BUYING A PRE-CONSTRUCTION CONDO VS A RESALE CONDO
When you’re in the market for a condominium in the Greater Toronto Area, you’re faced with a significant choice: should you buy a pre-construction condo or a resale condo? Understanding the key differences between these two options is crucial for making an informed decision. Here, we’ll explore both, but you’ll see why a resale condo might just be the better choice in today’s market.
Before we begin, let’s make sure we understand the difference between both options.
Resale condos are established properties that have been previously owned and are now up for sale by the current owner. These units are typically ready for occupancy now, and you can see exactly what you’re buying, from the layout to the neighborhood.
Pre-construction condos, on the other hand, are units being sold by a developer off of floor plans, meaning they aren’t built yet. These can take several years to be ready for occupancy, leaving some uncertainty in your purchase.
Factors to Consider Before Buying a Condo
Buying a condo is very different from buying a home. Aside from the communal aspect of living in a community, the right condo development can enhance your lifestyle with a number of amenities and offerings.
Here are some important things to consider if you’re buying a condo for the first time:
- Location: Condo developments are usually built in denser areas of cities, and often in prime locations that may be close to public transportation, shopping, and schools. If you are purchasing a condo because of the convenience of its location, spend some time exploring the area of the project to see if it provides you convenience and enhances your lifestyle.
- Maintenance Fees: Unlike a freehold home, you will be required to pay a monthly maintenance fee when living in a condo. This monthly fee varies widely depending on the condominium building/ project, so make sure to understand exactly what this amount is and what it pays for. Typically, it may pay for a portion of your utilities, your parking or locker access, and the privilege of using the building amenities. Regardless, you will need to budget for this fee along with your mortgage payment.
- Building Amenities: Depending on the condo development, it can come with limited amenities or world class amenities such as state of the art gyms, swimming pools, theaters, game rooms, party rooms, bbq areas, and much more.
- Condo Rules: It’s critical to understand the rules and by-laws of the condo building you want to live in. Each building decides on their own policies, and this can impact you if you own a pet or want to rent out your unit to someone else.
- Property Condition: The state of the condo and the building can impact future expenses. Check the age of the building, recent upgrades, and the condition of common areas in case it is a resale.
- Financing: Securing a mortgage for a resale condo is much different than getting financing for a pre-construction unit. You will need to have an in-depth conversation with your lender before deciding which type you want to purchase.
Let’s look at the pros and cons of buying a resale condo versus a pre-construction condo
RE-SALE CONDOS
| Advantages | Disadvantages |
|---|---|
| Lower Deposit Requirements Only a 5% minimum deposit is required for condos under $1 million. (5% Up 500K and 10% on remaining up to $1 Million. |
Higher Maintenance Fees Typically higher than those in newly constructed buildings. Well managed buildings are always exception. |
| Cost-Effective Typically much cheaper per square foot compared to newer condos |
Outdated Amenities Newer developments may have larger and more exciting amenties |
| Immediate Occupancy You can move in 30 to 120 days closing date instead of waiting for construction. |
Special Assessments Potential for extra costs depending on the building's age and condition in badly managed buildings |
| Established Neighbourhoods No risk of new towers being built next door and obstructing your view |
Wear and Tear Older units will likely need minor repairs. |
| Larger Units Resale units are usually larger than new pre-construction projects |
Renovation Needs May need to renovate to modernize or customize the unit to your liking. |
| Building Stability Financial documents and condo by-laws are readily available. |
Warranty Period Typically outside of the Tarion warranty period. |
PRE-CONSTRUCTION CONDOS
| Advantages | Disadvantages |
|---|---|
| Customization Ability to choose a layout and custom decor. |
Large Deposit Typically 20%+ paid in installments over 1 to 3 years. |
| Lower Maintenance Fees Newer buildings tend to have lower fees |
Undetermined Closing Costs Development charges are not known at time of purchase and can be astronomical |
| Modern Amenities Newer technologies and amenities |
Occupancy Period Paying rent to the builder until all the units are completed and registered |
| Prime locations Many new projects are in prime locations |
Market Risks Risk of lower appraisal value in a declining market. |
| Deferred Mortgage Payments No mortgage payments until registration of the building |
Project Failure Risk of project failure in an economic downturn or greedy builders. |
| Profit Potential Ability to exit for profit via assignment (has not happened over the last few years). |
Smaller Spaces Newer projects feature smaller and more compact floor plans |
| Builder Incentives Occasional incentives like discounts, lockers and upgrades, assignments, development caps, guaranteed rent |
Parking Costs Not all units qualify for parking, and parking can be very expensive to purchase |
Conclusion
Both pre-construction and resale condos have their perks, but resale condos often shine with some key benefits. The biggest benefit is that you can move in right away – there is no delay and waiting around for construction to finish. In addition, some buyers have a tough time visualizing a unit from a floor plan. Resale condos are already built, so you know exactly what you’re getting. You can also see the building’s current condition and management style upfront.
One of the key considerations to understand is that resale condos often come with a lower price per square compared to pre-construction units. You also dodge the uncertainty of construction delays and market swings, making resale condos a solid and practical choice for many buyers in the GTA.Much more options / choices as compared to preconstruction projects.
As you decide, think about your lifestyle, budget, and long-term goals. Choose what fits you best, and happy condo hunting!
The first step is to schedule a no obligation in-person or zoom video call meeting to understand what may be the best option for you to buy a resale condo or invest in a preconstruction condo project in GTA. We thoroughly analyze your needs & wants and situation and guide you accordingly. 10 out of 10 buyers have found this initial meeting to be extremely useful in their home buying journey. Get in touch with a Real Estate Expert today!
Picture by Manny Becerra on Unsplash
Tell us what are you looking for by filling the form below and we will be in touch right away
Dream Home
Explore Reviews and Testimonials to see why clients trust TEAM Paliwal, the REMAX Agents in Mississauga Oakville. The perfect moment has arrived to “Find Your Dream Home,” and the dedicated professionals at TEAM Paliwal from Remax Realty Specialists Inc in Mississauga are ready to provide you with unparalleled personal attention.
To be among the first to receive new listings of homes for sale, fill out the form. No obligation — just daily updates to help you find YOUR DREAM HOME!
As we progress, we’ll explain and request you to sign a Buyer Representation Agreement, ensuring the highest quality of real estate service.
Verified Reviews of The Best Real Estate Team
- Amit Arora, October 2023
- Nimish Sharma, October 2023
- Ruchi Naik, October 2023
- Mohamed Elghazaly, October 2023
- Anu Chadha, August 2023
