Should I Buy New Or Resale
Most potential homebuyers already know what they want. If you haven't made up your mind yet you may spend lots of time without reaching a firm conclusion. So, let's make it simple.
There're four primary factors to consider: the house itself, price, location, and maintenance cost. See which scenario appeals to you more.
Why To Buy A Resale House
You like living in an established neighbourhood. Getting to work isn't a hassle. Basic shopping is within a walking distance and kids are close to school. For anythig else you can have a short ride.
Buying a resale is more predictable. You can see different homes and choose the one you like the most. Not everything is perfect and shiny, but you'll know what you are getting into.
A rather traditional layout doesn't concern you as long as it fits your needs. What counts more is a housing option which will cost less, and where everything is negotiable.
You're aware that the upkeep can be more expensive, but you'll take on it later. One step at a time seems to be safer than a big leap for a brand new house.
Why To Buy A New House
A brand new and customized home is a top priority on your housing wish list. You crave for more living space, a bigger lot, pre-selected finishings and pristine appliances.
When you saw a model home you quickly fell in love with it. Although the price is stiff and steep, you are willing and able to pay for what the house is worth.
You already saved for a decent down payment, and the idea of living maintanance free along with having a warranty has tipped off your thinking.
The location is less than perfect, so that you'll have to spend more time and money to commute. Nevertheless, you accept these drawbacks because the benefits of a new home mean more to you.
Buying From A Builder
There is a number of particulars which relate specifically to buying from a builder. Most of them may take an extra weight off your wallet if not properly attended.
Lawyer's Review - Contracts are much more complex than a typical resale agreements, and they protect builder's interest with numerous clauses. Never sign an agreement of purchase unless it's conditional on a legal review or has been approved by a lawyer.
Changes - Builders often reserve the right to make minor changes without the approval of a buyer. You may find in your purchase agreement clauses allowing to reduce dimensions, alter the layout, substitute materials, fixtures or appliances.
If you let them go, there's a good chance you won't receive what you wished and paid for. Buyers should discuss with their lawyers whether such provisions can be removed or amended to guarantee a satisfying minimum.
If certain specifications are important to you, your agreement should be modified to remove the builder's right to change them.
In general, one has to stress that any feature of the property will be vulnerable to an unathorized change unless properly described and documented in the agreement. You won't have a legal recourse to enforce arrangements which are not a part of it.
For instance, you have been charmed by beautiful images of the house which you saw in the sales office. It's natural for an inexperienced homebuyer to assume that this is what you buy.
However, that might not be the case. If elevation drawings aren't included in your agreement the builder can alter the final external design.
Title Restrictions - Review the subdivision clause of the contract. It may contain various covenants which are limitations on what you can do on your property.
Development - 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.
Inspection - Your builder will schedule a pre-delivery inspection, usually about a week before closing. This is your opportunity to report defects. If you overlook them the builder may later dismiss certain claims and argue that the damage was done after you moved in.
Ask about the builder's inspection policy before you sign the contract. Most builders allow their buyers to hire a professional home inspector for assistance. Some restrict participation in the pre-delivery inspection to the purchaser only.
Closing Date - Construction delays are very common. Buying from a builder is for those who can bear with a lengthy sale and uncertain closing dates.
But even if you do, you need the following precautionary measures to keep delays in check:
In Ontario construction delays are well regulated to protect homebuyers. Other provinces don't have such restrictive laws on what a builder can do.
If you buy outside Ontario, ask your lawyer to draft a clause protecting your interest when delays happen. Then see your builder and insist on having it entered into the agreement.
Deposits - Your builder may require progressive payments throughout construction. The contract should set out a schedule of payments with precise dates and amounts.
The balance is usually payable on closing. Find out if your deposit will be held in trust, insured by the new home warranty and for how much.
Home Pricing - Advertised prices usually include GST/HST. They are reduced by the amount of GST/HST new housing rebate, which buyers assign to builders.
Upgrades - You'll see them in advertising materials and in a model home. However, the price they tell you is only for a standard house. Be ready to spend more than you're initially asked for, unless you want to buy bare bones.
Builders make good profits with upgrades, which may be offered at high markups. Consult an indepedent contractor whether you can get a better deal. If you decide to go your own way with upgrades make sure they won't violate your warranty.
Any upgrade you requested or were promised as a incentive must be entered into the purchase agreement. Otherwise, it may not happen.
Extra Cost - There are many charges which apply on closing and run into thousands. You'll have to pay for planting trees, the hookup of utilities, and so on.
Some of them may be bloated or unjustified, while other are only estimates. Such items should be either renegotiated, capped or removed. If you miss them, you may have to spend much more than expected.
Choosing A Builder
Since you buy something what doesn't exist yet you're in a disadvantaged position. Simply put it - you can't have it inspected before you commit your money.
The only way to make up for it is doing an exhaustive search. If the builder is registered with a new home warranty program examine their record of claims and resolutions.
Request references to previous buyers, and ask what developments they have built in the last 10 years. When you visit them and talk to owners who aren't on the reference list you might be able to dig deeper into the truth.
In a nutshell, only a broad research can give you a good assurance. Use all means available to you and you'll have a much better understanding of what you can expect.