You may have finally settled on buying a condo due to its many advantages, like the reduced cost of transferred maintenance duties. However, buying a home is no mean feat; you should get all the information you need beforehand. For condos, you can buy newly built condos, pre-construction condos, or from a previous buyer.
Pre-construction condos, as the name suggests, are yet to be built. Now you may wonder why anybody would buy a condo yet to be built. Buying condos from another owner typically means buying a unit that is not new, and it comes with its pros, like reduced price, while the con here is that the property is not new and may already have some damaged parts. Likewise, buying a new but already built condo with its new features but high cost.
Since the property has yet to be built, you will not buy the condo but the contract with the builder, known as an assignment. So why would you consider a pre-construction condo if you can buy a new but already-built condo? This guide shows you the benefits of buying pre-construction condominiums and why many people see it as the perfect investment opportunity.
Benefits of Buying Pre-Construction Condos
Buying a property before it has been built does not feel logical, but pre-construction condos are popular among homeowners. The benefits of purchasing this unit before its construction are vast, and we'll see some of them here.
1. Stronger Negotiating Power
With the property unfinished or unstarted, you hold a stronger Negotiating power to try to beat down the price and get a good deal. The idea is to use whatever the current building stage is as a bargaining chip.
2. More Time to Save for the Condo
Buying pre-construction condos gives you time to save up the money for the home. When buying pre-construction condo assignments, you generally would not have to pay the full amount of the condo; you can put a down payment and lock in your commitment. The acceptable down payment percentage varies from developer to developer, with a range between 10% to 50%.
You can make the down payment and start saving for the rest payment while the developers are constructing the property. You can have up to one year to save up if you paid the down payments at the foundation level or earlier. Then, within the waiting period, you can go ahead with your business to generate the amount for the unit so you can move it.
3. Enjoy a Cooling-off Period
If you buy a pre-construction condo, you enjoy a 10-day cooling-off period where you go through the agreement again with a clear head and decide if you want to go ahead with the contract. This is the period to let your financial adviser and lawyer look closely at the agreement to help you with mistakes.
The cooling-off period is like a money-back guarantee but for condos. You'll get your money in full if you decide to back out of the deal. In Canada, the cooling-off period is also a homebuyer protection program.
When you know you have ten days to change your mind, you'll purchase without pressure as you can back out, get your payments in full, and include no risk. However, you're bound to pay a termination fee of between 0.1% to 0.5%.
4. Customize With Your Style
Buying pre-construction condos allows you to exert your style in the condo. Since the condo is still under construction, you can suggest your favourite finishes to get a finish customized to your taste. You can customize the type of door, tiles, paint and finishes similar to your spec. Compare the level of customization with moving into an already built condo, whether new or old and see why putting in the finishing touches.
It gets even better as some pre-construction listings even offer customization upfront for condo owners to choose their favourite finishes to set their condo different from neighbouring complexes. The upgrades will usually not cost you if they are within the previous plan's cost. However, if you want to customize with features above the range, you may be asked to cover the additional cost.
5. Potential for Appreciation
You can get a good value when you buy pre-construction condos with even the potential of buying below market value since some of the sellers may be in a financial crisis or are looking to sell because they no longer like the contract. The potential for a rapid appreciation immediately after the property is concluded with the long-term potential for the piece of real estate to build equity and appreciation.
The properties may appreciate as soon as it has been completed, and you can quickly profit if you choose to sell. However, by the time it takes the property to be completed, the general cost and urbanization of the area would have risen, sending the condo's value sky-high.
6. Hassle-Free Process
Buying properties, in general, tends to get messy, with finished condos typically selling in bidding wars. However, you can jump the queue by buying the property before it becomes a bidding war. You also get to choose a fantastic spot too.
Instead of waiting for it to become rowdy and buying a condo unit at exorbitant prices due to bidding wars, get in early and pick a good condo assignment while you wait for construction to be completed.
There are many more benefits of buying pre-construction condos which cover condos that still need to be completed no matter the stage of its completion. Aside from saving cost, the customization you can do with a pre-construction condo is enormous as you bring the unit to your taste.
Finding the right pre-construction condos in Canada may be challenging without knowing where to look; some sites have a collection of condos, from pre-construction to buying from an existing owner.