Through my years of representing both developers and consumers, I’ve seen my share of buyer mistakes.
Don’t rush into a purchase just because you don’t want to miss out on the increasing real estate prices. Dot your i’s and cross your t’s before committing to a property.
Here are a few of the biggest mistakes I want you to avoid when shopping for a new home or condo.
Not researching the developer
This is an easy one—before committing to a purchase, know who you’re dealing with.
Has this developer successfully completed other projects in the area? If so, whether the project was completed on time and what the consumer experience like along the way are important pieces of information that are not hard to find. There are online resources that allow homeowners to share their experiences, and the developer can often provide references from previous buyers that you could call. The website Tarion.com is one such resource.
If you’re working with an agent, ask them to show you the projects the developer has completed. It’s likely that there will be some resale inventory that you could visit to get a good idea of the final quality.
If this developer is new, it doesn’t necessarily mean that they are not to be trusted, but you need to ask more questions. Particularly about what builder they plan on contracting, who are the investors supporting this developer, and whether they have hired a local consulting firm to help navigate the municipal rules and hurdles.
Not Negotiating Better Terms
I’ve seen too many buyers simply signing on the dotted line without even trying to negotiate with the developer. It can be intimidating for sure, but it’s always worth a shot!
Negotiating is not just about the price; you could also try to get an upgrade credit which would come in very handy when time comes to choose your finishes. Or, you could request to have some of the closing costs capped or waived, like the development charges or the Tarion enrollment fee—this could save you a couple of thousand dollars on closing date. Again, it is always worth a shot. In a competitive market, it’s not always feasible however.
Amending some of the restrictions that are built into the sales contract could also bring you a lot of value. This is something that you could ask your agent’s or lawyer’s help with during the conditional period. For example you could request permission to assign your contract prior to the completion date, which would give you some flexibility in the event that you no longer want to proceed with the purchase or just want to capitalize on the growing real estate prices.
Not Thinking Ahead
In order to avoid unpleasant surprises in the future, it’s important to think ahead. Add up all of the closing costs ahead of time. New construction often has higher closing costs than buying resale. Read through the purchase agreement in detail and ask your lawyer questions. I know this seems like a no-brainer, but I’ve come across many buyers that were surprised to be charged taxes on closing, not realizing that this is a part of the deal if you’re not purchasing the property to live in yourself. This is of course a large amount of money to have to come up with on the closing day and can cause a lot of stress.
Research the area around your new home and know what’s coming up. Does the same developer own the land around you? What is the zoning of the lot across from you and the timeline of the potential construction that may take place? Future development may affect the value of your property in a positive way but do you personally want to deal with construction noise and dust? What if you plan to resell the property while there is construction taking place? This may affect your resale value.
Not Using A Realtor
Speaking of resale value, make sure to hire an agent to represent you in your transaction. The right agent will help you choose the best lot, floorplan and finishes to maximize your resale potential and future returns on investment. There is nothing worse than investing your hard-earned cash into a property that is then impossible to resell!
They will also negotiate on your behalf with the developer and help you navigate through the sales contract. Having a third party representing you takes away the awkwardness you may feel to negotiate for yourself. Most developers will co-operate with agents without hesitation, so don’t feel like you have to do this alone.