Thinking about buying a pre-construction condo?
Buying a property is always a big investment, but buying a condo has unique considerations. This is especially true if you are contemplating putting your hard-earned money into a condo that isn’t even built yet. You must take precautions to make sure your builder will deliver what you expect.
So how does one go about that? First off, do your research. Find out everything you can about the remodeling contractor you intent on hiring. Check for online reviews for the contractor and talk to people in the industry. Real estate agents, mortgage brokers, contractors and other buyers can fill you in quickly on whether a builder is good to work with and reputable, or not.
Ask Condo Owners
When you talk to other buyers, ask them about the process and who they worked with. This can save you a lot of time, energy and money. Find out whether it was a positive experience and whether they encountered any hidden fees or steps they were not aware that they needed to take. Buyers are more than willing to share their experience, particularly if it was a bad one, so that you do not have to go through the same thing.
Buy Early When Possible
When possible, buy early. Prices tend to increase as units sell in a condominium project. Builders often price the first units at a lower price to get the buying process underway so that they can recoup some of the money they invested. Plus, few buyers want to be the first to buy. There is always a sense of security when a potential buyer sees that someone else has already jumped on board.
Be sure to closely investigate the neighborhood where you are looking to buy. As you are buying a new build, you can only imagine what your street will look like, but there are other things that you can confirm. Almost all new areas have shopping, schools or recreational facilities planned before condos are even built.
Check The Floor Plans
Check your house plans too. Even if you think that you know which layout and finishes you want, you may change your mind and that is still permitted in the early stages of the deal. Look at the practicality, not just the wow factor of all the options. Even if you decide not to buy at all, you usually have 10 days to withdraw without penalty.
Making a Deposit
If you find a condo that interests you, you will need to pay a 15% deposit to the builder. This is normally done in three installments. When construction is complete, you must also pay land transfer tax, development fees and legal fees. Beware – some builders are unscrupulous. Get your lawyer to review your purchase agreement and that there is a cap on the amount they can charge for developmental fees, levies and utility hook ups. For a one bedroom condo, a $5,000 cap is standard while a 2 bedroom should cost around $6,400 to $8,000 at most in extra fees.
Even if you have done your homework and you have taken all the precautions you can, investing in pre-construction has its risks. However, they are greatly reduced if you are methodical when reviewing your potential purchase and logical in your decisions. A good purchase should not be based on looks alone.