Your Complete Guide to Buying a Pre-construction House In The GTA

Are you ready to make the most important decision of your life and buy a new home? Perhaps you don’t know much about the Greater Toronto Area’s pre-construction industry, and you want to get some information on how to enter into this market and buy a home. Buying a new home can be incredibly thrilling and exhausting at the same time, especially if it’s your first time. Not to worry, we have covered everything you need to know about buying a pre-construction house in the Greater Toronto Area in this guide. So grab yourself a seat, a cup of fresh orange juice, and let’s get into it.


The Buying process

First, you need to find pre-construction house projects via builder’s websites, brokers, realtors, or brokerage firms. When you have decided on the pre-construction house you want to buy; you pay a refundable fee for the house to be reserved and sign your purchase agreement. After this, there is a cooling-off period of 10 days, when you get to review the contract details and decide if you still want to buy the property or not. If your decision to buy the property changes during this cooling-off period, you will escape financial or legal penalty, and you can get over 90% of whatever you might have already paid refunded to you. However, if you decide to buy the pre-construction house after the cooling-off period, you will make a 20% down payment spread over 15 to 24 months, with 5% of the house price due at each payment milestone. When your home is ready, you get the remaining 80% of the payment from your lender, ownership is transferred to you, and you can move into your new home.

The Lender

Before shopping for the best pre-construction house, you want to get a pre-approval from the lender or a financial institution. Search for at least five lenders with the best rates and make a pick. Remember, you are not obliged to use the builder’s lender.

The Realtor

You want to work with a Realtor who has experience bargaining with builders. It’s also vital that you and your Realtor are a good fit. You want someone willing and ready to work with you but at the same time is completely honest and not afraid to tell you the truth. Your Realtor will help you get a clearer picture of your needs and wants. You can both come up with a list of top pre-construction projects and their communities that you want to see. Some very good or platinum-level brokers and real estate agents received first-hand information about upcoming projects and building plans that have not yet been announced to the public. These platinum-level agents then present the project and building plans to their prospective buyers and clients, giving details about the projects, enabling them to buy the pre-construction houses at the lowest prices. Getting a platinum-level realtor can save you thousands of dollars when buying a pre-construction house in the Greater Toronto Area. You Realtor can also help with other professionals like; movers, inspectors, lawyers to help you get the best team and services. Some people avoid using a Realtor. They imagine getting a better deal by buying directly with the builder. While that may be partly true and untrue, the benefits of working with a Realtor can not be overemphasized. If you will not go to a court hearing without a lawyer, why buy a pre-construction house without a Realtor. If you want to do anything well, you need to get the help of a professional to help you. It is the same with real estate; it is better to work with a Realtor. You can get a Realtor with no affiliation with the developer or builder. That way, you are sure to get unbiased advice.

The Neighborhood

When it comes to which neighborhood or location to buy a pre-construction house in the Greater Toronto Area, many options offer you the best amenities, features, and investment opportunities. The Greater Toronto Area is a hot spot for Canada’s real estate market. Buying a pre-construction house in the GTA is undeniably a wise investment choice. The value of your house is sure to increase significantly, earning you a higher return on your investment. However, other factors come to play when choosing where to buy your pre-construction house in the Greater Toronto Area.

First, you want to consider the distance and commute time. How soon will you get to work from your new neighborhood, and when will you get home? It is therefore vital to pick a spot close to your workplace. The local public transit has to be good as well; if you can’t use your vehicle for some reason, you still want to get to work on time. The neighborhood should have access to good schools if you have children or plan to raise kids. Amenities such as restaurants, parks, bike lanes, communities centers are crucial to having a memorable and comfortable lifetime experience in your new home.

Take time to look at the environment of the pre-construction house you want to buy. You will help you understand how well your new neighborhood fits your needs; this is just as important as your home. You don’t want to end up with a beautiful new home in an environment that repels everything you are as a person. Akwarrrdddd! Of course, your Realtor has first-hand knowledge of the best communities to buy a pre-construction house in the Greater Toronto Area that suits your specific needs.

The Timing

When is the best season to buy a pre-construction house in the Greater Toronto Area? The best time to buy real estate property is when many people are not buying. During the cold winter and hot summer, buyers often do not want to go home touring in different weather. Many buyers wait until fall or spring; hence house prices are higher during these seasons. If you are looking to buy a pre-construction house at a lower rate, you may want to avoid the buyer’s season. Another question to consider when determining the best time to buy is when you want to move in.

When will the construction be completed, or what date do the developers say the building will be finished? A pre-construction house could take between 6 months to a year to be completed, so if you plan to move into your new home by Christmas this year, chances you are already running late. Remember that the buying process also takes time, so you want to start early enough. You also need to determine the time you are expected to close costs on your pre-construction house just before the ownership is transferred to you and you move in.

It’s essential to keep up with the builder, the progress of the construction, and the date you are expected to close the cost. Many buyers are shocked when they receive a notice to close costs cause they may have forgotten their expected time to closing costs. It can happen when homeowners do not occupy their unit during the interim occupancy and are probably on an extended vacation.

The Builder

You want to search for the best new construction builders in the Greater Toronto Area and their reputation. What are the previous projects they have worked on? Do they complete their projects, or do they have a cancellation record? What do the home buyers of their previous project think of their house; how does the builder relate with the buyers of their previous pre-construction house projects. Be enthusiastic and assertive about asking the builder as many questions as you may want, and be ready to answer a lot.

The model versus the house

When buying a pre-construction house, you buy a promise: a home that hasn’t been built yet. It is essential to visit the model home. The model is usually a few buildings on one huge lot. Some builders could have different housing types like townhouses, detached houses, semi-detached houses in the same neighborhood. Remember that most model homes the builders will have you tour are designed with upgrades and amenities. Find out what you are getting with a standard house without upgrades and take note of your preferences. You could choose to have hardwood floors, one or two garages, or different wall colors. Write down and communicate your customization preferences with your builder.

The pricing, prices, expenses, and payments

You start your payment for the pre-construction house, with a 20% down payment, made in milestones of 5% each after paying an initial reservation fee of about $5000.

Here is an example of a standard payment structure:

$5000 at the time you make the offer (if you cancel during the cooling-off period, the builder will return this money to you)

5% within 30 days

5% within 3-6 months

5% within 9-18 months

5%  at occupancy

The remaining 80% is due at closing.

Some builders may offer a 10% down payment as an incentive to attract more buyers; generally, payment structures may be slightly different depending on the developer.

When buying a pre-construction house in the Greater Toronto Area, you have many options. You can choose from pre-construction townhouses, Semi-detached houses, condos, e.t.c. You can compare prices across the different regions of the Greater Toronto Area. The table below shows price changes of pre-construction condo apartments in Mississauga, Brampton, and Toronto from December 2011 to December 2021.


Price Changes of Condo apartment in the GTA Between 2010 And 2021                                               



Source: Toronto Real Estate Board


Once your new home is fit for occupancy, you can move in while the rest of the construction is still yet to be completed. This period is called the interim-occupancy period. You are expected to pay occupancy fees to the builder. There may also be other fees, such as homeowners association fees, that you may need to pay. Find out about these fees before closing costs.

The Negotiation

It would be best if you got smart with negotiations. You may think the best way to negotiate with a builder or developer is to get them to cut down on their prices, but often that isn’t the case. Most developers do not want to lower their prices to avoid setting a precedent for bargaining prices with clients as future buyers may expect similar discounts. You can instead ask your builder for an upgrade at no extra cost.

The Guarantee / Warranty

You are buying a pre-construction house; you will need to guarantee that the builder will complete your home on time. Find out what your warranty covers. The Greater Toronto Area has legally mandated warranty coverage for newly built houses. It is essential to know what the builder’s warranty covers and its validity. Be aware that some builders use third-party warranties. For example, if your toilet seat comes with a different warranty from the manufacturer. Your builder may refer all problems with your toilet seat to the manufacturer. So you need to know what warranty covers what part of your home.

The Documentation

Any verbal conversation is neither legal nor binding: so everything needs to be documented. Your documentation starts from the day you tour the model house. Yes, you want to put everything down in writing. The negotiations, agreements, your preferences about customization and upgrades, what happens if construction is delayed or canceled, the cost of your homeowner’s association fees other fees you are expected to pay should all be written in your contract. Remember that you do not want to end up with a different home from what you expected. Then, the purchase and sale agreement; it’s essential to understand all the terms and conditions involved before signing. Your lawyer and Realtor can help you understand this before signing the agreement. Find out if you will be expected to pay some money during certain stages of the construction, or you are required to pay the remaining price for your home when you are granted final occupancy? Your contract should also include milestone payment details.

The Cooling-Off Period

The cooling-off period is ten days after you have paid for the home reservation, allowing you to look at the contract closely. Your lawyer can help you understand the terms and conditions of your contract, and if there are any issues, the builder can resolve them on time. You may also decide not to move forward with purchasing the pre-construction house during this period. Some reasons you may change your mind about buying a pre-construction home are:

  • Your lender did not approve your loan
  • You discovered problems during an inspection
  • You got a better offer with different property and developer

If you do resolve not to buy the pre-construction house, ensure to send a written notice to the builder before 5 pm on the last business day of the cooling-off period.

The Advantages and Disadvantages of Buying a Preconstruction House

Pros of buying a pre-construction house include

  • New home warranty

Unlike a resale home, every new home comes with a warranty that protects the buyer in case of any issues with the finished product of the building or if the builder failed to complete the project.

  • Time to save

Buying a Pre-construction house affords you the time to save up money to complete the down payment. The down payment schedule is divided into milestones which gives room for flexibility.

  • Market value appreciation

New and modern homes have a higher market value than resale homes. Potential buyers and renters prefer newly built homes.

  • Upgrades and customizations

With a pre-construction house, you can customize your space the way you want it. You can choose to upgrade almost anything: from changing the colors to kitchen countertops to flooring: you call the shots.

Cons of buying a pre-construction house include

  • Delays in construction

The construction may not be completed at the estimated time given by the builder. That means you may not be able to move in when you want to; you will have to wait longer.

  • Higher deposit

Buying Pre-construction houses means you have to pay higher for the down payment of 20% compared to the 5% required when buying a resale home.

Final Words

Buying a new home is easy if you have a guide like this one to help you with the proper knowledge to make intelligent decisions. Do your due diligence, follow this guide, and you are good to go.

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