Purchasing pre-constructed homes direct from developers is popular with Canadians. There are risks with purchasing a property that hasn’t been built, but the cost savings are attractive, as is the knowledge that no one has lived in the home.
You may be wondering what pre-construction means – well, it’s the stage before the home is built. Property developers have got the building permit – which covers the building code in the area, e.g. Ontario, and now they want to sell down the homes usually to fund the actual development. Therefore at the time of purchase, there is no home. You’ve bought off the plans – you can visit the site where your home will be, but right now, it’s just bare land.
You may be wondering how you know what you’re likely to get in your home if you can not see it? In the pre-construction phase, the developer’s marketing material and campaigns are in full swing.
3D designs and AR (augmented reality) presentations are now utilized in marketing off-plan developments so prospective purchasers can take virtual walk-throughs. Most property developer sites will like this website have video virtual tours of past projects and maps of new developments in the pipeline. Do your research, and reach out to sites like this one to find out what you need to know to make an informed decision to either buy new or resale.
With pre-construction homes, technology has taken the guesswork out of the buying decision for purchasers, and it’s why many are confident with the process and result.
The main positives for buying a pre-construction home are:
The property purchase price should be less than its value on completion. For example, say the pre-construction price is $600,000, and on completion a couple of years later, the home may value up to $720,000, representing a 10% increase in value per annum.
Once you’ve signed up for an off-the-plan home, the deal is done. There will be no bidding wars for you.
Paying a deposit when you sign the purchase agreement usually locks in the full purchase price. Caveat Emptor: Read the terms of the sales contract and get your lawyer to confirm your understanding of the agreement insofar as there may be an opt-out clause where the purchase price is not guaranteed until it’s fully paid. Delays to the build can increase costs which may be passed onto the purchaser.
Buying a new home, there’s no costly replacement or maintenance. For example, you may mitigate the purchase risk with a resale home by getting a building inspection done, and it is to your liking; otherwise, the deal is off. However, there is still the risk that a few months in and something goes wrong. It could be the plumbing or wiring, or you discover an unexpected leak.
A new home is a reassurance that everything is new and installed according to current building standards.
Customize To Your Liking
While many new homes are cookie-cutter in design, there is usually scope to alter the floor plan as long as what you’re asking for is within what’s been approved in the building permit. Therefore, changing the layout to meet your family’s needs better is doable in the pre-construction phase of property development.
Purchase Years In Advance
You can even purchase the property years before the completion date is scheduled. When you invest in freehold pre-construction properties, the purchase should be closer to the date of moving into the property than condos of the same category.
How To Find A Pre Construction Property
Let’s look at the subsequent steps you need to follow while finding the right pre-construction property starting with the location.
Choosing The Location
In the first place, homeowners need to visit the new locality where they are willing to purchase the property.
Once you review the neighborhood, you will gain relevant insights on the investment potential and lifestyle there. Plus, you can examine the social and civic amenities available around the area. You might also speak to your broker or agent to know about the future development prospects of infrastructure there.
Partnering The Right Broker Or Real Estate Agent
Find a broker with substantial experience in dealing with pre-construction properties. Of course, agents who represent the builders would try to influence you to realize better returns. It would be best if you were stringent and skeptical with your approach and put forward your interests. Try to find an agent who would represent your interests.
Consider The Developer’s Reputation And Track Record
Before finalizing your purchase decision, it’s imperative to check out the builder’s completion record. Also, have a look at the completed project and features integrated into these properties. It would be a wise move to check out first-hand reports through testimonials and online reviews.
You might also consider speaking to some of the existing homeowners who purchased directly from the developer. Besides, you need to ensure that they have the right documents in place.
Explore A Model Home And Negotiate Price
When you tour one of the developer’s model homes, you can gain a clear insight into the features you would enjoy in the new property. In this process, you can find out whether or not some of the amenities of fixtures need to be upgraded. Next, you can estimate the overall expenses, considering the cost of renovations or upgrades that you need to make.
It would be best to be careful at this stage, as not all the features present in the model home might be available in yours. In these cases, you may have to upgrade your property.
Once you are satisfied with the range of amenities, try to negotiate the price. Working with a reputed broker would work in your favor, as they can negotiate professionally to bring down the purchase price.
Check The Warranty and Sign The APS
As a buyer, you should ensure that the developer provides you with the completion date before processing the agreement documents. Why? Well, it would ensure that you can move to the property without delays. Your broker will help you to understand the coverage of the warranty.
Accordingly, you should proceed and sign the APS (Agreement and Purchase of Sale). You should have written contracts for all the negotiations and agreements.
Obtaining Your Pre-Approved Loan
Since the property development is not yet completed, you won’t be registered officially for a mortgage loan. However, at this time, you can reach out to different lenders and financial institutions. In the process, you can obtain a letter of commitment from them regarding the pre-approval of loans for purchasing the property.
Next, you need to wait out the cooling-off period. During this phase, the property will come under the name of the buyer. You need to reach out to a lawyer who can help you out with the legalities during the process of pre-construction.
If you are ready to proceed with the purchase agreement, you need to finalize the deal. Once the cooling period is over, you need to encash the first check.
It is mandatory to carry out a home inspection before transferring it to yourself, and this would ensure that all the installations and systems are in good shape when you acquire the property.
Final Tweaks To Your Property
Now that everything is ready, it is time to get your home customised before moving in. You need to coordinate with the developer and incorporate the necessary changes into the property.
Customizing your property involves choosing the right finishes, colors, and other upgrades and additions that you would like to make. Once this is over, you can move into the new property.
Although the process of finding the right pre-construction home seems complicated, partnering with one of the real estate brokers would ease up the task—no wonder why most homeowners collaborate with these professionals before choosing their properties.
You may explore the new properties in the desired locality in Canada or talk to one of the reputed real estate brokers around. A piece of professional advice would prove valuable for homeowners willing to purchase these properties.
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