Presale vs Resale Condos. Are Presale Condos Cheaper?
Two of the most crucial decisions you to make when purchasing property is what type, a Presale Condo vs a Resale Condo and where.
The wheels are already moving in your head, aren’t they?
The question you ask yourself may very well be: should I buy a resale or pre-construction property? Which one is better? Which one has higher ROI?
Both Presale & Resale Condos have advantages and disadvantages depending on the market conditions, contracts, etc. In this blog we will give you answers for your specific concerns, as well as provide you with in depth analysis
What is a Presale Condo?
A pre-construction property (also known as a presale property) is one that you purchase before it has been completed. It is common for a presale to be sold before the city permits are even issued, and move-in dates are typically 2-5 years away from when sales first open to the public. The buyer would be purchasing directly from the developer/builder in this case.
What is a Resale Condo?
A resale property is exactly what you think it is: a previously owned home. It’s a typical sale in which a person simply sells their home.
Note: Purchasing a pre-construction property is quite different from purchasing a traditional resale property. With a pre-construction property you are essentially taking part in the development of the building, and will be involved in decisions such as what finishes go where, what appliances and flooring are installed, and even which colours are used on the walls!
Pros of Buying A Presale Condo
1. Presale Condos Have Low Ownership Costs
You can frequently secure the purchase of a presale for as little as a 5% to 10% deposit. allowing you more time to save for the next payment or the balance on completion.
2. Payments for Presale Condos are Flexible
Most Presales Developments have a project completion timeframe of 2-3 years, allowing you to prepare your home for sale and move in a stress-free and comfortable manner.
3. Presale Have Customized Finishing Options
A lot of new developments hire very talented designers to create a unit layout that is perfectly suited to the owners’ lifestyle.
As a result, you typically have the ability to customise the colours and finishes of your home, as well as the option to upgrade your floors and appliances
4. Building Equity in Presale Condos from Day 1
Because the price of your condo is fixed at the time of contract signing, you can profit from a rising market if the price of your condo rises after construction is completed.
Read More Pros of Buying Presale Condos here
Cons of Buying A Presale Condo
1. Intangible Property
You are essentially speculating on what the finished product will be like. In most cases you’ll either have an artist’s rendering of the home, or a 3D virtual tour to give you an idea of what you’re buying into, so you’ll never be 100% sure of what you are purchasing
2. Completion Date
Many developers don’t follow through with their original completion date commitments. As such, it’s difficult to predict when you can actually move into your new home.
3. GST Constraint
You have to pay GST on your purchase, which is not the case when buying a resale property. Also, if you buy a pre-construction condo and then decide to sell it before the building is complete (assignment of sale), the assignor pays GST on lift (profit) and the assignee pays GST on original Purchase Price.
Pros of Buying A Resale Condo
1. Tangible Property
When buying a Resale Condo, you’ll have an opportunity to see the physical space, what’s included, the layout and how big it is. With this information, you can determine if it’s the right product for you.
2. No Waiting Time
There is no wait. You get to move in as soon as you close.
3. Math is Easier
You can get your mortgage pre-approved right away and calculate your monthly payment based on the current rate. When purchasing a resale you won’t have to worry about market shifts prior to closing.
4. Deposit is Lower Than Presale
A typical deposit for a resale property is 5% of the purchase price and is due at the time of subject removal. This is much less than presale deposit structures
Cons of Buying A Resale Condo
1. Renovation Costs on Resale Condos are High
When buying a resale condo or a townhouse, you may want to consider the renovation cost on top of the mortgage. Although you could get a good deal by buying a unit that needs renovation, you need to take into consideration what it could cost to renovate it.
2. Resale Condos aren't Brand New
Unlike Presale Condos, Resale units are generally a bit older and you might not have options for customization like colours and finishes of your home, as well as the option to upgrade your floors and appliances
3. Resale Condos Have Lower Property Transfer Tax Exemption Threshold
The property transfer tax (use this calculator) exemption for eligible Canadian citizens/permanent residents is for a purchase price maximum of $500,000. (PTT exemption for newly built homes for eligible purchasers is $750,000)
How to Maximize ROI with Presale Condos
Location, Location, Location
If you are a real estate investor, it is crucial to consider the location of a property before you buy it. It is easy to get carried away with the interior fittings and amenities of a property, but when you are buying, location becomes the most important thing. When picking out the location of your properties, make sure that they are close to transportation hubs and/or SkyTrain stations.
Choose a Competent Realtor
The best way to purchase a pre-construction condo is by signing up with an experienced Realtor. The Realtor you choose should have extensive experience working with pre-construction properties and will be able to take you through step-by-step process of purchasing a pre-construction condo
Choose a Reputable Builder
Builders and developers are busy people, which is why it’s important to do your due diligence when it comes to getting the information you need from them. That includes finding out how long they’ve been in business and how many projects they’ve completed.
You want to make sure that your investment is in good hands and not being rushed or cut short because of problems with the project.
Conclusion:
Whether you’re looking for a condo pre-construction or resale, it’s always best to work with a real estate agent that is experienced in the Greater Vancouver Market. By working with an agent who has experience in both pre-construction and resale condos, you can rest assured that you’ll get all the information you need to make an informed decision about your next purchase.
For more information on condo developments in Surrey, contact the team at Ipresalecondos.
Ipresale Condos is not just an agency that sells real estate, but our agents believe in educating each client deal with their own professional situation. Please call or text at 604-825-8881 or email at info@ipresalecondos.com
