The Full Pre Construction Home Buying Process

Buying your first home is definately a big decision and it comes with a lot of risk. The value of your preconstuction home depends largely on which project you choose to invest, the type of house you bought, relevant market condition during the time of purchase and also the builder of your brand new preconstuction home. Canadians over the years have developed interest in the pre-construction real estate market over the resale market, where you can directly purchase a property from the builders before the project is completed/still under construction.

There are many benefits of purchasing a pre construction home especially when it comes to the cost savings and the fact that it is a brand new home which nobody has lived in. A lot of investors buying their second, third or forth property value this aspect of a pre construction home.

Pre Construction Home Buying Process

The Pre Construction Home Buying process is quite simple, we will break it down into smaller concepts which is easily understandable for first time home buyers and also has value for veterain real estate investors. 

Market Research

The First Step to get you started in the real estate market is research. Start by searching “Pre Construction Homes Near Me” and go through the   Our Website provides you with a lot of information on pre construction homes and you can keep track of the market by accessing our Properties Page by licking this link.

Alternatively, you can access other websites providing deatils about new pre construction homes and compare different projects to Find the Best Pre Construction Home for Your Needs! One of the websites that we highly recommed using is REALTOR.CA

Define Your Budget

After researching and understanding the real estate market in depth, it is important to have an understanding of your budget and how it relates to your income. We recommeding factoring in costs associated with installing upgrades, the deposit, closing costs such as legal fees, home inspection fees, land transfer tax, other warranty plans occupancy fees, insurance the mortgage interest rates and so on.

For a first time buyer this process can be overwhealing, therefore we are here to help all our clients achieve the maximum returns on investment by purchasing the perfect pre construction home that fits in your budget.

Contact Jeevan Punni by scheduling a meeting or register on our site and someone will reach out to you soon.

Find the Best Real Estate Agent In Your Community

In order to find the perfect Real Estate Home it is important to find the best local real estate agent that early access to allocations and has a relationship with the Builders. This can be of a great help to you as a real estate property owner because you will also have invested in homes whose market value will expected to increase in future years and have a alliance with the builders. Jeevan Punni is a real estate agent that has over 15+ years of experience in real estate and has helped thousands of people find their dream property.

Placing an Offer

Placing an offer is the single most important aspect to consider when buying a pre construction home of your choice. Most people either underestimate or ignore the power of negotiating with the builders during the time of placing an offer. 

Many costs associated with buying a pre construction home can be elimated if the builder is willing to negotiate the details of your purchase. You might consider negotiating for a free locker, an extra parking spot, and cash back on moving allowances. 

If you plan on financing 75-80% of the purchase price of the property, the builder might be willing to negotiate your deposit structure as well or choose you provide you with VIP Incentives (More on this later).

Deposit Structure on a Pre Construction Home

The Deposit Structure of the property you’re about to purchase varies on the builders, the type of property your planning to buy, and your negotiation skills.

Typically, pre construction condos require a deposit of atleast 20%. Although this deposit is not required upfront and is paid off over  the years as installments. An example of a payment plan is described below.

  • Purchase Price: $500,000
  • Total Deposit: 20%
  • First Payment: $5000 with the offer
  • Second Payment: $20,000 in 30 days
  • Third Payment: $25,000 in 60-90 days
  • Forth Payment: $25,000 in 90-180 days
  • Fifth Payment: $25,000 at closing/occupancy

Again, keep in mind that the deposit structure varies for different builders and even different projects of the same builder. Although the deposit that you provide will be reduced from the purchase price and is divided across months or even years.

You have more room for negotiation when the construction reaches completion – when you’re a few payments away from the occupation date.

Closing of the deal

Right after signing your deal with the builders to purchase your dream property, you as a buyer, have the right to decline the intent of purchasing and waive the contracts you have signed as a part of the “Offer”.

Which means that after entering into a commitment to purhcase the home and signing post dated cheques to the builders, you have the right to cancle all your contracts and get back the deposit amounts during the cooling period

The duration of cooling period varies from provience to provience but a typical cooling period lasts arund 7-10 days after siging the deal.

After you have paid off the deposit prices and all the costs associated with closing the deal, you will now move forward with the pre closing inspection phase of your purchase. The builder will contact you and set up a pre closing inspection meeting at the house to ensure your satisfication and trust with moving forward with the closing. 

This provides you with the oppotunity to call out any deficiencies by the builder, which is caused by their actions or their negligence. Make sure to read and understand the fine prints of the purchase agreement and refer to it whenever required. 

Depending upon the completion date of your pre construction home, there might be a sinerio where the builder will call you to live in your unit while the rest of the building/project is finishing. This is called the occupancy period.

Because the occupancy period exists before the completion of the building, you will have to face certain difficulties during your stay as most ammenties offered with the construction of the building are not yet completed. You might have sound distrubances and loud noises due to construction. 

However, your stay at the unit before owning it is technically not free. You still have to make a small monthly payment called occupancy fees that will help your developer break even the cost of your stay. 

After the occupanncy period expires, your tenant insurance must be transferred to a homeowner insurnace – there should not be a day’s gap where you are left without either insurance.