Pre-Construction Vs. Resale Condos: Which One is Better?

Pre-construction projects tend to receive a lot of buzz in the GTA. While many buyers are curious about purchasing these units, some are also unsure about the benefits. Are there major advantages to purchasing a condo in a brand new building, or can you get just as much value from an older unit? While the pre-construction vs. resale debate has been going on for a long time in this city, the best way for condo hunters to make an informed decision is to familiarize themselves the pros and cons of each option.

If you’re wondering which type of unit is right for you, check out our pre-con vs. resale primer…

 

Customization

If you plan to make your condo home (as opposed to renting it out as an investment), the ability to customize it may be a key factor in your decision. Pre-construction offers you the opportunity to personalize your new space—from flooring to countertops and everything in between. In contrast, changing the finishes in a resale condo can be a hassle, and management may not even allow you to make the updates you want.

Pricing

It’s entirely possible to get a great deal in both brand new and older buildings. That said, pre-construction condos come with some unique pricing benefits. VIP and platinum prices allow buyers to save money by getting in on the ground floor (so long as you work with an agent who’s well connected enough to offer them). In many cases, developers also provide added financial incentives when they sell pre-con units.

Lastly, buying a pre-con condo allows you to “lock in” a good price. Whatever happens in the market between the day you sign your contract and the day you close, the sum you pay won’t rise above your agreed-upon price. The best part is, your condo will continue to appreciate in value during this period.

Timeline

If you’re looking to move into a new home immediately, you should only consider resale condos. On the flip side, if you don’t mind waiting a while for the unit of your dreams—or a lucrative investment—pre-construction might be right for you. Timelines vary. But the completion of a pre-con project can take years, and delays may pop up along the way. If you’re thinking about the benefits of pre-construction vs. resale units, be sure to factor in your future plans.

Down payments

In the pre-construction vs. resale debate, down payments can be a major deciding factor. Brand new condos come with more flexible deposit structures, whereby purchasers make payments over time leading up to possession of their units. This more flexible structure can provide buyers with more time to save up for their down payments—not to mention their closing costs.

Closing costs

Closing costs can add up regardless of what type of unit you’re buying. That said, pre-construction condos come with their own unique costs. Here are a few that you can expect to pay if you go the pre-con route.

Development fees

Condo developers are charged levies by municipal governments, which are then passed on to buyers in the form of development fees. These fees can vary considerably from one building to the next, but they should be capped in your contract.

HST

If neither you nor one of your immediate family members is moving into your pre-con unit, you’ll have to pay a 13 per cent HST tax.

Occupancy fees

Pre-construction buyers also have to pay occupancy fees. These fees are charged during your interim occupancy period— the period of time between when you take possession of your unit and the date when you officially own it.

The bottom line

When it comes to pre-construction vs. resale units, it all comes down to your preferences and priorities. Do you want to customize your condo from the ground up, or would you rather not bother with design decisions? Do you want to experience the financial benefits of locking in your pricing, or are you looking for a place you can move into next month? If you’re not sure which option is right for you, a real estate agent with expertise in Toronto’s condo market can help.

Searching for the perfect condo? Send us a message! We’d love to help you find a unit that meets your needs…