Tips for Buying New Home Construction
It is Law in the Province of Ontario that all Newly Constructed Residential Dwellings, whether Freehold Residential or Condominium Residential, being sold to parties other than the builder, must be registered with the Tarion New Home Warranty.
The exception to this law is if the Buyer & Builder both agree in writing to waive the Tarion Warranty or the Builder is occupying the dwelling as his principal residence.
For additional information on Tarion visit www.tarion.com
Why Hire Kelly & Kerry when Purchasing New Construction?
Many times the Buyer of New Home Construction is unaware of the fact that they can hire their own Realtor to protect their interests when buying a home from a builder. Kelly & Kerry while being your advocate throughout the process and combined with their extensive knowledge, will also advise and provide recommendations on the following:
* a Cost Evaluation of Price Per Sq. ft for all builders that may offer a similar product
* a side by side analysis of the different extras and features being offered by the different builders
* a market evaluation of the property comparing with resale-homes
* a report on all Builders’ Track Records i.e.: complaints filed, unresolved disputes etc.
* recommend Stage Building Inspectors
* recommend Building Inspectors and when to inspect
* Review Builders Agreement of Purchase and Sale, prior to signing, to ensure there are no hidden additional costs or unknown site influences and easements that may affect the property.
Advise on the Following
We will advise and ensure that you clearly understand some of the difficulties and problems that are synonymous with New Home Construction. We will also advise on the positive aspects to buying New Home Construction. If you are empowered with the full knowledge, you then can make an informed decision and should not suffer any costly surprises. The following are some of the topics we will be discussing with you in detail.
* Deposits Required
* Large Deposits are required
* Freehold Residential Purchase: Deposits up to $40,000 are protected under the Tarion New Home Warranty Program
* Condominium Purchases: Deposits up to $20,000 are protected under the Tarion New Home Warranty Program
If the New Home Builder is requesting a deposit in excess of the aforementioned, please know that you may lose the excess amount not insured by Tarion in the event the builder becomes insolvent.
Hidden Additional Costs & Upgrades ie:
* Extras and Features
* Lot Premiums
* Tarion New Home Warranty
Kelly & Kerry will carry out research to ensure the property you are buying does not face or back onto or will be located near any future site influences that could effect the resale value of the home i.e.:
* Backing or fronting onto a future major roadway, railway, transit system etc.
* Backing or fronting onto future institutionally zoned lands
* Backing or fronting onto future commercially zoned property yet to be developed
* Is home fronting onto a street that is a proposed future Bus Route
* Is future home located in the vicinity of a waste disposal site (present or future) or airport (present or future)
* Does home conform with future residential development i.e.: mix of single family homes with town homes or town walk-ups, apartments etc.
Possession Date Not a Guarantee
Under the Tarion New Home Warranty Program the builder may delay closing for reasons out of the builder’s control. Tarion has built into the warranty that the builder can extend closing up to 120 days by delivering notice in writing to the buyer prior to closing stating that they will require an extension. Note the Buyer has no right to terminate the Agreement as a result of the extension and must abide by the extension if notice has been delivered properly.
* Home may only be 80% Complete (“substantial completion”)
* Landscaping may take several months to complete and Buyer cannot make use of the potentially muddy grounds
* Quiet enjoyment is diminished as the builders trades personal will still need access to the home to complete unfinished work or rectify deficiencies noted in the pre delivery inspection.
* Neighborhood will be dusty, dirty & noisy from unfinished construction
* Early Possession is not an option unless the builder has inventory and still may require 60 days before Buyer can take possession.
* Normally the Builder will need any where from 6 months to one and one half years depending on development plan & lot releases.
Mortgage Financing and Interest Rates May Not be Guaranteed
Mortgage Interest Rates cannot be guaranteed past 120 days, depending on lender and need to be applied for again prior to expiry of the guaranteed period and the Buyer may have to pay a high interest rate or may benefit from lower rates if they drop.
Design & Finishing Control
You will have the exciting opportunity of changing floors plans to suit their family needs and can select finishing in flooring & cabinetry etc. that will suit their personal tastes.
Note you will have limited control over the above, some builders do not allow for any floor plan changes unless a custom builder and the buyer must select finishings from builders samples. Some may be deemed as upgrades and additional costs will be associated with the upgrade or floor plan changes.
Appreciation: Building Equity on the Builders Dime
Due to the requirement for significantly longer closing dates, you will probably realize a healthy increase in their property value prior to closing. Kelly & Kerry will provide you with a complete assessment of the Market and Forecasts for the future (Exception: if the real estate market changes into a Buyers Market the Buyer may not realize a dramatic, if any, appreciation prior to closing.)
Land Transfer Tax Rebate
Applies to First Time Home Buyers only to a maximum of $2,000. We will advise on the application process.
Depreciation of Structure Due to Age
* Does not factor into New Construction
Cost of Future Repairs
* Will be less than that of re-sale
Time to Save Additional Monies
* Due to longer closing dates the buyer will have extra time to save for additional monies for down payment, upgrades or new home furnishings. This is especially beneficial to First Time Home Buyers
For additional information on Tarion visit www.tarion.com
SALE PRICE (exclusive of GST) Unit Fee (incl. PST & GST)
FreeHold and Condo
Up to $100,000 $511.75
$100,000 – $150,000 $540.50
$150,000 – $200,000 $598.00
$200,000 – $250,000 $655.50
$250,000 – $300,000 $713.00
$300,000 – $350,000 $770.50
$350,000 – $400,000 $828.00
$400,000 – $450,000 $885.50
$450,000 – $500,000 $943.00
$500,000 or more