Did you know that in Canada, 1 in every 3 homes bought is purchased directly from a builder or developer? There are many benefits associated with purchasing a home during the pre-construction stage including spending less, customization options, the pride of ownership, and a really good return on investments (ROI) when you decide to sell your home later.
Here are 14 steps for purchasing a pre-construction house in Toronto:
Visiting the homesites and project sites will help you get to know your potential new neighborhood and the social amenities near the area. Visiting project sites will let you know if there’re any plans for future commercial expansions in the area.
Find a great real estate agent or broker who is experienced in pre-construction and in new construction to represent you. Most of the agents represent the builder or developer and are duty-bound to act in their best interest, meaning that their work is to ensure that the builder or developer gets the highest price possible. Having your agent or broker will ensure that they’re duty-bound to act in your best interest.
Before you settle for a pre-construction house, make sure you first investigate the builder’s reputation and completion record. You can start by visiting one of their recent developments or past projects and speak with the homeowners. You can also do a quick background check on them online and search for testimonials, reviews, and news related to their past projects.
Another option is checking out local home builder’s websites such as Land Development Association (BILD) and The Greater Toronto Area’s Building Industry. Also, you can find out if your agent has worked with the builder before.
Touring model homes will help you know which amenities and features come standard with the home and the upgrades. This will help you negotiate the price or avoid the extra cost that comes with additional upgrades.
If you’re happy with what you have found, you can negotiate the price with the help of your agent or broker. Many builders and developers are very reluctant when it comes to lowering the prices. You can also ask for discounts by asking the developer or builder to perform upgrades at no extra cost or pay your closing costs.
Before you purchase agreement documents, ensure that they specify a completion date. Since the house is not completed yet, make sure you get a guarantee that the house will be ready on time. Your agent should also explain to you what might happen in the event of a delay on the buyer’s or the builder’s side. When signing Agreement and Purchase of Sale (APS), ensure you know what the warranty for your new home covers.
Before you sign anything, make sure everything has been agreed upon, negotiated, and written into the contract. Remember, verbal conversations are not legally binding, therefore, ensure every little detail is written down and signed by all involved parties.
When the day to sign the APS comes, ensure you have a valid government-issued photo ID, driver’s license, and checkbook. Your agent will help you through the signing process and answer any questions you might have.
Since the house is not completed, you will not be officially registered for a mortgage. You will need to look for lenders or financial institutions to help you secure pre-approval or a commitment letter to purchase your home.
During the cooling-off period, the home is on hold under your name depending on the number of days the period lasts. You can also find a lawyer experienced in pre-construction to help you review this agreement.
After the cooling-off period, if you’re satisfied with the purchase agreement, you can finalize the contract and cash your first check.
It is mandatory for all new homes under warranty to undergo the first inspection before closing and having the ownership transferred to buyers. The second inspection occurs about a month before the home warranty is due to expire.
While you wait for the house to be complete, someone in your developer or builder’s office will be working with you to help you customize and design your home. They will help you pick the colors, finishes, and any additional upgrades you may need to create your dream home.
The Interim Occupancy and the Final Closings are very important dates and stages during the closing process. During these final closing phases, your builder or developer will inform you that the house is ready for Interim Occupancy. You will then meet with your lawyer before making any outstanding deposits and occupancy fee payments.
You will meet with your lawyer a second time shortly after the final closing date. Your lawyer will help you sign all the documents to officially transfer ownership of the home from the developer or builder to you.
There’re some lifestyle factors you need to consider before buying a house during the pre-construction stage. Remember, you’re not only buying a house but also purchasing a home and into a neighborhood.
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