Precon Properties in Canada – Our Answers to the Top 10 Questions

Posted On December 21, 2023

‍Welcome to our informative Q&A blog, addressing the most frequently asked questions about purchasing pre-construction properties in real estate Canada.

If you’re considering buying precon properties in Canada, you’ve come to the right place. We have gathered insights from industry experts to provide a comprehensive guide to navigating Canada’s preconstruction real estate market.

1. What are precon properties?

Precon properties, short for pre-construction properties, are homes purchased before being built. This means buyers can secure a property at an early stage of development, often at a lower price than the resale market.

Precon properties are typically found in major cities like Toronto and Brampton, where real estate demand is high.

2. Who buys precon properties?

Precon properties attract a diverse range of buyers. While investors have traditionally favoured them for potential returns, there has been a shift in recent years. End users, including first-time homebuyers and those seeking a new home, have become increasingly interested in precon properties. This trend is driven by the appeal of purchasing a brand-new home and the opportunity to secure a property at today’s prices while having more time to save for a down payment.

3. What are the benefits of buying precon properties?

Buying precon properties offers several advantages over the traditional resale market. Here are some key benefits:

• Lower Initial Investment

Unlike resale transactions that require a full down payment upfront, precon properties allow buyers to make deposits in multiple installments over a longer period. This payment structure gives first-time buyers more time to save for a down payment while securing a contract for their future home.

• Potential for Future Value Appreciation

Purchasing a property at an early stage of development can offer the potential for future value appreciation. As the building progresses and the surrounding area develops, the property’s value may increase, providing buyers with potential equity growth.

• Customization Options

When buying a precon property, buyers can customize certain aspects of their home, such as finishes and upgrades. This allows buyers to personalize their space and create a home that suits their preferences.

• Extended Closing Period

Buying precon properties provides buyers with an extended closing period. This allows more time to plan cash flow, prepare for the move and potentially benefit from changes in interest rates and borrowing costs.

4. What are the risks of buying precon properties?

• Delays in Construction

One of the main risks associated with precon properties is the possibility of construction delays. Factors such as labour shortages, weather conditions, and unforeseen circumstances can cause delays in project completion. Buyers should be prepared for potential delays and factor them into their plans.

• Changes to Plans and Layouts

Developers may change the original plans and layouts of a precon property. While these changes are typically minor, buyers must review the contract and understand the potential for modifications.

• Financing Challenges

Buyers of precon properties must ensure secure financing to complete the project. Changes in personal financial circumstances or market conditions can affect the ability to obtain a mortgage at the time of completion. Working with real estate professionals who can guide buyers through the financing process and help mitigate any potential challenges is crucial.

5. How do you decide between precon properties and resale homes?

Deciding between precon properties and resale homes depends on individual circumstances and preferences.

Here are some factors to consider:

• Timeline

If you have a specific timeline for moving into a new home, a resale home may be a better option, as the completion of precon properties can take several years. However, if you have the flexibility and are willing to wait for a brand-new home, precon properties offer an exciting opportunity.

• Customization

If the ability to customize your home is important, precon properties provide greater flexibility than resale homes. Resale homes, such as detached houses for sale in London, may require renovations to meet your specific needs and preferences.

• Financial Considerations

Consider your finances and determine which option aligns with your budget and long-term financial goals. Precon properties often require multiple deposits over time, while resale homes typically require a larger upfront payment.

• Location and Amenities

Consider the location and amenities that are important to you. Precon properties are often located in up-and-coming neighbourhoods with potential growth and development. Resale homes may offer established communities and amenities.

Deciding between precon properties and resale homes depends on your circumstances and priorities. It is important that you consult real estate professionals to make an informed decision.

6. Can I customize my precon property?

Yes, customization options are commonly available for precon properties. Buyers can select finishes, upgrades, and other design elements to personalize their future home. This allows buyers to create a space that reflects their style and preferences.

7. How do you finance a precon property?

Financing a precon property involves securing a mortgage to cover the purchase price. Working with a mortgage specialist who can guide you through the financing process and provide options tailored to your specific needs is important.

Here are some steps to consider:

• Pre-Approval

Obtain a pre-approval for a mortgage to determine the amount you can borrow. The pre-approved mortgage will give a clear understanding of your budget, helping to streamline the purchasing process.

• Consult Real Estate Professionals

Seek guidance from professionals such as mortgage brokers or lenders specializing in precon properties. They can provide expertise on financing options and help navigate any potential challenges.

• Deposit Payments

Be prepared to make multiple deposit payments according to the agreed-upon schedule. These deposits will contribute towards the down payment required at the time of completion. You can use a mortgage calculator to help streamline your cash flow.

• Closing Costs

Factor in closing costs, including legal fees, land transfer taxes, and other expenses associated with the purchase. It is important to budget for these costs to ensure a smooth closing process.

Working with professionals who specialize in precon property financing is crucial to ensure a seamless and successful transaction.

8. What do you look for in a precon property developer?

When choosing a precon property developer, it is important to conduct thorough research and consider the following factors:

• Reputation and Track Record

Research the property developer’s history, including reputation and track record in the industry. Look for past projects and assess their quality and timeliness of completion. Reading online reviews and consulting with real estate professionals can provide valuable insights. In Ontario, you can consult the Ontario Builder Directory (OBD), an online resource to help you confirm if your builder is licensed to build new homes in the province. 

• Financial Stability

Evaluate the financial stability of the developer. A financially stable developer is more likely to complete the project on time and deliver on their promises.

• Transparency and Communication

Consider the developer’s transparency and communication throughout the purchasing process. A developer who keeps buyers informed and addresses any concerns promptly fosters trust and a positive working relationship.

• Warranty and After-Sales Service

Review the developer’s warranty and after-sales service policies. A reputable developer should provide warranties for construction defects and offer support after the completion of the project.

9. Can I rent out my precon property?

The possibility of renting out a precon property depends on the terms outlined in the purchase agreement.

Some developers allow buyers to rent out their units during the interim occupancy period, while others have restrictions. Reviewing the purchase agreement and consulting with professionals is important to understand the rental options available.

10. How do you find precon property listings?

Finding precon property listings can be done through various channels. Here are some ways to access precon property listings:

• Real Estate Professionals

Consult professionals who specialize in precon properties. They have access to up-to-date listings and can provide guidance based on your specific preferences and requirements.

• Developer Websites

Visit the websites of precon property developers to explore their current and upcoming projects. Developers often provide detailed information about their properties, including floor plans, amenities, and pricing.

• Online Listing Platforms

Search online listing platforms such as www.savemax.com that specialize in precon properties. These platforms aggregate listings from various developers, making it easier to compare options and find the right property for you.

Precon Properties

The Greater Toronto Area is a prime location for precon properties in Canada. With thriving real estate markets and growing communities, this region offers a range of precon property options. Buyers can find properties that suit their lifestyle and investment goals, from downtown condos for sale in Toronto to suburban houses for sale in Richmond Hill.

Purchasing a precon property in Canada offers unique advantages and opportunities for buyers. Whether you’re a first-time homebuyer looking to enter the market or an investor seeking potential returns, precon properties provide flexibility, customization options, and the potential for future value appreciation. However, it is important to consider the risks and work with professionals who can guide you through the process.

By conducting thorough research, understanding your financial capabilities, and consulting with experts, you can confidently embark on your journey to owning a precon property in Canada. Contact us to help you make an informed decision.

Remember, each precon property is unique, and it’s crucial to evaluate the specific terms and conditions of the property you are interested in. With the right knowledge and guidance, you can confidently navigate the precon property market and find the perfect home or investment opportunity.