Do You Need a Realtor to Buy a New Construction Home in Ontario?

| Buying

Many buyers assume that real estate agents only show resale homes, when our goal is actually finding properties that check off the most boxes on their list of must-haves. With the recent introduction of new HST laws regarding new home purchases, we anticipate that more buyers will be encouraged to consider the new construction option.

While it might seem you don’t need an agent when viewing model homes in new subdivisions, it’s probably one of the riskiest types of homes to tour on your own.

Let’s take a look at why it’s always a good idea to work with a realtor instead of buying directly from the developer.

What’s the Difference Between New Construction and Resale Homes?

New-build homes are purchased from the builder either as the building process is underway or when the first phase of a new subdivision is established.

Buyers also have the option to purchase a home in the “pre-construction phase” based on the builder’s plans. In comparison, a resale home is a previously owned property purchased from the current owner/seller.

For more advice on buying a home, check out these posts next:

Why Consider a New Construction Home?

Whether you’re buying something brand new or a resale property, you need to weigh the good against the bad. For new construction, that includes the following pros and cons:

Pros

  • Everything is brand new, so you’ll likely live a decade or so before you have to contend with replacements or major repairs.
  • By law, the home is under a builder’s warranty starting the minute you sign the Agreement of Purchase & Sale and lasting for up to 7 years, for the original owner and anyone you sell the home to within that 7-year period.
  • Energy-efficient features help reduce utility costs over time.
  • Upgrades for homes still under construction allow you to customize your home in most cases.
  • First-time home buyer rebates are available, providing up to $50,000 of the federal portion of the HST paid on new homes valued at up to $1.5 million and the full eight percent of the provincial portion of the HST for new homes valued at up to $1 million. This can result in total savings of up to $130,000.

Cons

  • You are likely to face a wait of 30 to 90 days (which is similar to a resale property) for a new construction home but 2 to 5 years for preconstruction.
  • You have to keep a calculator handy to track the upgrades you select to avoid paying far higher than the base price discussed.
  • You often have to live in a bit of a dust bowl or muddy conditions for subdivisions still under construction.
  • You have to factor in further costs for things like landscaping, decks, and fencing, which are not included in the sale price.
  • Buying preconstruction is risky from a quality standpoint, as you can’t really judge the home’s value based on plans.
  • Model homes can be misleading, as they pretty much always include upgrades.
  • The onsite sales team represents the best interests of the developer, which leaves buyers vulnerable.
  • Weather, supply chain issues, and labour shortages can cause delays.

If you’re buying a home now or in the near future, here are a few more posts you might find interesting:

Why Work with a Real Estate Team to Purchase a New Construction Home

Here’s what a crack real estate team (like us) offers when it comes to new-build homes:

  • Builders pay new construction sales agents to maximize profits, while agents like us protect your interests all the way.
  • Licensed builders and sellers must follow the Home Construction Regulatory Authority’s (HCRA) Code of Ethics to ensure honesty, integrity, and professionalism, but they are not quite up to the strict standards realtors are held to.
  • Realtors use their knowledge of things like a lagging market and high inventory to get you perks like discounted upgrades, incentives, waived or reduced closing costs, and more.
  • We investigate the reputation of the builder to ensure they are trustworthy and have a clean record of completing their projects.
  • If you’re not a first-time buyer, we can help align timing between selling your existing home and taking possession of the new home.
  • We can guide you through scary prospects like delays or unforeseen issues like damage caused by fire or weather while the home is still under construction.
  • We can translate “contract-speak” to ensure you understand the terms, know your rights, and are not caught unawares by things like delays and required payment schedules.
  • Guidance on strategic upgrades ensures you a) don’t blow your budget, b) don’t get finagled into agreeing to something you don’t need, and c) won’t overinvest in upgrades that eat into your profits when you sell.
  • The builder actually pays our commission, so you get our services for free!

Whether you’re thinking about a pre-construction home, a new build, or a resale property, the Christine Cowern Team is here for you! Get in touch today by calling us or sending an email today!