A Buyer's Guide to Pre-Construction Homes
According to the Canadian Real Estate Association, 1 out of every 3 homes sold in Canada comes from a builder or developer. If you buy a home before construction, you'll save money, have plenty of customization options, have pride of ownership, and get a good return on your investment if you decide to sell it.
Pre-construction homes aren't for everyone. It's critical to weigh the advantages and disadvantages of buying a home during the pre-construction stage.
We're here to help, we've put together a list of tips for those looking to buy a house or condo before construction begins. So, let's get started!
A Great Real Estate Agent or Broker Can Help You
It's best to find a great agent or broker who has experience working with pre-construction and new construction before starting your search for pre-construction homes. Model houses in new construction projects let you see what the finished product will look like, but the brokers who work in them sometimes have ties to the developer or builder. These agents typically represent the developer or builder in their capacity as the agent of the seller. It is their obligation as the seller's agent to act in the best interest of the builder, not necessarily yours (the buyer's). As a result, it's critical that you work with a real estate agent or broker who exclusively represents buyers.
A great real estate agent may be hard to find. Click here to read a few things to watch out for!
Verify the Reputation and Track Record of the Builder
Do your research on the builder's reputation and track record before buying a pre-construction home. Consider visiting one of their current or previous projects and speaking with some of the residents first. Do a quick web search and look for testimonials, reviews, and recent news about their previous projects for more information.
Use Your Imagination When You're Negotiating
If you're satisfied with your findings, your agent or broker can help you bargain for a better deal. When it comes to lowering prices, many construction companies and developers are apprehensive. You may be able to also negotiate a lower price by asking the builder or developer to cover your closing costs or to perform upgrades for free.
Obtain a Guarantee and Learn What's Covered Under the Warranty
Check for a completion date in contract documents before you buy them. The home is still under construction, so get a guarantee that it will be completed on time. A delay on the part of the buyer or builder should be explained to you by your agent. Check your new home's warranty coverage before signing the Agreement and Purchase of Sale.
Ensure Everything is in Writing
Before you sign anything, double-check to see if everything has been agreed to, negotiated, and documented in the contract. Make sure all details are written down and signed by all parties because verbal conversations are not legally binding.
Sign the Purchase and Sale Agreement
Take a valid government-issued photo ID and a cheque book with you when the time comes to sign the Agreement of Purchase and Sale. If you have any issues or concerns during the signing process, your agent will be there to help you.
Locate a Lender and Obtain a Mortgage Pre-Approval
Due to the fact that the home is still under construction, you will not be eligible for a mortgage until it is completed. Pre-approval or a commitment letter to buy a home will require you to look for lenders or financial institutions to assist you.
The 10 Day Cooling-Off Period
The Buyer has a ten-day cooling-off period in which to cancel the agreement. This allows the home to be placed on hold in your name. The cooling-off period begins on the date the Agreement is signed, since the documents are typically provided on the same date as the agreement is signed. It's important to note that the 10 days referred to here are calendar days, not business days.
Now is the Time for You to Cash Your First Cheque, Congratulations!
If you're happy with the purchase agreement after the cooling-off period ends, you can finalize the contract and cash your first cheque.
Perform a Home Inspection
Before closing and transferring ownership to the buyer, all new homes under warranty are required to go through the first inspection. A month before the home warranty expires, a second inspection is performed.
Interim Occupancy & Final Closing
During the closing process, the Interim Occupancy and Final Closing dates and stages are critical. Your builder or developer will let you know when the home is ready for Interim Occupancy during these final closing phases. Prior to paying any outstanding deposits or occupancy fees, you will meet with your attorney.
After the final closing date, you will have another meeting with your attorney. In order to officially transfer ownership of your new home from the developer or builder to you, your lawyer will assist you in signing all the necessary documents.
To learn how to save for a down payment, click here!
Before buying a pre-construction property, think about your personal preferences and needs in terms of your way of life before making a pre-construction home purchase. Keep in mind that you're not just buying a home; you're also buying into a community!
Real Estate, Andrew Irani can assist you with both buying and selling a home. Don't hesitate to get in touch with him right away. Click here to contact Andrew Irani today!