Should You Buy a Pre-Construction or Resale Condo in Midtown Toronto?

Just so you know, I did not use AI to write this little post.

I thought about what to write and include using my own brain, my own experiences, and typed it out using my own hands, while eating a celery stick. True story.

Joking aside, I think it's important to point this out so you know where this information is coming from.

It is coming from over 10 years of marketing condos for builders and developers, and going through the condominium purchase process with hundreds of buyers.

Now that we have that little disclaimer out of the way, we can get started on deciding whether or not you should be thinking about buying a pre-construction condo or a resale condo already completed.

What is Pre-Construction?

Pre-construction projects are condos being sold first, before they are completed, and typically even before construction is started.

You can view renderings of the building, interiors, and amenities.

You can flip through the floor plans of condos available for purchase.

Sometimes you can even visit a presentation gallery to see features and finishes in person and walk through a model suite.

But when you are buying pre-construction, you are buying a condo that does not exist yet. It is a vision (a very detailed one).

Everything will be brand new, warrantied, even sometimes customized to a certain extent, and you just need to take the keys, walk in and enjoy once it's ready.

However, these condos can take between 4-6 years before occupancy begins (people start moving in). So you need to take this into consideration before thinking about buying pre-construction.

Why would somebody buy their future home that doesn't exist yet off a floor plan?

• You don't want or need to move until further into the future

• You don't need to close and activate a mortgage today (only at closing which is at completion)

• You are only required to provide incremental deposits (typically up to 20% over one to two years)

• You want to buy brand new today, at today's pricing, anticipating value appreciation upon completion or thereafter

• You want to be a part of a brand new master planned community

• You want a hands off, no renovation, key turn ready home purchase

You need to ask yourself one question

The first and most important question you need to ask yourself (and I ask my clients) is when do you plan on moving?

This can automatically make the decision for you and dictate whether pre-construction is an option or not for you.

If you say within the year or even the next 6 months, this doesn't necessarily remove pre-construction from the equation.

The "Sweet Spot" condo purchase

There are projects that are still considered pre-construction, brand new, however are just about to be completed within a month to a few months, or have just recently been completed, but the builder still has remaining units for purchased.

This is what a like to call the "sweet spot" condo purchase for the following reasons:

• brand new, but tangible, completed, and available to walk through and see in person today

• Get the perks of pre-construction like Tarion warranty, new, upgrades, incentives

• Pre-construction pricing equal to or less than resale pricing

• HST Rebate incentive still applies (up to $130K off the purchase price)

• Additional builder discounts/incentives on select units because builders do not like holding on to inventory that is now complete

• Avoid closing costs associated with pre-construction projects if the project has already been registered/closed.

These are not always available depending the timing of you potential move, and most of the time you are lucky to find more than one option in any given neighbourhood, so when I do find one of these opportunities, it is always an option for condo buyers.

Resale condominiums

Let's assume there isn't any "sweet spot" pre-construction purchases available in the neighbourhoods you want to live in, or if you want to move out in the next 30 - 120 days, you need to be looking at resale condominiums.

These are the traditional condos that are already built, already owned, listed on MLS, and available to view in person today. They can be anywhere from 6 months old to over 25 years old.

Here are the things that need to be true in order for resale condos to be an option for you:

• You want to or are able to move soon. Most of the time, if a buyer is able to move in sooner than later, sellers prefer this and it can be used to further negotiate on the sale price. However the traditional range for closing dates after acceptance of offer is 30- 120 days max. Of course this can be negotiated and changes on a deal per deal basis. Are you ready to make this move quickly? Do you need or want to sell your current home first (if you are not a first time home buyer)

• You are pre-approved. The last thing you want to happen after visiting multiple condos is fall in love with a unit that you realized you cannot afford. When you are pre-approved you can then figure out what you are comfortable paying, and what you can actually afford to pay for any given unit. You also don't want your offer to be accepted and you were not able to get approved for the amount you thought you would be afterwards. A signed purchased agreement is a contract you are legally obligated to, and you should not take this lightly.

• You are ok with buying a previously lived in unit. This isn't necessarily a bad thing if the unit is kept in a great shape, has had recent upgrades, or is relatively brand new. However, this sometimes means the unit is dated, has wear and tear, or will require a renovation. These are also things that will predict sale price/value of the condo which can work in or against your favour when getting an offer accepted.

The benefits of buying resale

There are obvious benefits to buying resale, and for this reason alone, most people who are new to buying condos, or a home in general, believe this is the only option for them.

• The most obvious benefit of buying resale is the fact that it exists. It is available today, you can walk through, and know pretty much exactly what it is you are buying.

• You can review the "financial health" and history of the condo building. This is typically done by requesting and reviewing what is called the status certificate to the unit/building. Through this certificate you can take a look at things like is there enough in the reserve fund, are there any upcoming special assessments you should be aware of, or do future budgets include maintenance fee increases (and by how much)? These are important metrics you have access to on a building that has history to identify what I call the "financial health" of the building.

• The number of days on the market can influence whether or not you can get the unit at a cheaper price. The longer the unit has been on the market, the more likely you have leverage to buy the condo below listing price. This isn't always the case with pre-construction; in fact it is typically the opposite. Initial "day one" pricing tends to be the lowest, then builders increase the price on units later on.

Your moving timeline will dictate your options

It's not that difficult to figure out whether or not pre-construction or resale is an option for you.

It comes down to when are you ready or willing to move?

If you find yourself in a position to be able to choose between both a pre-construction project and a resale condominium, go through the advantages of both, review what you are looking for, your budget, what is important to you, and take it from there.

However most of the time, a buy can clearly identify if they want to move now (30-120 days) or if they are planning for the future (buy pre-construction now or take a chance on what resale options and pricing in the future).

After we figure out your timeline, we focus on your ideal neighbourhoods, because location is the first layer of our signature condo search system; then the building, then unit.