July 22, 2017  

New Condos FAQ

Buying pre-sale condos in Greater Toronto Area has advantages for both First Time Home Buyers and experienced property investors. Presale properties are different from Resale properties. Here we will explain the purchasing process and the relative benefits of purchasing presale homes. Contact us via email if you have any questions.

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Presale Homes & Condos Buying Process

When you purchase a presale home or condo, you are paying for a future home.   A VIP presale is when a developer offers real estate developments to us in some cases before the general public and construction of the building has started.  You only need to pay a deposit to reserve a unit.  You will still pay the full price, but you don’t need to take out a home loan on the property right away.  The deposit will start with 5% of the purchase price generally due within 30 days, and further 10 to 15% increments throughout the construction phase. Your deposit is held in a trust account until the building is completed. If for any reason the developer does not finish the building, the full amount will be returned to you.

 

Purchasing Process of a Presale Condo

Our team of pre-construction experts can help you with the following:

  • First Access to VIP prices & floorplans for preconstruction homes & condos.
  • Get you thousands in VIP Incentives before public
  • Consultation on suite selection that will work best for your needs be they investment-oriented or related to personal use.
  • Guiding and advising you throughout the entire purchase process, with the offer, and with related documentation including mortgage arrangement and lawyer referrals.
  • FREE first year rental service for our investors or bonus cashback incentives to assist with closing costs.

Do I Pay Commission when I Buy a Presale Condominium in Toronto?

No fee at all, the developer pays all Agents including the Sales Centre Agents. Our services are always free for Buyers and in addition to our expert advice we are also offering our Exclusive Platinum VIP Broker Incentives.

 

What are Condo maintenance fees?

As a condominium owner, you are required to pay mandatory monthly maintenance fees. These fees are separate from your monthly mortgage payments. Maintenance fees go toward paying for the overall upkeep of the common areas in a condominium complex.

Some examples of what maintenance fees include are as follows:

  • Landscaping for the common areas
  • Snow removal
  • Maintenance of elevators, parking, pool, gym and patio areas, common hallways, common mechanical and electrical elements, etc.
  • Insurance for commonly owned elements
  • Security personnel or concierge
  • Legal, accounting and administration including paying a condo management company

 

What’s the process if you are interested in purchasing a unit?

If there is a project that you are interested in investing, get in contact with us and we will send you the sales package including floorplans, VIP incentives, and prices to review. You will then be required to submit a “worksheet” with your top 3 selections and a piece of GOVT ID.  

All unit allocations are on a first come and serve basis so we advise all our clients who are serious to submit their worksheet early.

Due to an overwhelming response to some projects due to VIP Prices and incentives you may be required to choose from allocation allocated to you by the developer.

Once your unit selection is confirmed and reserved, we will contact you to schedule an appointment to come into the Sales Centre Office to sign the Agreement of Purchase and Sale with the Developer. At this time you will be required to bring along with you a Photo ID (Driver’s License), SIN Card (required by the Developer for deposit interest) and a cheque book (minimum 6 cheques that will be postdated when signing).

 

What is a WORKSHEET and Why is it so important ?

The condo market in the GTA is hot and on many occasions the best unit selection sells out first. Due to high demand for units the worksheet system has been introduced by developers for a fair allocation of units on a first come and serve basis without having you to line up for weeks to get in the first release of units. Here is the typical way new developments are sold:

1) The VIP Broker event (for Agents only) is he   ld a week before the first release of units. Worksheets are made available during this event and we have 3 – 5 days to get them in to the developer from our clients.

2) Worksheets indicate your interest to purchase a condo in the development and you areon most occasions required to submit 3 choices. You are required to submit the model type, floor preference, along with a valid piece of Govt issued ID. This is a very time sensitive document that needs to be completed and delivered as sales are on a first come and serve basis. 

3) The worksheets are time stamped in most cases and allocations are made on a first come and serve basis. We recommend our clients if serious about getting the VIP prices and incentives before the public opening to not delay the submission of your worksheet. If you are allocated a unit from your Top 3 choices but you wish to demand a specific floor or need more time, the developer simply moves on to the next one. In some condo launches, the developer receives over a 1000 worksheets within just a couple of days for less than 300 units that are available (most recently 8 Cumberland, Halo condos, Axis Condos).

4) With worksheet and VIP Broker Access, once you are allocated a unit you are given an appointment to come and sign without having to wait for hours or days in a lineup.

 

How do mortgages work for presale condos?

Do I start paying before the construction is complete or is there a percentage that I should pay before its done to “secure” the apartment, and then I pay the regular mortgage when the building is complete?

When buying a presale, you usually pay a 20% presale deposit to the developer top secure the property. Once the property is completed you get a mortgage for the remaining 80% payable and the 20% you paid the developer is included and forms part of the purchase price.

 

The Benefits of Buying a Presale Condo

The answer depends on your objectives, which we investigate in more detail here; there are three key reasons that should be known to every potential purchaser:

  • You own a brand new condo as soon as it is built.
  • You can sometimes have alterations made to your specifications ahead of time so you walk into your own color scheme, appliances, and fixtures.
  • You can secure a cost at the buy date, with the possibility to profit from a rising land market, without the monthly expense of a mortgage payment, property charges, and upkeep fees.

 

For Investors

Presales offer numerous points of interest for speculators. Beneath we lay out six appealing components of the presale market.

A. Investment Benefits

You can buy a presale condo for a meager deposit of 5% to 10%. Should the property’s value increase over time, you could see a huge return on a small investment. For instance: you choose to purchase a $300,000 condo with an arranged completion date as far off as 5 years. To secure the property, you make a 10% deposit of $30,000. Because of an increase in the market, your condominium is worth $360,000 2 years after the fact and you choose to put the property on the market (this is known as selling the assignment of contract). You leave with your $30,000 deposit as well as the increased value that is, 60,000 or a 200% profit on your initial investment.

Presently say you choose to keep that same property and the value stays steady until your fruition date. The property is still valued at $360,000 when you go to your representative to see about getting a home loan. Since you have more than 20% in value ($60,000 + $30,000 = $90,000 or 33.3% of your $270,000 mortgage) you can keep away from costly CMHC high proportion protection premiums that are required for properties bought without a 20% up front installment. You made a 33.3% down payment on your home loan with just putting 10% down at first.

For non-Canadian residents, presales offer a great investment. As a rule, non-Canadian residents need to put down a 35% default (please confirm this with a mortgage specialist) when purchasing a current property in Toronto at the time you buy. At the point when one purchases a presale in Toronto, the deposit is generally 20% of the country where you live. What’s more, this is additionally paid over 9 to 15 months much of the time.

B. Less Stress

Presale properties follow regular market trends, with prices rising and falling pretty much as property does. The distinction between holding a presale and a current property lies in the way that an investor can profit by the potential capital without the stress of occupants, the expense of property taxes, and the month to month maintenance costs.

C. Lower Upkeep Costs

New condominiums built by legitimate developers will not require exorbitant repairs or upkeep with respect to an owner/investor for an extensive period after finish. The same can’t generally be said for more seasoned structures.

D. Tenants like New Condos

New Condo structures are exceptionally popular with tenants because of – new appliances, modern layouts and new condo fixtures; no need for repairs or large maintenance; and a lot more features are available with new structures, such as, pools, hot tubs and saunas as well as, exercise rooms and the main entrance attendant, and so forth.

E. Higher Rental Profit

Prospective Tenants are often willing to pay a premium to rent a newly built home or condo over an older unit for the reasons detailed above.

F. Protection Warranty

All presale construction receives Ontario’s Tarion Warranty. For 40 years, Tarion has provided new home warranty protection to almost two million Ontario homes. To review the full coverage visit: http://www.tarion.com/homeowners/yourwarrantycoverage/Pages/An-Outline-Of-Your-Warranty.aspx

 

What happens after I sign the Purchase of Agreement and Sale with the Developer?

Once the contract has been signed with the developer, you are entitled to 10 days called the “10 Days Cooling Off Period” to get your mortgage Pre-approval letter, have your Lawyer review the contract and if you change your decision during the 10 days for whatever reason you have the right to cancel the contract with no questions asked. The deposit cheques that you have provided to the developer are returned back to you. However, after the 10 days the contract is firm. We have our team of mortgage Brokers and lawyers who will be glad to help you through the process.

If you would like to stay on top of new developments across GTA and receive information on Platinum VIP Sales Events for all upcoming pre-construction condo projects please submit the VIP registration form or send us an email.

 

What is the difference between a Condo unit and a Condo townhouse?

The condo unit is usually an apartment-like unit in a medium or high-rise building. Those buildings have elevators, whereas, condo townhouses are usually built on street level, and without elevators.

From their physical appearance, condo townhouses may resemble freehold traditional properties. However, they have common foundation connections to qualify for condo status. Therefore, their outside upkeep and maintenance is mandated by monthly maintenance fees, just like the condos in high-rise buildings.

 

What is the Interim Occupancy Period? 

When the condo is built and ready to be moved into, there is a period of ‘interim occupancy’, where the Buyer can take possession (in other words, move into the unit). During the period of interim occupancy, the Buyer does not yet own the condo; they simply pay the builder an amount roughly equal to what their mortgage payment + condo fees + taxes will equal. No transfer of land has yet occurred, and no mortgage has yet been given.

 

What is Assignment and how does it work?

With an assignment, the Seller is actually selling their interest in a property (in other words, their contract with the builder). They aren’t selling the actual condo (as they don’t own it yet); they are selling their promise to purchase a property.

When you purchase an assignment, you are essentially stepping into the shoes of the original purchaser. You can’t renegotiate the price or terms of the contract, you are simply taking over the contract as it already exists.

It’s important to note that some builders won’t allow their original purchasers to assign contracts, or will only do so for a fee (we’ve seen assignment fees from $750 to $7,000). Builder approval to assign a contract is almost always necessary.

So if you want to buy or sell an Assignment then you have come to the right web site! Our team can assist you with buying or selling assignment.

 

 
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RE/MAX Realty One Inc., Brokerage
Suite 102 - 50 Burnhamthorpe Rd W.
Mississauga, ON, L5B 3C2
Office: (905)-277-0771
Fax: (905)-277-0086

Pat Kapoor
Broker
RE/MAX Realty One Inc.  
Cell: 647-299-0800
          416-821-5399
Email: sales@newhomescondos.ca
 
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