In my opinion, resale is the only way to go. Just the idea of spending hundreds of thousands of dollars with only seeing a floor plan is ludicrous. And I speak from experience, as a real estate agent and a buyer.
Most pre-construction sales offices only have a miniature model of the building, floor plans on the wall, and a model suite that contains appliances, fixtures, flooring, cabinetry, finishes and hardware that is not included in the purchase price. It is true that pre-construction prices tend to be lower than resale prices, but at what cost? By the time you’re finished paying for all of the upgrades necessary to make your suite look like the model suite (which you assumed you were going to get), you pay much more.
The builder’s Agreement of Purchase and Sale is usually non-negotiable, typically 50 pages thick and written exclusively to protect the builder. Resale Agreements are about five pages in length, and are completely negotiable (especially the price).
Generally, realtors are not even allowed to represent the buyer in pre-construction transactions. The sales representative at the sales office is there to represent the builder, not the buyer.
Closings can be as long three to five years in pre-construction, and can be postponed several times (this can be very frustrating, when selling your current condo). Resale closings are usually never longer than 90 days, and can be as short as a couple of weeks.
There is also hidden rent (interim occupancy fees) in pre-construction. Buyers are moved in as their floor is finished, while construction continues on the above floors. All the while having to pay interim occupancy fees until the building is complete and registered. Then the buyer takes ownership and the mortgage begins. Depending on which floor the unit is on, these fees will have to be paid for several months. Not only is this not mentioned in the sales office, but it is very difficult to live in when there is construction still in progress.
Noise is a big issue (especially if the buyer works a night shift), as well as cleanliness. Building security is also not at its maximum effectiveness during this phase.
Resale and new condos are also taxed differently. Resale condos are exempt from GST, while new condos are not. Many new condo owners sell after completion, so why not wait for those resale units that have never been lived in?
Resale is not for everyone, but if you want to make the most educated decision on the most expensive purchase in your lifetime, I think you should at least be able to see exactly what you are buying and be able to negotiate to get the best possible price. |
