Whether to Buy Resale or Presale: The Pros and Cons
Home buying is fraught with tricky decisions, and one is whether to buy an older resale home or a brand new one. Here’s the case for each
When you’re looking for a home to buy, one of the biggest decisions is whether to buy a resale home through the MLS® or whether to go to a developer’s sales centre and buy a brand new unit off plan. Both decisions have their advantages and disadvantages, and knowing what those are will help you make the right choice for you.
- Resale homes purchased through the MLS® tend to be cheaper per square foot than a new home – and there’s no GST to pay.
- Resale homes are already built, so you can go and view the exact home you will be living in – no nasty surprises about space, feel, views and so on.
As the resale home is already built, there’s no waiting years to move into your new place.
- What you see is what you get – and a home inspector can inspect the unit thoroughly, in person, before you remove subjects.
- A resale home has been lived in before – the unit’s fixtures and fittings, will unlikely be brand new (unless it has just been renovated) and may wear out sooner.
- The building also won’t be brand new – and the older the building, the more wear and tear it will have, which means maintenance costs.
- You’ll have to pay Property Transfer Tax on the purchase – unless you are exempt (first-time buyer and purchase price is under $500,000).
- You’ll get a brand new, never-before-lived-in unit that is (or should be) in top-notch condition and will be under a New Home Warranty.
- New home developments usually have great amenities and be in established or up-and-coming neighbourhoods.
- You could have the chance to customize your unit to your own tastes, or at least choose from colour and design options offered by the developer.
If the home is under $750,000, you’ll be exempt from Property Transfer Tax.
- New homes are desirable, which means they tends to cost more than resale homes per square foot – plus you have to pay GST.
- Your chosen home won’t be built yet, so there could be a long wait to move in – and even if the value drops in that time, you’ll still pay the contracted price (which is also true if values increase). Plus a lot can change during that time and you need to be sure you can get a mortgage and a down payment for completion date.
- You might get a pretty good idea of the home you’ll be getting, but show suites and floorplans can sometimes seem quite different than your finished unit – especially in terms of intangibles like views and “feel”.
- There’s a lot of paperwork and other risk-mitigation factors to consider – you have to be sure you’re getting what you pay for.
- Whether you choose a resale or presale home, make sure you work with an A-team of real estate professionals – REALTOR®, lawyer and mortgage broker – to ensure you get exactly what you want and can afford.
Information obtained from REW.ca and Joannah Connolly