Buying a pre-construction condo in Toronto can be very lucrative with many great benefits. The first benefit is that you get first access to the units that you like with the best price, allowing you to leverage your money to gain a better return on your investment.
However, it's important to do your research and be aware of the potential mistakes that can occur during the buying process. By knowing what to watch out for, you can avoid costly and frustrating errors. Here are 7 things to avoid when buying a pre-construction condo in Toronto.
1. Not doing enough research on the developer
When purchasing a pre-construction condo, it is important to choose a reputable and experienced property developer like Frank Gehry.
Unfortunately, many buyers make the mistake of selecting a developer based on the structure or price alone. This can often lead to subpar construction quality, delays in completion, and a host of other problems.
In order to avoid these pitfalls, take the time to research various developers before making your final decision.
Look for developers with a proven track record of delivering high-quality projects on time and within budget. Also, be sure to read online reviews and speak with past customers to get an idea of what to expect.
By taking these precautions, you can help ensure that your pre-construction condo purchase goes smoothly and without incident.
2. Mortgage Interest, Maintenance And Other Fees
One mistake that many people make is underestimating the costs associated with ownership, including mortgage interest and maintenance fees. Mortgage interest can easily add up, especially if you're not planning ahead. Maintenance fees can including parking and a locker. In addition to your maintenance fees beware of any other monthly fees that may come up.
Other fees can include:
- Monthly hydro bills
- Water charges
3. Not Consulting a Real Estate Lawyer
One of the biggest mistakes you can make is not consulting with a real estate lawyer.
There are many different aspects of a condo purchase that a lawyer can help you with, from reviewing the Purchase Agreement to ensuring that you understand your rights and responsibilities as a unit owner.
Without legal advice, you may end up making decisions that could have costly consequences down the road.
A lawyer can help you understand the contract, the developer's disclosure statement, and any other legal documents involved in the purchase. They can also answer any questions you have and help protect your interests.
Without a lawyer, you may not understand all of the potential risks involved in buying a pre-construction condo. So, be sure to consult a real estate lawyer before making any decisions.
4. Underestimating the closing expenses
When you're buying a pre-construction condo, it's important to be aware of all the potential costs involved in the transaction.
Many first-time buyers make the mistake of underestimating the closing cost, which can add up quickly. These include land transfer taxes, legal fees, development charges, HST and other miscellaneous costs.
Registration occurs when the title is handed over to you by the builder. This is also when payment for closing charges must be made.
It is important to have a good real estate broker who will work with you on negotiating the closing cost cap. An investor must pay HST when they close and all registration fees.
5. Falling in love with the model suite
It's easy to see why so many people fall in love with the model suite when they're shopping for a pre-construction condo in Toronto. The models are almost always professionally decorated, and they often include high-end finishes and fixtures that aren't available in the actual units.
However, it's important to remember that the model suites are designed to sell condos, not to give buyers an accurate representation of what they're actually going to get.
For one thing, the model suite is often much larger than the average unit, giving buyers a false sense of space. In addition, the model suite is typically decorated with high-end finishes and furniture, which can make the units seem more luxurious than they actually are.
It's important to keep these things in mind when viewing pre-construction condos, lest you fall in love with the wrong unit.
6. Trusting the floor plan
You are investing in much more than just four walls and a roof. You are also investing in the promise of a certain lifestyle.
The floor plan is one of the most important aspects of this promise. It is a map of how you will live in your new home. And yet, many buyers make the mistake of trusting that the floor plan they are shown is set in stone.
The truth is, things can and do change during the construction process. Floor plans may be revised to make better use of space, or to accommodate the needs of the builder.
As a result, it is important to be flexible when reviewing floor plans. Keep in mind that the final product may look slightly different than what you originally saw.
Unfortunately, many purchasers make their new house selections solely on brochures or artist conceptions. In fact, the builder has the power to alter a picture, floor plan, or layout at any time.
7. Failing to review the contract legally
The purchase agreement is a legally enforceable contract that spells out what you're receiving and the terms of the transaction. One of the most common mistakes is failing to review the contract legally.
It's important to have a lawyer look over the agreement before you sign anything, so that you understand all of the terms and conditions. Otherwise, you could be putting yourself at risk of financial hardship down the road.
The contract is full of legal language that can be confusing, and it is easy to miss something important. A lawyer will be able to advise and identify any red flags.
There is a 10 day cooling off period after the contract is signed. During this time, you can cancel the deal without any penalty.
Make sure you take advantage of this period and have your lawyer review the contract thoroughly before you make a final decision.
When buying a pre-construction condo in Toronto, it is important to be aware of the various mistakes that can be made. Underestimating closing costs, falling in love with the model suite, and trusting the floor plan are just a few of the potential mistakes buyers can make. It is also important to review the contract legally before signing anything and to take advantage of the cooling-off period. By avoiding these mistakes, you can help to ensure a smooth and successful transaction.
Read our blog on the advantages of buying a pre-construction condo.