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12 Mistakes To Avoid While Buying A Pre-Construction Condo in GTA

In the last few months, we’ve read and watched endless horror stories of people taking big losses on pre-construction investments due to mortgage rate increases. Sadly, that’s not the whole story. The main problem investing in a new construction property that’s above your affordability. This is a major issue but a simple one that can be solved by doing your research, calculating finances, and saving money for future emergencies. In this blog, we talk about common mistakes buyers make when purchasing a pre-construction condo in GTA and how you can avoid them. Let’s get started…. 

Mistake 1 – Skipping Research on the Developer

Only work with a reputable developer with a track record of successful projects and timely deliveries. You are then less likely to encounter significant delays or compromise on quality. Look at their past projects, read reviews on forums like Reddit, look up their record on the Ontario Builder Directory, and consider their financial stability. 

Stay away from builders who have priced units way lower than current market prices. It is usually a sign that they aren’t financially stable or the project won’t ever be completed. 

skyscrapers in toronto, canada

Mistake 2 – Ignoring the Importance of Location

A condo in a desirable area not only promises a better lifestyle but also ensures your investment appreciates over time. Consider proximity to amenities, public transport, schools, and future infrastructure projects. I always recommend my clients to purchase a smaller unit in a good location versus a large unit somewhere on the outskirts. 

Mistake 3 – Overlooking Additional Costs

Some builders are sneaky about additional costs like development charges, HST, and utility hook-up fees. Other than these, there will be ongoing costs like maintenance fees, property taxes, and insurance. Lastly, ask about the assignment fee, which typically ranges between 0 to $10,000. Some projects don’t allow assignment of units. They won’t mention it much until it is time to pay the final deposit and grant interim occupancy. Work with a realtor who specialises in pre-construction sales, so they can advise you about builders and projects, reasonable amounts for development charges, assignment, and hook-up fees.  

Mistake 4 – Not Securing Financing Early

This is the exact mistake I talked about in the introduction. Most buyers leave mortgage approval in the future and when it is time to get it done, they find out they won’t qualify for the amount they owe to the builder. And remember, lenders’ criteria can be stricter for pre-construction properties, so make sure you are in contact with a mortgage broker all along. As a rule, purchase a pre-construction condo in GTA that’s priced at an amount you’ll qualify for right now and not a couple years in the future when the project’s ready. 

Mistake 5 – Failing to Read the Fine Print

Builders don’t hide anything but they are particularly sneaky about the fine. They might write obligations and rules vaguely, so it is your responsibility to read through. Pay close attention to clauses related to construction delays, changes to the unit or building amenities, and the “cooling-off” period. Typically, you can get 10 calendar days after signing the agreement, where you can review the fine print with your lawyer, and if you want to, choose to back off without paying a penalty. Your initial deposit is kept in a trust fund for those 10 days. 

Mistake 6 – Misjudging the Completion Timeline

Construction projects are notorious for delays caused by weather or material availability. And with major construction labour shortages across Ontario, you can expect even more delays. Plan for delays and have a flexible living arrangement in place, so you reduce any  stress and inconvenience associated with delayed move-ins. 

Mistake 7 – Underestimating the Value of a Good View

A condo with a great view can be a joy to live in and a lucrative investment. However, future developments could obstruct your once-pristine panorama. Investigate the area’s zoning and future development plans to assess the risk of losing your view. Sometimes, paying a premium for a unit with a protected view is a wise investment.

an open kitchen and living room area in a modern pre-construction condo

Mistake 8 – Not Considering Future Developments in the Area

The neighbourhood around your condo will evolve, impacting your living experience and the property’s value. Research planned infrastructure or commercial developments that could enhance or detract from your quality of life. A new park or subway station can boost property values, while a high-traffic commercial complex might have the opposite effect. 

Mistake 9 – Overlooking the Resale and Rental Potential

Even if you plan to live in your condo, it’s smart to consider its appeal to future buyers or renters. Units with versatile layouts, quality finishes, and desirable amenities tend to attract more interest and command higher prices.  

Mistake 10 – Not Visiting the Sales Centre or Showroom

While it’s easy to be swayed by glossy brochures and sophisticated renderings, visiting the sales centre or showroom offers invaluable insights. You can get a feel for the finishes, spatial layouts, and overall quality. Also, looking at the customer service’s professionalism and mannerism will tell you if you’re heading in the right direction or not. 

Mistake 11 – Waiting for the Right Floor Plan 

The truth is – the perfect floor plan doesn’t exist. Do not get fixated on the tiny details but focus on whether the unit will appreciate in the future and has all things that’ll make living convenient and comfortable. If you come across a good problem, simply book the unit. If you wait longer, property prices will appreciate and you’ll have to shell out $10,000 to $50,000 more for the same size unit and location. 

Mistake 12 – Not Working with A Real Estate Lawyer 

I mentioned it previously but it is the most common mistake a buyer makes and I just want to emphasise on it again. Your real estate lawyer will break down the complicated terminologies, point out any red flags or unfavourable conditions, and also explain to you any rights and responsibilities you have as a pre-construction condo buyer. 

Take the time to research, plan, and consult with professionals to ensure your journey to condo ownership is as smooth and rewarding as possible. Me and my team are always here to answer any questions and support your journey as an informed buyer.

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