Hi everyone! For those of you who don’t know me, my name is Danielle Demerino, and I have been in the real estate space for over 16 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.
What’s the Difference Between a Resale Condo and New Construction?
I often get questions from my clients looking to purchase a condo in Toronto about whether 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, pre-con) 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.
How Does Pre-Construction Work?
In today’s building climate, developers are being charged over $1000 per sq ft. 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 sq ft because they have to. If you choose to buy resale, you are looking at about $1000 per sq ft. 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.
There’s nothing quite like condo living in Toronto. It’s like owning a slice of the sky in one of the world’s most exciting cities. With condo ownership comes many nuances. If you’re new to the condo game or you have specific condo questions, check out these posts next:
- What Happens if My Condo Building is Flooded?
- Rent Rate Caps and Pre-Construction Condos
- How to Sell a Condo in a Downward Market
Resale Vs. Pre-Construction: Down Payment Rules
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 sq ft or $1000 per sq ft for an established building. If I were you, I would stick to resale!
Danielle Demerino
ddemerino@royallepage.ca
416-728-5401
