When deciding to buy a new or resale condo, there is no clear choice.  You have to choose what’s right for you given your circumstances.

Keeping in mind the pros and cons of each type of condo, here are a few questions you should ask yourself:

Question #1: Are Pre-Construction Condos Even Available?

The dilemma of buying resale vs pre-construction ends quickly if the area you want to buy in is fully developed. Gentrified neighborhoods may not have new condos you can buy. In this case, you won’t have any other option than to buy resale.

To find pre-construction condos, you have a few options:

• Google searches
• Driving around the neighborhood
• Asking your real estate agent

Question #2: Will I Be Able to Make the Down Payment Schedule?

In some condo developments, builders ask for a 20% down payment. While that may seem like a lot, it’s spread across 4 payments and follows a specific schedule:

• The first 5% due upon signing.
• The second 5% is due at a specific calendar date. It’s usually 6-12 months after signing.
• The third 5% is due at “roof completion” or “windows on”. In other words, it aligns with a specific construction milestone.
• The final 5% is due when you take possession of the condo.

In cheap markets, most buyers find it easy to meet this schedule. If you’re buying a $200,000 condo, you’ll have to make four $10,000 payments in 24 months. Not bad right?

This sort of payment schedule is problematic in expensive markets like Vancouver and Toronto. A $750,000 condo means four payments of $37,500!

Note – Check with your mortgage broker on creative financing options. It may cost you a bit more in lending costs, but you’ll at least be able to get that dream pre-construction condo.

If you can’t meet the stringent down payment schedule, you can try negotiating with the developer. It’s not easy, but some will be flexible to get that sale. A realtor can help you negotiate these terms.

Question #3: Is My Move-In Date Flexible?

Expect delays in delivery dates if you plan on buying a pre-construction condo. It’s not uncommon for builders to be weeks behind schedule.

This can be problematic for two types of condo buyers:

• Existing real estate owners: if you sell by a certain date and your new condo isn’t ready, you may have to find temporary housing.
• Buyers moving from another city: coordinating moving trucks with a pre-construction condo delivery may be next to impossible.

If your move-in date isn’t flexible, avoid spending energy trying to buy a pre-construction condo.

Note – You may find late-construction condos. These are finished but unsold units from the pre-construction phase. They’re held by the developer and don’t always show up on MLS. The deals aren’t as great as pre-construction. But the move-in date is at least easier to align. Your realtor can help you find such properties if they exist. Also, the commission is paid by the builder at no extra cost to you.

Question #4: Am I Willing to Live Through a the Building’s “Settling”?

You may not notice it but all buildings move throughout the day. New buildings shift more than older constructions. It’s called the “settling” phase.

What does this mean for a pre-construction condo buyer? The months after you take possession, expect cracks in the drywall to appear. Doors may also not close properly.

Luckily, the builder repairs these issues. However, you’ll still have to deal with the contractors coming in to fix the problems. Not to mention the dust left behind by the repairs.

Resale condos don’t have this issue. By the time you buy one, the building is nicely settled in. Cracks and other annoyances shouldn’t appear as they’ve been dealt with.

Question #5: Can I Afford Resale Condos in the Area?

There’s no point getting one’s hopes up if your ideal resale market is out of budget.

Consult the multiple listing service (MLS). It’ll give you a good sense of the average condo cost in an area. It’ll also tell you what the municipal taxes and condo fees are. From there, write a conservative budget. 

Note – Your mortgage broker can help you calculate how much monthly mortgage payments you can afford.

You may have to consider buying pre-construction and waiting a year or two if resale is out of your budget. You can also look for late-construction deals if they’re available.

Question #6: Do I Want a Turnkey Condo?

As you start shopping for resale condos, you’ll notice some units have been renovated. Those that don’t require renovations after move-in are called “turnkey”.

Because the seller invested money in upgrading the units, turnkey condos can be expensive. The seller doesn’t want to lose on the investment. It’s worth mentioning that if the renovation added value, the seller will add a premium for the effort and time invested.

Those looking at buying in established neighborhoods may have to readjust expectations if budget is limited. Otherwise, buying pre-construction may be a more affordable option.

Question #7: Are Condo Renovations Something I Can Afford? If Not, Can I DIY?

If you can’t afford a turnkey resale condo, you may have to buy an outdated one and renovate yourself.

Of course this depends on your monthly budget. If you have little to no leftover at the end of every month, you may not be able to save up for those costly renovations.

Note – There are options for those on tight monthly budgets. Depending on your mortgage and lender, you can include the cost of renovations in your financing. Once you get the condo, you’ll have cash on hand to hire contractors. Unfortunately, you’ll pay a bit more every month in payments.

The alternative is the DIY route. Those willing to learn and get their hands dirty can increase the value of their condo. Not to mention that it’ll make it more pleasant to live in.

Question #8: Are There Pet Restrictions In the Condo Buildings I’m Interested In?

Buyers looking into specific buildings must be sure they aren’t looking at condo developments that have pet restrictions or bans.

When pet bans take effect but the condo owner already has a pet, there is a grandfather clause. However, it doesn’t transfer over to you if you buy that resale condo.

Note – Don’t rely on the seller’s realtor to tell you whether there is a pet ban or not. Read the condo rules and regulations before placing any offer. If there’s a pet ban or restrictions, you’ll find it in there.

Wrapping Things Up

Choosing between pre-construction and resale isn’t easy. Each type of condo offers its distinct advantages. It all comes down to what’s right for you and your household. Be honest in how you answer the questions above and the choice should be clearer.