New homes are routinely sold before they are actually built. That's the most tricky thing about it.
You are buying something that does not yet exist. There is a possibility of delays and you may
not get exactly what you have expected. Your satisfaction will very much depend on how
carefully you choose a builder.
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| Why to Buy a New House |
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Easier to Buy - Purchasing contracts are usually signed a long time before construction ends. A lengthy sale can give you more time to
save for the down payment. Quite often you can enter into the housing market with as little as $1000 of the initial deposit and you will be protected against price increases.
Easy to Find - Information about new homes is easily accessible, often online. When you visit sales offices you can see drawings,
plans and specifications. Many builders will show you model homes or suites. You will be able to compare different offers and choose what is best for you.
New Home Warranty Programs - Programs differ in details across provinces and providers. In general, all warranties
provide coverage against defects in workmanship, materials and structure.
Modern Technologies - New homes comply with recent standards, like R-2000. Buyers can expect better materials, improvements in safety, and more efficient energy usage which will save them money in the long term.
Better Functionality - New homes fit better modern lifestyles with bigger living rooms, extra storage space, house equipment and wiring.
Most of the time many features of a house can be tuned up to your specific needs.
New and Clean Dwelling - You will be the first one living in your home and everything that you get will be brand new.
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| Why Not to Buy a New House |
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Distance - New homes are often built outside densely populated urban centers. If you move
out of a town you will have to
commute more than before.
Lack of Services - You may have limited access to public transit, schools, shopping and other amenities which are
standard in developed areas.
Delays - Quite often construction of new homes is delayed. When this happens you may have to find a temporary shelter and pick up its cost.
Delays can also compromise
your pre-approved mortgage interest guarantee if it expires before you can close the transaction.
Higher Taxes - Municipal taxes may be higher in developing areas to fund the supporting infrastructure.
Rigid Price - Prices offered by builders are usually not negotiable.
Raw Landscape - Most likely you will have to wait for some time to see sidewalks and lawns in your new surroundings.
Ongoing Construction - If you move as one of the first you may have to endure the nuisance of a continuing construction around you.
Unknown Neighbours - You don't know if your lifestyle is compatible with that of your future neighbours.
Different Look - There is always some discrepancy between advertising
images and the reality.
GST/HST - New homes are subject to GST or HST, depending on a province. HST combines both GST and PST taxes into one. Taxes on principal residences under $450,000 may be rebated. Information on rebates for purchases of new or substantially renovated houses can be found at Revenue Canada.
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| When Buying a New Home |
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 Lawyer's Review
Contracts are much more complex than a typical resale agreement. They protect builder's interest through multitude of clauses, specific for buying new homes. For this reason you should always seek lawyer's advice before signing your contract and every time an amendment has to be made.
Home Details
Make sure your contract refers exactly to the right model and its variation. It should describe in detail all standard and customized house features. Verify the lot
location and orientation of the home to see if they reflect your choice. You should also get specification of all materials and products you can
refer to when you discover discrepancies.
Development
Gathering information about local development should be a part of your decision making process. Learn about community plans from the builder. Ask your lawyer to contact a municipality and find out if there are development projects for the area which could affect you and your property.
Warranty
The contract has to spell out warranty coverage and exclusions. It should specify if warranty is provided by the builder or a third party. Make sure you understand
warranty coverage and who is paying for it. If the builder is registered with the New Home Warranty provider ask for publications and visit their website.
Changes
If it's not too late you should be able to alter the details of your new house when you change your mind. Amendments have to be made in writing and
signed by both sides. There may be an administration charge for processing the amendment.
Builders often reserve own right to make minor changes and without buyer's approval. It's their defence against delays from unexpected shortages of
products or materials. This special clause has to allow only unavoidable substitutions of similar or better quality which won't diminish the value of the property. Although substitution clause is supposed to benefit both sides it may in some cases result in disagreements - one more reason why you should choose your builder wisely.
Title Restrictions
It is important to learn about them because they will limit your property rights. Read carefully the subdivision clause of your contract. It may allow access or use of your land by others (easements) or restrict what you can do on your property (covenants).
Inspection
Your builder will schedule a pre-delivery inspection, usually about a week before closing. This is when you can report any deficiencies or defects, and have them removed before you move in. Ask about the builder's inspection
policy before you sign the contract.
Most builders will allow a professional home inspector to assist you. Some restrict participation in the pre-delivery inspection to the purchaser only.
Closing Date
Closing date extension clauses are routine. You should have a contingency plan in case you will have to leave the place you occupy and your new home is not ready yet.
Deposits
The contract should set out a schedule of payments with precise dates and amounts. Your builder may require progressive payments throughout construction. The balance is normally payable on closing. Find
out if your deposit will be held in trust, or insured by the New Home Warranty and for how much.
Price
Advertised prices are only for the standard models. You will have to pay extra for upgrades of your choice. Prices of new homes usually include GST tax, and are reduced by the amount of GST rebate which buyers assign to builders.
Extra Cost
There are multiple extra charges which will increase the total cost. For instance, you may be asked to pay for installation and hookup of utilities, connection of appliances, tree planting and builder’s legal expenses. They should all be listed in the contract so you can determine your bottom line and avoid surprises when paying your outstanding balance on closing. |
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 What's R-2000 standard ? |
It is a series of technical requirements for new home performance. The standard set the benchmark for home building in Canada.
It is continually upgraded to include new technologies and reflect changes in building codes.
R-2000 homes are the most environmentally responsible and energy efficient.
You can learn more about
R-2000 from Natural Resources Canada.
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| How to choose a builder ? |
Always examine your builder’s credentials before deciding to buy.
If a builder is registered with The New Home Warranty from a third party you should learn
about their track record which will tell the number of claims and conciliations.
Also, you can inquire about builder's memberships with Better Business Bureau
and The Canadian Home Builders’ Association, which indicate professionalism and quality.
Check with your local BBB if there are any complaints on builder's file and how they were resolved.
Ask the builder for a list of customers who already bought their homes.
Learning from them is often ignored by new buyers for fear they might be intruding someone's privacy.
Such misgivings are unfunded since these buyers agreed to be contacted and are usually willing to share their house buying experiences.
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What questions should I ask ?
What was your general experience of buying your house from the builder ?
What in particular did you like about buying from this builder ?
Is there anything that you did not like ?
Did you experience any problems, and how they were solved ?
Was the home completed on time and as budgeted ?
If not, what were the circumstances ?
Was there anything missing or broken upon move in ?
Were upgrades and extras delivered as requested ?
How was the after-sales service ?
Are you happy with their home? If not, why ?
Would you recommend this builder ?
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