Buying Pre-Construction Condominiums Can Be a Gamble

pre construction

Buying Pre-Construction Condos is a Gamble

I’m regularly approached by sellers desperately looking for a realtor to sell their pre-construction condo agreements.  As much as I love my work, my answer is always the same, no thanks. Certainly I feel badly not being able to help, but the reality of the situation is the piece of paper they hold  is almost impossible to sell in today’s condominium market.  Let me explain.
The scenario always rolls out the same.  While at the developer’s presentation centre buyers/investors are shown glossy floor plans, colour renderings of beautiful glass towers and a list of premium unit upgrades.  Now comes the pitch, “Commit to purchasing today, before the shovels are in the ground, and you will get a better price than what you would pay in 4 years once it’s built”.  Sounds like a great investment, but is it?  However, once you sign the contract, you put down your deposit, arrange future payments and you are then told come back in 4 years for the keys.  It’s impossible to predict what life has in store for us; but changes in personal relationships, new job opportunities and adjusted financial priorities can all be reasons where you may be forced to sell your unit.

Selling  pre-construction purchase agreements are incredibly frustrating as you are going to encounter a number of challenges:

  • Developers will allow you to reassign the agreement, for a fee, however you will be excluded from posting it on Multiple Listing Service (mls.ca).
  • The builder can unilaterally make changes to your agreement: including changing floor plans, construction materials and adding retail/commercial space.
  • With a continuous wave of new condominiums saturating the market, selling prices have not reflected the gains which some developers’ agents promised.
  • You will continue making scheduled payments and if you decide to default the developer can resell the unit and sue for any losses.
  • Potential buyers of condos want a place to live and not a piece of paper.
  • If you are indeed one of the fortunate ones to sell, any additional money made will be subject to capital gains as you never lived in the unit.

If considering purchasing a pre-construction condominium my suggestion is to go in with an unjandiced eye and realize you`re  making a long term commitment..

Now, a  safer and more measured approach is to buy pre-existing condominium construction:

Follow

Get every new post delivered to your Inbox

Join other followers: