buy from a reputable builder, with an outstanding record for providing stellar customer service. Only consider a builder with awards in customer service and build quality. That way you are certain that previous customers are happy with their purchases, and found the floorplans, amenities, and build quality was what they expected. An experienced real estate agent that sells preconstruction knows the cities top-rated builders, and can show you the builder’s previous projects, so you can see their build-quality, and materials. A real estate agent will also help navigate the sales process, negotiate the contract, and protect your interests. Also, the real estate agents fees are paid by the builder.

Can you recommend a project in the City?

Our clients believe honesty and integrity are beyond reprieve, which is why we take great care when it comes to recommending a preconstruction project. A lot is said about a builder’s awards, as well as our past experiences. With that said, we have a few that we are very impressed by, one of them is Tridel’s Bayside Community, which includes three buildings with condos ranging from the mid 300,000’s to well over $4,000,000. Check out the Aquabella.

If you’re thinking of buying a preconstruction condo or home, contact us. We believe honesty and integrity are beyond reprieve, and we’ve based our business on offering honest, accurate advice. Let us help you navigate the in’s and out’s of buying a preconstruction condo or home.