3 Misconceptions that Buyers Have About Pre-Construction Condos
Pre-construction condos get a lot of bad press. When discussing the Toronto condo market, many outlets or “personalities” make the city’s high-rises seem more of a liability than they really are.
But how true are these claims? The costs of high-rise complexes have no doubt increased, but does mean that home-buyers should avoid them or settle for less?
The answer is no. In fact, many of the notions about pre-construction condos are misconceptions, and it’s worthwhile taking a look at why they don’t hold up.
1. You Will Wait An Eternity to Get That Condo
In some instances, buyers have to wait it out – as in several months – before they can move into their condo. But this is more of an exception to the rule. In most cases, condo developments finish around the projected launch date, either right on time, a little after or even before its official open date.
Delays (and cancellations even) are just as frustrating to developers as they are to buyers. Also, look at a delay from this perspective: sometimes the cause of the slowdown comes from factors the developer can’t control. That could be from harsh weather, labour strikes or structural issues that need attention. In these instances, a delay is a positive thing. It means the builder is taking steps to ensure they won’t sacrifice high building standards for the sake of meeting a deadline.
Now there are some builders who will delay (or worse, cancel) a project with no apparent or justifiable reason. Usually, these condos come from builders who don’t have strong track records. You can always do your research on the developer and builder to see how their past projects have turned out before considering one of their units.
2. Costs – Pre-Construction Condos Aren’t Worth the Money
With the many pre-construction units on the Toronto condo market ranging from 500-750K+, the 20% down-payment requirement serves as a major turnoff for buyers. But you DON’T need to put a 20% down-payment on a pre-construction.
Trustworthy developers allow you to bypass the traditional down-payment as a lump sum, so that you can stretch out your payments. This gives you breathing room to make payments, and relieves the stress of not being able to afford a more competitive unit when the time seems right.
Now another misconception that involves pre-construction condos and their costs is that they’re generally unaffordable. Some developments are simply too pricey for certain individuals. But the market has become more affordable for many first-time home buyers because there is an abundant supply of condos.
Ultimately, a condo’s affordability boils down to your finances. That includes your monthly budget, annual income, payment structures and more. That’s why it’s better to look at a condo’s value and deeper into your finances to see whether you truly should buy a particular condo or not.
3. Pre-Construction Condos Bring Too Many Risks in General
The element of risk is one of the strongest reasons (and misconceptions) as to why people shy away from buying pre-construction condos. What is this element of risk exactly? They include:
- The fear that the development will fold (and that the buyer will lose their deposit)
- Surprise fees and bills may pop up around closing time
- You never know what you’ll get with a pre-construction unit
These are all legitimate concerns but here’s reassurance for all three.
In terms of a development folding, the risk of a cancellation is very low. More importantly, if a cancellation were to happen, buyers will receive a deposit protection to minimize total loss of one’s payments.
As for surprise fees and bills, these sudden appearances will not likely happen if the developer has a solid and reputable track record. Such a builder would likely include all fees and closing costs into the price of your suite so as to be covered by your mortgage payments.
Finally, regarding the fear of not knowing what you’ll get, rest assured that you as the buyer are in control of this. One of the advantages of buying a pre-construction condo is that you get to choose, question, scrutinize, and request whatever you want for your condo during the development phase.
Not Everything About Pre-Construction Condos Are True
Buying a pre-construction condo (or any home for that matter) is a major undertaking. It’s likely that you will experience a degree of uncertainty and stress. However, buying into one of these new units isn’t any more or less risky than buying a resale condo or a standard home.
What matters most is to research the history of the builder responsible for your condo, and to secure a unit that fits within your monthly budget and income range. In so doing, you will minimize the perceived element of risk that pre-construction condo myths seem to stir up.