For many, buying pre construction homes can be an exciting opportunity. On the other hand, buying a property in its pre-construction stage can be quite a hassle and worrisome for many. Thus, both these schools of thought can be overwhelming for the homebuyer and can be a cause of confusion. Buying a pre-construction house comes with its set of pros and cons. However, before we further delve into the topic, it is also important on the buyer’s part to consider a few important things. Let’s discuss them first.
Buying Pre Construction Homes: Things To Consider
-
Builder Reputation
Before even considering buying new construction homes, the first and foremost step is to look for builders with a robust market reputation and an excellent track record of delivering projects. For this, you can read reviews and testimonials from their previous customers. It will help you gauge the specific builder’s reliability and workmanship quality.
-
Delays and Setbacks
Any construction project is subject to delay owing to a variety of reasons. These reasons include permits, shortage of labour, bad weather conditions or even supply chain disruption. This is why it is so important to have a flexible timeline when purchasing a pre-construction house.
-
Warranty
Pre-construction homes often come with a builder’s warranty that covers defects in construction for a certain period. Be sure to understand what the warranty includes and for how long it lasts. It will greatly benefit you in the long run.
-
Contracts and Legalities
Buying pre construction homes in Canada involves signing a contract and evolving documentation work with the builder. This contract will outline your rights and responsibilities and those of the builder. Thus, it is recommended to have a good real estate attorney review the entire contract beforehand. Doing this will protect your interests in the long run.
The Pros of Buying Pre Construction Homes in Canada
The following are the pros of buying a pre-construction property.
-
Cost and Maintenance Savings
One of the key benefits of purchasing a pre-construction house is cost savings. Also, being the first person or family to move into a property gives you an advantage in using the available facilities. As everything is brand new, there won’t be a need to find a replacement or do repairs anytime soon.
-
Customisation Opportunities
With a new construction house, you also get the liberty to design your living space as per your preferences. You can decide what kind of appliances you are getting for your home and which paint will best suit your walls. And you can also change the overall layout and aesthetic appeal of your home.
-
Access to Cutting-Edge Amenities
Investing in a pre-construction home comes with the guarantee that the most energy-efficient systems and only the top-notch amenities will be used during construction. With this, you can experience the modern-living experience and live an active lifestyle.
-
No Risk of Escalating Prices
While the property is still under construction, the prices are relatively fixed. There is not much room for negotiation, thus, completely eliminating any scope of bidding. With this, one can buy their desired property without much hassle.
-
Profitability and Equity Growth
Purchasing a new-construction home can be a lucrative investment opportunity with substantial potential for property value appreciation in the long run. And investing early on in a project gives you the first-mover advantage. You can hold the property for a few years and sell it off when the time is ripe to make good profits.
The Cons of Investing in Pre-Construction Real Estate
-
Potential for Delays
There are certain disadvantages to investing in a pre-construction property, and the risk of the project getting delayed is one of them. The fact that you are practically investing in a non-existent property can be debatable. Thus, it is very important to remember this point while investing in a pre-construction property.
-
Financial Uncertainty
Pre-construction residences often require an upfront deposit, typically up to 20% of the total price, representing a hefty financial obligation. In the unfortunate event of developer bankruptcy or project cancellation, you risk losing your deposit, or even if recoverable, you might forfeit any anticipated investment returns.
-
New Home Sales Tax
Depending on the regional laws, you, as a homebuyer, may be required to pay Goods and Services Tax (GST) or Harmonized Sales Tax (HST) on your new home. Though you may qualify for a rebate, you’ll have to bear the initial cost and then seek the tax refund, adding an extra layer of financial burden.
Wrapping Up
In conclusion, buying a pre-construction home is a decision that holds both unique opportunities and potential drawbacks. It offers a significant advantage in terms of lower costs, the ability to personalise your space, access to modern features, avoidance of bidding wars, and a chance to increase equity. However, it also comes with the risk of construction delays, financial uncertainties, and the responsibility of additional taxes. So, as a homebuyer, it is highly important that you test the waters and only then take a concrete step.
You May Also Read :
|
Guide To Mortgage Rates Canada |
|
|
All About Wooden Houses in Canada |
|
|
Know About New Build Houses |
|
|
Understand Types of Contractors |
Frequently Asked Questions (FAQs)
Fundamentally, a pre-construction house refers to the phase where the actual construction begins or is still ongoing.
Buying a pre-construction home during its pre-construction stage offers lower prices, affordable entry into the housing market, and changing the overall customisation as per your liking.
Delays in construction, loss of finances, and unexpected changes in the housing market are a few risks of buying a pre-construction property.
Investing in a pre-construction property can be a good investment idea depending upon the market conditions, financial situation, and the ability to absorb any unforeseen loss.
What is the meaning of a pre-construction house?
What are the benefits of pre-construction?
What are the risks of preconstruction?
Is it a good idea to invest in a pre-construction?
Can you sell pre construction before closing?
