If you’re on the hunt for a pre-construction condominium, rather than a move-in ready unit, your buying journey is going to look quite different.
From having to account for installment-based deposit structures and pre-construction “sales cycles,” to the fact you can customize multiple features of your future unit, the list of differences between pre-construction and resale is long.
Rather than opening up access to all units to buyers at once, condo builders follow a sales cycle in which they stagger the release of their residences in multiple phases across several months. Getting in early, during the first phase when a developer is still securing financing for a project, is critical to snagging pre-construction units for the lowest prices. Moreover, this is when developers tend to offer special incentives that can include everything from cash back to big discounts on parking and luxury finishes.
It’s common practice for developers to hike up prices progressively in each phase as they sell off inventory. Add to that the fact you may have a smaller selection of units (and floor plans) to choose from in the later phases of a project’s sales cycle (when much of a building has already sold) and it becomes all the more clear why getting into a pre-construction building early is key.
Forming an Agency Relationship with the Buyer Client
- Meet with buyer client and obtain search criteria
- Have the buyer client sign Buyer Representation Agreement and Working with a Realtor Form
- Obtain 1 piece of Government issued photo ID (Drivers License)
Selecting a Development
- Google research developments matching buyer client criteria and speak with pre-construction colleagues to identify the best projects
- Search for name of pre-con developments in GMAIL to retrieve emails from Builder Representatives with contact details
- Contact Builder Representatives from your brokerage for access
- Contact 3rd party Builder Reps for access if no Builder Representatives work with your brokerage
- Have the Builder Representatives email you:
- Marketing packages for developments of interest
- Price list for current availabilities
- Payment structure
- Floor plans for current availabilities
- Monthly PSF maintenance cost estimate from builder
- Confirmation of incentives: parking, locker, luxury finishes, appliances, assignment fees, right to lease
- Confirmation of closing costs: levies, development charges, other taxes
- Base finishes
Upgrade options and costs
Making the Purchase:
- Complete worksheet with client for desired unit
- Include photo of buyer client’s government issued photo ID
- Include photo of Initial Deposit Bank Draft
- Include photo of Void Cheque
- Obtain confirmation from builder about which units are available and the price for the unit types the buyer client expressed interest in
- Ask the builder’s representatives about everything that can possibly change in floor plans, renderings, amenities, parking, etc. between now and when the building is completed.
- The buyer client now selects the specific unit they will be purchasing
- The client needs to select upgrades and finishes which will increase the cost
- Confirm the following prior to signing the Agreement:
- Usable Square Feet
- Whether or not Sales Tax is included or not included in the purchase price
- The buyer client now signs the Agreement of Purchase and Sale
After Signing the Agreement of Purchase and Sale:
- During the 10-day recession period, have the Agreement of Purchase and Sale and condominium documents reviewed by a lawyer who has experience dealing with pre-construction transactions to understand any possible charges and fees that can arise during closing
- If buyer client is not satisfied with their purchase, they can retrieve the deposit bank draft and cancel the purchase within 10 days of signing the Agreement of Purchase and Sale
- If buyer client is happy with everything, then they will only need to make the pre-determined payments per the agreed payment structure on the planned payment dates. Before occupancy, they will need to arrange: Mortgage Financing for Balance, Property Insurance, Utility Transfer
After Taking Possession:
- A home inspector should be hired to conduct a detailed inspection of the property to identify ANY and ALL building defects or omissions
- If there are any defects or omissions, these will be specified in a report and sent to the builder to correct
- Once the builder corrects all defects and omissions, the buyer client will sign off on transfer of possession.