Pre-Construction are projects that haven’t been built yet or are not ready for move-in. Typically in pre-construction, you are dealing directly with the developer unlike in resale where you are buyer from the current unit owner.
Pre-Construction allows you to purchase a unit before development begins allowing for the best prices, best units and best potential returns. Pre-construction is attractive due to the potential capital gains upon project completion.
The Pre-Construction process:
Step 1: Reserving a Unit
An agent will submit a worksheet with your preferred units.
Step 2: Signing an Agreement
Once the worksheet is submitted and the unit is available, your reservation will be accepted.
Your agent will then make an appointment with you at the sale’s centre to sign the Agreement of Purchase and Sale and submit a deposit.
Step 3: Cooling Off Period
After your deposit is submitted and the Agreement of Purchase and Sale is signed you will have a 10 day cooling off period, to review the agreement and reconsider.
During this period it is recommended to have your lawyer review the contract.
Why Should You Buy Pre-Construction?
Unit Customization – You get to design and finish your unit the way you want.
Live in a Brand New Building – You get to be the first round of tenants to live in a building.
Own a Rental Property – If you are buying a pre-construction unit as an investment property, you can rent it out to help pay off your mortgage while building equity
Affordability – Pre-construction condominiums have some of the best pricing, especially during potential VIP sales.
How to Choose A Location
In 2019, 97 pre-construction projects launched in downtown Toronto alone. There is so much choice out there so how do you find the perfect pre-construction site for you?
Your Purchase Goals
What are you looking for from this property? Is it a place for you to live or an investment?
Your Price Point
The project has to match with your future financial goals as well as your current financial capabilities.
Your Time Frame
When are you looking to move in by? The projected delivery date will play a role in your decision.
Your lifestyle once you move in is going to determine the location of your pre-construction project. Are you purchasing this as a young professional? Will this be a downsize? Are you buying it for a child?
If I back out what happens to my deposit?
If you decide to not continue through with the purchase, so long as you are within the 10 day cooling off period your deposit will be refunded .
Will I need a lawyer?
Yes, you will want to have a lawyer look over the Agreement of Purchase and Sale along with any other documentation provided by the developer during the cooling off period.
If my financial situation changes, what can I do?
Most developers will allow you to assign the unit, meaning you can sell your contract to someone else. However, during the cooling off period have your lawyer verify that this is indeed an option available to you as each and every contract is different.
Will there be additional costs?
Yes, there may be additional costs of 1-4% of closing costs.