Resale or Pre-construction?
person CondoGo | watch_later 2022-01-03
Resale or Pre-construction?

When looking to buy a condo in Toronto, you have two options: buying resale (a unit in an existing building) or pre-construction (in a development that hasn't been built yet). You might be attracted by the sexy marketing materials for developments in the city's coolest 'hoods, but there are also some pros and cons to buying pre-construction. Both buying resale and starting from scratch have their benefits and drawbacks. Only you can decide what works for you based on your budget, your timeframe and how comfortable you are with taking on the responsibility of being a home buyer.

RESALE: THE PROS 

PRO: Buying a condo unit that’s already built means you can walk through the door and see what it looks like, how big or small it feels, and get a sense of the layout in real life – that’s a lot harder to do when you just have a computer rendering to go on.

PRO: You can move in fast when you buy resale. When you buy resale, the closing date is firm, so you know the exact day you'll be able to move in and start paying off your mortgage.

PRO: Because the building has been around for a while, residents are used to the way things run, the condo corporation has built up a decent reserve fund (hopefully!), and any deficiencies or problems that crop up in brand-new buildings have been worked out by now.

PRO: When you move into a finished building, it's likely that the amenities are up and running, landscaping is done, and neighbors have had time to get to know each other.

PRO: The status certificate should tell you the percentage of renters versus owners in the building, which is good to know. Buildings with a lot more renters tend to feel a bit more transient. Having a higher percentage of owners is desirable for most buyers since it increases the pride of ownership and community.

PRO: You can often find better value if you buy resale. Resales are priced according to today's market and standard rates of depreciation. Pre-cons are often priced according to projected value 2 or 3 years in the future.

PRO: You can still get into newer buildings. Just because a unit is being sold as a resale doesn't necessarily mean it's old. In fact, Units in relatively new buildings come up all the time as people’s situations change. For example, now that Airbnb rules have changed, folks who bought in as an investment may not be able to use the unit as they had originally planned, and will want to sell.

RESALE: THE CONS

CON: The finishes are someone else’s taste. If you really like a material that’s not easily changed, such as granite countertops, or if you really dislike a tile in the bathroom, you can live with it until you’re able to change it yourself.

CON: You may need to do renovations. If the bathroom needs an upgrade, Replace the carpets to brand new carpets, or the layout would work better without that weird half wall, you'll need to include the cost of renovating them in your buying budget. However, if it's something you can live with for a while, renovating them later might be worth doing.

CON: Unit Choices are limited. Instead of having multiple units to choose from, you’ll probably only have one unit that’s up for sale.

CON: Facing bidding wars. A nice condo in a great building and a good location is everyone's dream, but there aren't many condos in great buildings that are in good locations. You'll probably face stiff competition. A bidding war can be stressful and disappointing if you don't win.

PRE-CONSTRUCTION: THE PROS

PRO: Preconstruction condos are a great option if you love the idea of having a brand-new space that no one else has ever lived in before.

PRO: You can customize your apartment with your own finishes. You can choose what type of flooring, bathroom tiles, and door hardware you'd like to have in your home that suits you best and decide what floor you’d like to live on.

PRO: Your price is locked in. Yes, you will have to wait years for the condo to get built. But you won’t have to worry about price reductions or bidding wars.

PRO: You’ll have time to save a down payment when buying pre-construction, because you’ll make deposits over many months. So, instead of having to hand over the whole down payment right away, you might have a year to come up with it – without having to worry about the unit going up in price. If you took a year to save a down payment for a resale unit, on the other hand, you’d be entering the market after year’s worth of price increases. In this market, that could be a huge difference.

PRO: New home warranties. Any new-build home is protected by Tarion, so if there's anything that's missing or not working properly, it's covered.

PRE-CONSTRUCTION: THE CONS

CON: After you buy a pre-construction condo, there is a long wait until you can move in. It can be years before the building is completed, and even if they give you a completion date, there's no guarantee it will be finished on time. To get started, the developer must have a certain percentage of all the available units pre-sold, and it can take time to sell them. There are also inevitable delays – things like bad weather or materials not being delivered on time to skilled labour. Legally, builders are required to be 18 months behind schedule to give your deposit back.

CON: Rendering drawings can be hard to interpret, making it difficult to picture what the finished unit will look like.

CON: You could end up living in a construction zone. Most condos move people in gradually; lower-level units open up first. So if your unit is on a lower floor, you’re looking at living in a building that’s still under construction. And that means noise, unfinished amenities, and workers in the building.

CON: If you want to buy preconstruction, you can’t just walk into a sales centre. Even if a building has just announced its first release and you’re first in line to buy, all the best units will already be gone. You should be working with a top agent who has connections to the development team-this won’t just ensure you get a great unit, but will also save you from waiting in line in the bitter cold for hours before having a chance to buy! At CondoGo.ca we’ve got those connections, so if you’re looking at buying preconstruction, talk to us first. We’ve got your back!

So, there you have it...pros and cons for both options. CondoGo agents are here to help you weigh the merits of each, helping you understand the good, the bad (and the occasionally ugly) - and get into a condo that will make you happy. Get in touch with us today!