THE PRE-CONSTRUCTION PROCESS
Investing in a pre-construction property involves a different buying process compared to resale. There are many perks to purchasing pre-construction. Pre-construction projects have deferred deposit schedules, allowing you to make smaller installments over the course of construction. Instead of paying a 20-25% lump sum deposit, when you buy from a builder you can make 5% payments over a 3-4 year period. This deposit structure will allow you to be more flexible with your cash flow and allow the property to appreciate while it is being built. You are getting a brand new suite that you are able to customize by selecting your finishes, colours, and upgrades based on your style.
With so many new developments to choose from, the process can appear to be overwhelming. Working with an agent that specializes with pre-construction will help you make an informed decision. Urban Condo Group is dedicated to making this process for you as smooth as possible. Check out our 10-Step Guide to Pre-Construction below.
This will give you the opportunity to know about new condo developments in the pipeline before the general public. You will have the opportunity to secure a suite at the Pre-sale stage with the best incentives.
2. Identify your short-term and long-term investment goals
Whether you are looking to purchase a rental income property or a property to live in, knowing your budget and timeline is important. Is your goal to earn a strong ROI, generate rental income, and diversify your investment portfolio? Or, are you a first-time home buyer looking to get into the market? Knowing exactly what you want within your budget can help you select the right property.
3. Locate the right neighbourhood/amenities
Depending on your lifestyle, the types of neighbourhood amenities that are accessible to you can make all the difference. The importance of public transit, restaurants, entertainment, schools, and parks will measure differently to each buyer. Investor-savvy buyers seek properties with high rental rates, high resale values, and close to transit and employment nodes. Whereas homebuyers gravitate more towards building amenities such as a fitness centre, pool, party room, and 24-hour concierge.
4. Select the right Builder
There are over 5,000 licensed new home builders in Ontario. Ensuring you are buying from a reputable builder is critical. Remember, you are making one of the largest investments of your life. Look for builders with a proven track record with the highest standards of excellence.
At Urban Condo Group, we have over 12 years of combined real estate experience and sold over 60 pre-construction projects with the Top Builders in the GTA. Our clients have benefited from our relationships with builders, giving them exclusive Platinum/VIP Access to many hot new projects.
5. Submit your Worksheet
Once you have decided on a particular project, the next step is to pick your suite and submit a Worksheet. A Worksheet is a form submitted to the builder along with a copy of your government identification to show the builder that you are interested in securing a suite. The sooner the worksheet is submitted, the better the chance of getting that suite allocated to you. Often, builders will receive hundreds of worksheets for the same suite. Suites are typically sold on a first come, first sale basis.
6. Signing the Agreement
Once a suite is allocated, you will be advised of your signing date to sign the Agreement of Purchase and Sale. You will need to bring your cheque book and government-issued identification.
7. 10-Day Cooling Period
By law, when buying a new property you will have 10 calendar days to do your due diligence and review the Agreement of Purchase and Sale. This is known as your 10-Day Cooling Period. During this time, we recommend having the Agreement reviewed by a Lawyer that specializes in pre-construction. If for any reason you decide to withdraw from the purchase within the 10 days, your cheques will be returned to you without any penalties.
8. Colour Selection
Closer to the Occupancy date, you will be contacted for your colour selection appointment. You will have a one-on-one consultation with a décor representative to select your finishes, colour, and any upgrade packages.
9. PDI/Interim Occupancy
During your Pre-Delivery Inspection (PDI), you will be guided through a comprehensive inspection of your suite. Any items that are damaged, missing or incomplete should be noted on the builder’s PDI Form.
Interim Occupancy is the period prior to Final Closing. You will receive your keys for the suite, however, ownership has not yet been transferred from the builder. During this period you have no mortgage obligations but will be responsible for paying an interim occupancy fee to the builder made up of 3 things: interest on the balance due, maintenance fees, and property tax.
10. Final Closing
This is the final time you meet with your lawyer to sign the necessary paperwork required to transfer the ownership to your name. At this moment your mortgage payments will begin and you will be responsible to pay the final closing costs.
For more information on any of these topics, feel free to reach out!
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