The Pros & Cons of Buying Resale vs. Pre-Construction
Whether it is your first home, second home, or a future rental property, a house is one of the greatest investments you will ever make. With the rise of pre-construction homes and condos, it can be very difficult to decide whether to take on an existing property or invest in a new build.
At Spectrum Realty, we have specialized in real estate services in the GTA since 1992. Our team of qualified experts are here to assist you in your buying/selling journey, and that is why we have composed this guide highlighting the pros and cons of both resale and pre-construction homes.
Resale
Pros:
Well-Established Neighbourhoods
Typically, resale properties will be located in well-established neighbourhoods. These areas may offer greater access to schools, parks, shopping centres, and public transportation, all of which may still be under development in newer areas.
Unique Character and Charm
Resale homes, especially older resale homes, often boast unique architectural features and character that you may not find in newly constructed properties. This can range from vintage flooring and moldings to the overall layout and floorplans.
Option for Negotiation
Pre-construction homes have fixed prices, whereas resale properties provide room for negotiation. Sellers may be willing to negotiate the price, closing costs, or other inclusions such as appliances, which gives buyers more flexibility in the purchasing process.
Immediate Availability
If you’re on a tight timeline or eager to settle into your new home quickly, a resale property may be advantageous to you. Once your offer is accepted, you will get the keys to your new home on closing day, which typically occurs within 30 - 45 days.
Detailed Inspection
Resale properties have a history, which means you can obtain detailed inspection reports to assess the condition of the home. This allows you to make informed decisions and potentially avoid unexpected repair costs down the line.
Cons:
Maintenance and Repairs
Older homes may require more maintenance and repairs compared to newly constructed properties. From outdated plumbing and electrical systems to aging roofs and HVAC units, these additional costs should be factored into your budget.
Limited Customization
Unlike building a new home where you can customize every aspect of the design, resale properties come as-is. While renovations are possible, they may be more limited in scope or require additional time and investment.
Higher Energy Costs
Older homes may lack energy-efficient features found in newer construction homes, leading to higher utility bills. Investing in upgrades such as insulation, windows, and energy-efficient appliances can help mitigate this issue but adds to the overall cost.
Potential for Hidden Issues
Despite thorough inspections, resale properties may have hidden issues that only surface after you've moved in. From structural problems to pest infestations, these surprises can be costly and stressful to address.
Competitive Market
In popular neighbourhoods, resale properties can attract multiple offers, leading to bidding wars that drive up prices. This competitive market environment can make it challenging to secure your desired property within your budget.
Pre-Construction
Pros:
Customization Options
One of the primary benefits of buying pre-construction is the opportunity to customize your home. From selecting floor plans, finishes, and upgrades, you have more control over the final product, ensuring it aligns with your lifestyle and aesthetic preferences.
Potential for Appreciation
Pre-construction homes are priced at today’s market value, meaning there is often greater potential for future appreciation. By the time the development finishes and the surrounding area evolves, your property’s value may increase, providing a greater return of investment over time.
New Home Warranty
In Ontario, pre-construction properties come with a Tarion warranty, providing coverage for defects in workmanship and materials. This warranty offers peace of mind to buyers, knowing that any issues discovered after closing will be addressed by the builder within the warranty period.
Modern Features and Security
New builds often come equipped with modern features and energy efficient technologies that can help reduce utility costs and provide comfort. This can include smart home automation, built-in security monitoring, and high-efficiency HVAC systems that contribute to a more comfortable living environment.
Delayed Payment
When purchasing a pre-construction property, payments are typically made in instalments known as a deposit structure. This staggered payment schedule offers buyers the opportunity to spread out their financial commitment over time, which can make homeownership more accessible.
Cons:
Construction Delays and Uncertain Timelines
One of the most significant risks associated with buying pre-construction is the potential for construction delays. Factors such as weather, labour shortages, natural disasters, or permit issues can prolong the building process, leading to delays in occupancy and leaving buyers in limbo, potentially disrupting their plans and increasing their expenses.
Limited Resale Value
In the early stages of development, pre-construction properties may have limited resale value compared to completed homes. Until the project is nearing completion or occupancy, buyers may encounter challenges selling their property as assignment sales, which is the sale of the contract/rights of the property.
Potential Changes to Plans
Developers may make changes to the project plans or specifications throughout the construction process, sometimes without consulting buyers. While minor adjustments are common, significant changes could impact the layout or features of the home.
Market Fluctuations
Economic factors and market conditions can impact the value of pre-construction properties over time. While purchasing early may offer the opportunity to lock in a lower price, fluctuations in the real estate market could affect the property's value before completion.
The choice of buying a resale property or a pre-construction build requires significant thought and attention. Get in touch with our team of experts to help you determine the best choice for you and your family.
