Hi everyone! For those of you that don’t know me, my name is Danielle Demerino and I have been in the real estate space for nearly 14 years. I work hard to educate my clients and followers on real estate industry trends, offer advice and aim to help build wealth for my clients, friends and family the same way I have done for myself and my family.
I often get questions from my clients looking to purchase a condo in Toronto if they should go for a resale or a pre-construction unit. For those that are not familiar with the difference, a resale is a unit that has been previously owned, is already built and is move-in ready. Whereas a pre-construction (aka new build, precon) is a brand new, undeveloped unit that is sold before the unit is even built. Let’s break it down!
A resale property means that the property is already built and is move-in ready. In this case, you are purchasing from someone who has already lived in the property. There are a number of factors that need to be taken into consideration when determining whether a presale or resale purchase is more appropriate for you.
In today’s building climate, developers are being charged over $1000 per sqft. That’s before marketing costs, profit, and realtor commissions; it’s no wonder that buying resale is a better transaction. At the end of the day, builders charge $1400 per sqft because they have to. If you choose to buy resale, you are looking at about $1000 per sqft. That’s a 40% savings, not to mention, you aren’t subject to developers closing costs that can go anywhere from $7,000-20,000. Even worse, what if they cancel the project? We have seen that a lot in the past couple of years.
With a resale condo, you are only subject to 5-15% down; whereas with a pre-construction condo, you are almost always in for 20-25%. That makes it very difficult for first-time home buyers. Resale condos are for everybody and pre-construction is starting to be just for the rich. So ask yourself, $1400 per sqft or $1000 per sqft for an established building. If I were you, I would stick to resale!