What are the common mistakes people make when buying a pre-construction condo?

For many young families and real estate investors in the greater Toronto area, buying a new builder condo unit is preferred over a freehold detached house or even a townhouse. There are many reasons for this. High rise condos are still more affordable to buy. Also with spread out deposit payments, buying your first home becomes easier. But there are some common mistakes we see people making when buying a pre-construction home. 


Here are they are:

1. Buying from an inexperienced builder or new builder

Lack of experience can bring many problems. Risk of not getting required permits, long delays in completing the building or even not completing at all, not giving the finishes and features that were promised. Though there’s always a risk in putting money behind something that hasn’t been built yet, finding a reputable builder will lessen these risks. 

There are important factors to look at when investing into a builder and their reputation. First, you should look at their track record; if they completed their pre-construction project before and if they did, were they completed on schedule. You must understand that if delays on the past projects went over a year, it could mean poor financing or some other issues.  Another thing to check on is how their past pre-construction projects are progressing today. Are they in financially good standing? How’s the management of the building? Is there a huge increase in the maintenance fees??
 

2. Not working out finances

 For pre-construction condos, a 15-20% down payment is standard. After your initial deposit on signing agreement, the balance is paid in installments up to closing. If you fail to pay on time within the scheduled date given, the builder will send 1 or 2 notices to bring up the payment in order. Otherwise, it is treated as default and the builder can cancel the agreement. If the builder terminates the agreement, though it is very rare, it could lead to lawsuit.
 

3. Not getting your lawyer involved earlier

You need to know exactly what right the contract gives your builder because what you saw and agreed may not be exactly what you get. So, you’ll need a lawyer to review the contract. There will also be a lot of information to digest and that’s why you’ll have to hire a real estate lawyer to explain the contract, because there might be some real estate jargon you won’t understand. The law allows you a 10-day cooling period when you buy a condo unit. Use it to have the contract reviewed by a lawyer. If your lawyer or you are not satisfied you can always return the agreement without any penalty.
 

4. Letting low price driving buying decision.

They say that the worst house in a good area is still better than the best one in a bad area and that’s the same with condos. Condo prices away from urban centres are usually cheaper but you need to consider your commute to work, will it sale in the future if you need to make a move.  Also if you are buying to rent your condo, if that location has any rental demand and will the future rent cover your monthly costs. It is better to buy where there is a higher demand for condos such as areas in and closer to the greater Toronto area.
 

5. Not having an experienced agent.

 If you hire an experienced agent like a Platinum VIP agent, then  you’ll have first access to pre-construction units.  That way you get to know about a condo project first before it is advertised, learn about project launch events and sales much earlier and you can often reserve a unit ahead of other buyers simply by filling out a worksheet. But if you hire an inexperienced agent then anything can go wrong.
 There might be missing details or this agent might misread the market. Also, because if this agent is not a VIP agent, he or she may not get the same access to information and any special deals from the builder. 
 

6. Thinking all condos in a neighbourhood are the same. 

This is simply not the case. No two condo buildings are alike. They are very different from each other in respect of design, amenities they provide or value appreciation. We have seen cases where condos in one building appreciating much higher than the adjacent building in Downtown Toronto. Having an agent who has knowledge and experience in condos of a particular area will help a lot in making the buying decision.

Doing your homework is essential when purchasing a pre-construction condo. This will avoid or at least reduce future problems and risks substantially.

If you are looking to buy your first or second condo or are an investor, tell me what is motivating you to buy your condo. Do you agree about the 6 mistakes I just mentioned?

If you need help in purchasing a pre-construction home, I can help you. Call me at 647-834-9928 or email at [email protected] or visit one of our latest pre-construction projects on our webpage.








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