Investing in new construction can be rewarding and hurtful at the same time. Let’s examine some of the benefits and deterrents of buying that brand new home.
Everything is new
If you like shiny things and clean corners, new construction cannot be beat
Prices can be promotional
Getting into a new development with early bird or promotional pricing can help you gain financial ground in the real estate market
The Developer may offer incentives for buying one of their products, such as memberships to certain clubs or business’, additional appliances or upgrades, etc.
Your building will be made of the latest and greatest advancements in construction and design
Support staff with development
Onsite development staff will be constantly at the development for the first few weeks. This is the time to let them know of any problems, while they are easy to track down
New home warranty
The new home warranty covers all new homes built in British Columbia. You get 2 years on labour and materials (some limits apply), 5 years on the building envelope and 10 years on structure. It’s the strongest construction defect insurance in Canada.
Most new developments these days have a very high rental rate due to changes in our fluctuating real estate market. Renters are associated with taking poor care of the property and having a lower level of respect for the occupants. Most new developments would have no restrictions on the amount of rentals
The strata council can change and implement changes altering bylaws manipulating your resale audience
Cost can be speculative
Buying a new property at tomorrows prices have burned many people in the last 10 years, disabling them to sell at a profit or even break even
Prices are non negotiable
Developers tend to avoid price haggling at all costs. The price is usually the price
Contracts written by the developer, for the developer
Any contract you sign from a sales office was written by a very educated and determined legal team to protect all aspects of the developers behind. These contracts are heavily weighted for the developers benefit only.
Floating completion and possession dates
Your move in date can be pushed back typically, not fully ensuring an exact move in date
Got to love those taxes. Similar to buying a new car and driving it off the lot, 12% HST is difficult to recover short term
Immediate resale complications
Many developments do not want to compete to sell remaining properties if you choose to sell your unit in the early stages as well. If you have purchased and decided to move, there may be restrictions on how you are able to market your property, or you may even have to pay the developer a portion of your sales money as a penalty.
When purchasing a new home, it is critical to include the involvement of me, your REALTOR®. By reviewing the contract for unfair terms or conditions, providing you with a real time market value, proper pricing forecasting, and ensuring you do not overpay, you can avoid many of the deterrents listed above. Investing in a new development can be rewarding, if done correctly and well-researched.