The Great Debate: Pre-sale vs. Resale
If you’re purchasing a condo, you’ll have two options to consider: pre-sale and resale. Pre-sale real estate is a home or unit a buyer can purchase prior to it being ready for moving in, meaning it’s either not built yet or under construction. Resale real estate refers to any existing home or unit that an individual owner has purchased previously and is now reselling. Depending on your needs and financial state, you may be better suited for one more than the other.
Here are the key differences to know before making any purchase decisions.
Starting a Mortgage
One of the largest differences between pre-sale and resale is the start date of a mortgage. The deposit of a home is paid when a contract is signed; however, mortgages start on the completion date. For example, if the completion date of a pre-sale condo isn’t until fall of 2018, the mortgage won’t start until then. The completion date of a resale condo usually occurs much sooner – and so does a mortgage.
New vs. Older
Purchasing a pre-sale means starting with a clean slate in a brand new home or condo. You’ll be the first homeowner in a pre-sale. When buying a resale, it may be beneficial to consider who’s lived in the condo before. This could help evaluate wear and tear in the home, including if appliances need to be replaced.
Know Your Developer
Because you can’t walk through to see, touch and feel real space, when considering a pre-sale, it’s a good idea to research the developer of the condominium to ensure they hold a trustworthy reputation. While it’s still important to know the reputation of a developer for a resale, the advantage is in the ability to walk through an existing space and physically see and feel the condo’s quality.
From the time the decision is made to purchase a condo, a tower can take three years or more to complete. If you have a suitable habitat in the meantime, this may work to your advantage, especially if you don’t plan on starting a mortgage right away. If you need to move right away, resales work to your advantage.
Some developers will allow custom upgrades when purchasing a pre-sale, especially if construction hasn’t started. Common upgrades include changes into interior design or hardwood throughout a condo to replace carpet. If your Realtor has good negotiation skills, these upgrades could come at a low or sometimes no cost. In the resale market, in older condos, simple suite upgrades can increase a condo’s value and can see a good return on investment.
Grandfathered Strata Clauses
If strata rules change after a council is formed, changes would not affect those who purchased from a developer in the pre-sale stage. These changes often include rental or pet restrictions, like the number of rental suites in the building or the size or weight of a pet. These new rules wouldn’t apply to those who purchased in the pre-sale stage, but would affect those who purchased a resale condominium.
Looking for insight on pre-sale and resale condominiums? Our Rennie Advisors specialize in every neighbourhood across the Lower Mainland. View our advisors here or contact us at firstname.lastname@example.org.