The year is 2018 and you certainly don’t have to look too far to find a new condo development project going up in Toronto or the surrounding GTA. In January of 2018, the average price of a detached home in Toronto was around $1.2 million.
With home prices seemingly on the rise, new condo development projects have become increasingly popular for homebuyers unwilling to pay the steep prices required to own a traditional home. In addition, condos continue to pop up throughout Toronto and the GTA.
Tips to Consider When Purchasing A Condo from a New Development
Here are a few tips that we recommend you consider if you are interested in purchasing from a new condo development project in Toronto or the GTA.
1. Expect Construction Delays
No matter how promising a project is, construction delays can and will happen. Don’t lock yourself into any moving agreements until you have a finalized move-in date. This will save you from potential headaches should the construction of your condo get delayed due to unforeseen circumstances.
2. Learn Your Deposit Structure
New condo development projects have specific deposit structures. In most cases, you will be expected to pay a 20 percent down payment before your move in date. However, that payment may occur in one lump sum, over a period of two years, or within the first year of your contract signing.
If you are purchasing a condo in a desirable area, try and pay your down payment as quickly as possible before construction starts. As the area develops, your condo will appreciate in value, giving you a noticeable head start on your equity.
3. Get a Good Lawyer
This may seem like obvious advice, but it is also necessary. You want to hire a lawyer that not only specializes in real estate law, but one that knows a lot about new condo development projects.
A good lawyer will help you reduce your closing costs, review your contract and suggest amendments, and they will explain the fine print of your contract to you.
4. You Have a 10-Day Cooling Off Clause
Buying a preconstruction condo is a big decision. Not only are you spending a lot of money to buy a home, but you also have to wait for it to be built.
If you are unsure about your decision, for whatever reason, you have up to 10 calendar days to withdraw your offer (known as the rescission period). However, it’s important to discuss this with your layer as there have been problematic circumstances legally with this rescission period.
5. Condo Fees Always Increase – Stay Informed
Condo fees are something that all condo owners need to come to terms with. As your building ages, repairs will need to be made and your condo management company may raise condo fees to compensate for those repairs. We recommend attending the Condo meetings arranged by the Condo management administration to remain informed on any major decisions regarding the condo’s budget which is ultimately reflected in residential condo fees.
6. Seek an Assignment Clause
Whether you plan to live in your condo or not, always seek to have an assignment clause added to your contract. An assignment clause allows you to sell your contract before occupancy. Because new condo development projects tend to increase in value as construction nears completion, it may be in your best interest to sell your unit before it is ever completed.
As mentioned above, you can sometimes capitalize on the equity of your home before construction has finished.
7. Understand Your Closing Costs
It doesn’t matter if you are buying into new condo development projects or a traditional home, closing costs are a standard aspect of any real estate transaction. When closing your condo purchase, expect to pay things such as land transfer taxes, development levies, utility connection fees, park levies, reserve fund contributions, lawyer fees, and other fees related to closing your condo.
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