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Sun. Jul 14th, 2024

Ottawa Real Estate: Should You Buy a New Home or an Existing Home?

By Vaseline May26,2024

There are many decisions you need to make before you decide to buy a home, and one of them is whether to buy a new home or a resale home.

While the end result will be the same — owning a home — the process of getting there and how long it takes can vary between buying new and resale, Taylor Bennet of Bennett Property Shop Broker told CTV Morning Live on Thursday.


Purchase price

Bennett says there really isn’t much difference between the purchase price of a resale or a new home.

“However, there may be hidden costs,” he says. “So usually the purchase price you see in there reflects the actual upgrades you get. Those are extra costs. It also reflects the rebate the Ontario government provides for the purchase of new homes.”

He notes that the government rebate may not be valid if you are not an investor.

Bennet warns that specific clauses may result in a higher price, citing construction costs, including lumber and labor costs.

“If during the construction process construction costs increase, increase from my side, you may have to pay a higher purchase price both there and the buyer. So if construction takes three or four years, the wood can go up, or the concrete can go up, and all of a sudden you have to pay those extra costs,” he explained.

He suggests hiring a broker who is familiar with these hidden costs and procedures.

“Make sure you have someone who has that experience and walks you through where the pressure points are in that contract,” he added.


Deposit

Deposits for new homes are slightly higher than those for existing homes, he says. Adding that they are – however – secured.

For example, if the builder goes bankrupt, or if the project is not rebuilt for any reason, you will get your money back, Bennet explains.

“There may be multiple deposits due and there are different stages when you buy the house. You may be required to pay a deposit 60 days later, perhaps at different stages of construction. But again, that will be part of the agreement that you sign up front,” Bennet explained.


Conditions

For resale homes, the buyer can set their own conditions, such as inspection, mortgage financing or legal review, Bennet notes.

Circumstances also vary between the buyer and the builder, he adds.

“So the buyer, of course you have your financing, regulatory approval, things of that nature. But the builder, if you’re in the early stages, may have a requirement that they have to sell a certain number of houses before they get the construction financing,” Bennet said.

“But they had to get approval from the city before they could start construction, so the full terms may not have been approved in your contract yet.”


Finishes and upgrades

Many people are misled when they walk into a model home and see the beautiful finishes and extras because they might assume they come with the new construction home they are purchasing, Bennet adds.

“Talk to the seller on site and don’t just talk to the person on site, but make sure you do this in writing because he may say something, but he may also be mistaken. Maybe they were having a bad day, maybe they were distracted when they were talking to you and they said one thing, you sign the contract and the other thing said, everything in writing takes precedence,” he said.

Meanwhile, some builders may offer some of these upgrades and extras as bonuses and incentives, he says.

Bennet also warns that appliances may not be included in the purchase contract. He notes that some builders offer this as a bonus, and recommends that this be arranged in writing as well.


Closing date

The closing date can also vary between the purchase of resale and new construction homes.

The buyer and seller agree on a date for closing the property for resale, he says.

It is more complicated when buying a new home depending on several factors such as construction delays.

“In some cases it can be a year apart and the builder has the right to change that date within 90 days’ notice. You have a three-month window before you actually close on these things, and it’s something you can’t choose with the buyer. The builder can do that,” he added.

He says people buying new homes that are in the completion stages of construction are less likely to experience delays than those buying in the early construction stages.

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