How to Buy a Pre Construction Condo: Why Hire a Platinum Cashback Realtor?
The Uniqueness of Pre-construction Condos
Buying a pre-construction condo in Toronto is distinctively different from buying a resale condo.
Pre-construction deposit structure and payment schedule:
New condo purchases don't require a large upfront down payment.
Buyers usually can start with a smaller deposit.
Buyers can arrange variable payment schedules over a couple of years.
The seller of new condos is a corporation instead of an individual seller in the resale market.
Pre-construction condo closing costs are higher than that of the regular resales market.
The occupancy date may differ from the closing date.
Key Documents
Builder’s agreement
- Instead of using the Agreement of Sales and Purchase in the resale market, builders may use their own format.
- Buyers should hire a real estate lawyer to review the documents for their own interests. For example, are there any clauses allowing builders to make changes to the unit or any spaces at the builder’s discretion?
Disclosure statement
Similar to the Status of Certificate, the disclosure statement is an important document prepared by the builder. It includes:
The rules and financial status of the corporation
The condominium’s features and amenities
The corporation’s declaration, bylaws, and budget for the first year after registration
It demonstrates that the builder has met all statutory requirements
Main Terms and Clauses
Ten-day cooling-off period
Once the buyer receives a copy of the completely signed contract or the disclosure statement, whichever comes later, the buyer has a 10-day “cooling-off” period to reconsider the purchase.
- It means you are allowed to change your mind in that period of time, even though you have signed the contract.
- If you decide to cancel the contract and provide the written cancellation notice within that 10-day period of time, your deposit will be refunded.
Interim Occupancy
Buyers often take occupancy before the home title transfer. They pay the occupancy fee until the corporation is registered and the title is transferred to the owner. The interim occupancy fee calculation is based on the interest of the unpaid balance, the estimated municipal tax, and projected common expenses.
Assignment
- An Assignment Agreement means the transfer of one person’s benefits or rights over a property to another.
- In pre-construction builder contracts, the builder usually has restrictions on condo pre-selling.
- An assignment may cause HST rebate-related issues and tax implications.
- Pre construction condo investment takes a large share of the assignment sales.
Potential Risks
You may encounter discrepancies between plans and actual construction, deficiencies in the common elements, delays in the schedule, or even the cancellation of the whole project.
Consumer Protection by Law
The Ontario Building Code
The Ontario building code governs the detailed technical and administrative requirements and sets minimum standards for building construction in Ontario.
The Ontario new home warranties plan act
This act defines warranty coverage for new homes including the units, the common elements of a condominium corporation, and condominium conversion projects. The coverage includes:
Protection for deposits
Compensation for delays in closing or occupancy
Protection against unauthorized substitutions
One and two-year warranties for certain defects in work and materials
Seven-year warranty for major structural defects
Coverage for condominium common elements
The ownership change doesn’t impact this coverage, which means the coverage stays with the building itself as long it meets the requirement.
Deposit protection and delayed closing compensation
There are also other rules covering the deposit and compensation for consumers’ interests in the case of project delays and regulating how many times a builder can delay the closing in Ontario.
How to buy a pre construction condo
- You can contact directly with the builder's office for a unit
- You can also hire a realtor free of charge.
Why do you need a realtor?
- The new condo market is different from the resale market. Pre-construction condos have a fixed price. The builder has in-house salespersons to market and promote their products.
- You may not be aware that when you buy a new condo, the realtor fee is paid by the builder. You can get a decent cashback from your realtor.
- To qualify for this rebate, buyers have to go with a realtor on their very first visit to the builder. The real estate agent needs to register you as a buyer with the builder.
- In addition, you need a realtor to deal with the following issues during the transaction.
Transaction related issues
Considerations
- How comfortable do you feel when negotiating with experienced professionals?
- How familiar are you with the market?
- Are you aware that the closing cost is much higher than the resale closing?
- Do you know that the development charge can be capped and upgrades may be negotiable?
- How much can you gain from the negotiation?
For premium units
Those units with a better view, a nicer floor plan, and a higher floor are commonly allocated and sold well before the public opening. Hiring a realtor may help you source those premium units.
For the commission
The realtor you hire gets paid by the builder. If you don’t hire a realtor, that commission may go to the sales team of the builder.
Hire a platinum real estate agent
What is a platinum agent?
In a nutshell, a platinum agent is the first group of agents/brokerages chosen by the developers to sell their units. For every project, the number of platinum agents is normally limited to from 10 to 20.
The benefits of working with a platinum agent
- Secure Premium Units at the Best Price
- Lock Incentives & Promotions
- Get Favorable Deposit Schedule
- Cap on Development Charges & Levies
- Free Assignment Clause for most projects
In addition, you will be the first group to access the floor plan, promotion materials, project schedule, etc., which allow you more time to make the purchase decision.
Why us?
Platinum Access to most projects in GTA
Top value service: streamlined process supported by an experienced, service-oriented team
Call (647-914-7337) for details: transparent and efficient! you won't regret it!!!
Important!
1. You have to be registered by the realtor with the builder at the very beginning. If you provide your name to the builder without mentioning your agent, then the builder is not obligated to pay a commission to your agent, and eventually, you leave a large sum of money on the table.
2. To protect your best interest, hire a good real estate lawyer to read through the thick volume contracts.
