What to Know Before Buying a Pre-Construction Condo in Hamilton

Buying a pre-construction condo is very different from buying a resale home.

Instead of walking through the finished property before making your decision, you're often making your purchase based on floor plans, renderings, specifications and a developer's plans for a building that may not be completed for several years.

That can be appealing. You may have the opportunity to choose a unit, select certain finishes and move into a brand-new building.

But there are also important differences you should understand before signing a pre-construction agreement.

1. Your Move-In Date May Change

When you buy pre-construction, you'll generally be given an estimated occupancy or completion date.

But construction can take longer than expected.

Delays can result from a variety of factors, and the date you originally have in mind may not be the date you actually move into your new home.

This matters particularly if you're selling another property, ending a lease or making other financial commitments based on the expected completion date.

Build some flexibility into your plans.

2. Understand the Costs Beyond Your Deposit

The purchase price isn't necessarily the only number you need to understand.

Pre-construction purchases can involve costs that differ from those associated with a typical resale transaction. Depending on the project and agreement, buyers may encounter items such as development charges, utility-related costs, taxes and other closing adjustments.

Your purchase agreement should be reviewed carefully so you understand what you could be responsible for paying.

A real estate lawyer experienced with pre-construction agreements can explain the specific terms of your contract and the costs that may apply.

3. Understand How Your Financing Will Work

A pre-construction purchase can involve a much longer period between signing the agreement and actually closing on the property.

That means you need to think about your financing well before closing.

Your financial circumstances could change during that period, and mortgage qualification and interest-rate conditions may also be different when the time comes to complete the purchase.

Don't assume that because you qualify today, everything will automatically be the same when your condo is ready.

Understand your financing plan and discuss it with your mortgage professional early.

4. Remember That You're Buying From Plans

One of the biggest differences between pre-construction and resale is that you aren't buying a finished home.

You're buying based on plans and representations about what the finished building and unit are expected to be.

Renderings, floor plans, model suites and finish selections can help you understand the proposed property, but the completed building may not look exactly like the marketing materials.

Your agreement will set out what the developer can change and under what circumstances.

Read those provisions carefully.

5. Understand the Occupancy Period

Pre-construction condominiums can have an occupancy period before the final closing.

During this period, you may be able to occupy your unit even though the condominium has not yet reached final closing.

The financial arrangements during occupancy are different from a normal mortgage-and-closing situation, so it's important to understand exactly what you will be paying and when.

This is one of the areas where getting professional legal and financial advice before signing is particularly important.

6. Think About the Building, Not Just Your Unit

It's easy to focus on the kitchen, finishes, floor plan and view.

But you're buying into a building and a community.

Think about:

• The location
• Transportation and accessibility
• Parking and storage
• Amenities
• Expected maintenance fees
• The overall size and design of the building
• How the surrounding area may change
• Whether the building fits your lifestyle

For many buyers, the unit itself is only part of the decision.

7. Get Professional Advice Before You Sign

A pre-construction purchase can involve a substantial financial commitment and a lengthy agreement.

Before signing, consider getting advice from professionals who understand these transactions, including a real estate lawyer and mortgage professional.

And if you're working with a REALTOR®, make sure they understand pre-construction purchases and can help you evaluate the opportunity independently of the developer's sales presentation.

Is Pre-Construction Right for You?

Pre-construction can make sense for some buyers.

For others, a resale condo may provide a better opportunity to see exactly what they're buying, understand the building's current condition and move on a more predictable timeline.

There isn't one right answer.

The important thing is understanding the differences before you commit.

If you're considering buying a pre-construction condo in Hamilton and want to talk through the process, I'm happy to help you understand what to look for and what questions to ask before making a decision.

Mike McCarthy, MBA
REALTOR®
Mike McCarthy Realty