End User’s Guide to Buying Pre-Construction Condos in Toronto

February 23rd, 2024

If you’re considering buying a pre-construction condo in Toronto, you’re in for an exciting journey. Toronto is known for its vibrant real estate market and many pre-construction condo opportunities. However, purchasing a pre-construction condo requires careful planning and research. In this guide, we’ll walk you through the essential steps involved in buying a pre-construction condo in Toronto.

What Is a Pre-Construction Condo?

Pre-construction condos are new condominium units that are sold before they’re built. The primary advantage of buying pre-construction condos is that buyers can get a lower purchase price. If the condo market is rising when the unit is completed, the buyer can usually sell the property for more than the purchase price. Additionally, buyers have the opportunity to pick their preferred units from the available floor plans and building specifications, and to select the features and finishes that best suit their personal style and lifestyle. That means customization and affordability are additional benefits of buying pre-construction condos.

Next, here are the steps you’ll want to take if you’re considering buying a pre-construction condo in Toronto or the Greater Toronto Area.

Research the Market

Start by doing thorough research of the condo market. Understand the current trends, demand, and supply dynamics in Toronto. Look at factors like location, amenities, transit options, and future developments in the area. Familiarize yourself with the price range for pre-construction condos in different neighbourhoods and assess what fits your budget and lifestyle.

Understand the Timeline

Pre-construction condos have longer timelines compared to resale properties. Understand the estimated completion timeline for your chosen project. Developers usually provide an estimated occupancy date, which is when the building will be ready for residents to move in. Keep in mind that delays can happen due to various factors, including construction issues, weather conditions, or unexpected circumstances. Prepare yourself for potential delays and plan your living arrangements accordingly.

Review the Floor Plans

One of the advantages of buying a pre-construction condo is the opportunity to select from different floor plans. Carefully review the available options and consider your lifestyle, spatial needs, and preferences. Pay attention to the unit size, layout, number of bedrooms, and overall functionality. Visualize how the space will work for you and whether it aligns with your long-term goals.

Understand the Pricing Structure

Pricing for pre-construction condos in Toronto is typically based on a per-square-foot basis. Developers usually have a tiered pricing structure, with prices increasing as the building progresses. Understand the pricing structure and consider factors like floor level, unit size, and view when evaluating prices. It’s essential to have a clear understanding of the total purchase price, including any additional costs such as parking or locker fees.

Get Legal Advice

Hiring a real estate lawyer who specializes in pre-construction condos is vital. They will review the purchase agreement, look out for any red flags, and ensure your interests are protected. They can also guide you through the legal aspects of the purchase, such as deposit protection, warranties, and closing procedures. Make sure to choose a lawyer who is familiar with the intricacies of the pre-construction condo market in Toronto.

Understand the Deposit Structure

Pre-construction condos require a deposit structure different from traditional purchases. In Toronto, developers often require a deposit of around 15-25% of the purchase price, paid in installments over the construction period. Deposits for pre-construction condos are typically held in trust since the property remains under construction. This means that the deposits are protected if the builder goes bankrupt or fails to deliver the property as specified. Familiarize yourself with the deposit structure and its payment schedule. Ensure you have your finances in order to meet the deposit deadlines.

Stay Informed and Updated

Throughout the construction process, stay informed with regular updates from the developer. Developers typically provide progress reports and construction milestones. Attend any buyer meetings or open houses to get a first-hand look at the progress of the project. Staying updated will give you peace of mind and help you plan ahead for your eventual move-in.

Close the Deal

When the building is near completion, you’ll be asked to prepare for the closing process. This includes obtaining a mortgage pre-approval, securing home insurance, and coordinating with your lawyer to ensure all the necessary documents are in order. Your lawyer will guide you through the closing process, including the final payment and the transfer of ownership.

Prior to closing, the builder may carry out a walk-through with you to address any concerns and ensure that the unit is completed as specified. You should also request a warranty statement, which should outline warranties and after-sales support for the unit.

On the closing date, you will sign the final purchase documents and receive the title deed. This is when you’ll be required to pay the balance of the purchase price and any closing costs.

Buying a pre-construction condo in Toronto offers a unique opportunity to invest in a new property and experience the excitement of being part of a growing community. By thoroughly researching the market, understanding the pricing and deposit structure, and seeking legal advice, you can navigate the process with confidence. Stay informed throughout the construction process and be prepared for any delays. With careful planning and the right guidance, your pre-construction condo purchase in Toronto can be a rewarding and profitable experience.

Do you have any questions about buying a pre-construction condo in Toronto? Connect with BAZIS on social media (Facebook, X, or Instagram) and let us know!