If you're looking to buy a new condo in Toronto, you've started at the right place. Buying pre construction has many advantages, as well as potential pitfalls. Having someone guide you through all the marketing and hype is important. I’ve personally put together this part based on my experience to help simplify the process.
The first thing you'll want to do is sign up by clicking here and send me an email with your interest to buy preconstruction. When new projects are launched I can send you information before the general public.
Now to the condo buying process! Like any investment, it's important to be financially prepared. Speak with a mortgage broker on different options of financing. You won't need to give the developers the entire amount until the final closing, but they’ll still want proof you can afford the unit.
After the money issues are in order the fun begins. I get early access to floor plans for the entire building and can easily set up and appointment to preview before going to the sales centre. Typically the builder will ask for a 25% deposit (this varies with different projects) you’ll have to have that cash on hand, but it won't have to be delivered at once. Usually payments are staggered over a couple of years.
Once the prefect unit is found and the paperwork has been signed you'll have 10 days (rescission / cooling off period) for your lawyer to review all the documents. As part of my ongoing service I provide access to real estate lawyers. These lawyers work specifically in new condos and know what to look for to protect your interest and make necessary changes. Contracts are long and often full of clauses unreadable to the common purchaser. To protect your interests, I highly recommend having the documents reviewed.It'll usually take a couple of years until the Building is ready for occupancy (delays should always be anticipated) and in that time you'll be expected to keep up with the deposit structure. The money is held in a lawyers trust account and not in the back pocket of the developer.
Technically there are two move-in dates. The first being your "Occupancy Date," this is when the municipality allows the purchasers to occupy the units. Since there is no title given on the property, a mortgage can’t be issued. The purchaser is responsible to pay a monthly occupancy fee (that amount is similar to your future mortgage payments). It is split into 3 components: estimated monthly maintenance fee, estimated monthly realty taxes and estimated monthly interest component. The purchaser can avoid paying the interest portion of the occupancy fee if they decide to pay the full balance of the purchase price owing on the date of occupancy. (However, in order to do this, the purchaser or his lawyer must request this during the 10-days rescission/cooling off period) The amount of time you'll be paying this "phantom mortgage" varies. Developers can’t collect the money from the trust account until the building is registered so it’s in their interest to keep the occupancy time to a minimal. During this time the city inspects the building to make sure it is built according to the plan they agreed on with the developer. Once it's been verified, the building becomes "registered" and the final (second) closing occurs. At this time the mortgage is due and the condo unit becomes yours!
The biggest advantage to buying preconstruction is price. The earlier you buy into a project, the more you save. The preconstruction pricing relies on basic supply and demand principles. As more units sell, developers increase their prices on the remaining inventory. Many clients have been lucky enough to see their units increase by thousands in just a few days. (Keep in mind that the increase is only on paper and the money isn’t made until the owner resells the unit upon completion) Through my work in the downtown core, I’m able to get my clients into brand new projects before the general public. In some cases I’m even able to get them in before they open the project to other realtors.
With all the advantages, there are some pitfalls. The biggest being representation. Too often buyers walk into a sales office and purchase directly thorough the developments sales team. This is a big mistake! What smart buyers must remember is that these people are not representing your best interests and often times try pushing the left over units onto unsuspecting buyers. Luckily there is an easy solution to this. Have me represent you when buying a condo. I can get you access to many projects before the general public, provide you with information on the developers past projects, help arrange financing, provide you with floor plans and other renderings of the projects, but most importantly protect your interests. My service doesn’t stop once the papers are signed; I’m in it for the long haul and am always available throughout the entire process regardless of how long it takes.
Your next question is probably...”how much do you charge to be my representative?” My answer: “nothing” Sounds too good to be true, I know! There is a fee incurred, but it’s the developer who pays it so typically there’s no commission to be paid by you. A prudent buyer might think that if they go into a sales centre, without a Buyer Representative, they can get a reduction on their unit because they builder won’t have to pay a commission, - Not True! They sell their units for the same price regardless if you have a buyer’s representative or not. To get all that I have to offer, can you afford not to have me represent you?
So now that you know a bit more about how the preconstruction process works here's how you can you can stay ahead of the crowd. Send me an email my clicking here with your interest in purchasing pre-construction. Whenever a new project comes my way I’ll send you the details on it.
