Buying a pre-construction condo means you are buying a condo that is not yet built. While there are many benefits to have a say in what goes into your condo and what the finished product looks like, there are also some downsides.
Looking at both sides of the equation can help you decide what is right for you.
The Pros of Buying a Pre-Construction Condo
- You play a role in the design of the condo. Typically, the builder will already have a ‘cookie cutter’ design for the condo. But what you have a say in is the interior of the condo. Do you want granite or laminate countertops? Do you want wood or ceramic floors? Did you have a certain area you wanted outlets wired in or do you need a phone outlet on a certain wall? These are just a few of the ‘opinions’ you can have when building a condo.
- You won’t have to give a large down payment upfront. Usually, builders have you make a security deposit or earnest deposit. This shows the builder that you are serious in your intent to buy the condo. The contract may require that you put more money down in certain increments in order to help the builder move along in the building process. The lump sum won’t be due until you close on the loan.
- The property will likely appreciate before you move into it. Depending on how much time lapses between when you put your deposit down and when you actually close on the home, it could appreciate. The builder has to construct an entire building; it’s not just a single house. By the time they are done, quite a bit of time may have passed, which may have allowed the building to appreciate.
The Cons of Buying a Pre-Construction Condo
- The developer is usually favored in the purchase contract. While the risk is minimal, the builder does have the option to just fold up and stop building. There’s nothing holding the builder to the project except good business sense. In many cases, your money will be returned, but that doesn’t give you a place to live.
- You won’t know exactly what you are buying. Unlike single-family homes, you won’t have a model to walk through. This may mean that you have unpleasant surprises when the unit is actually finished. Maybe the view isn’t what you thought or the parking is much different than you anticipated. It could decrease the excitement of buying a new condo.
- You may have to wait a long time to live in the property. Again, because the builder has to build an entire building, it could be a year or two before you are able to move into your condo. This means you’ll have to find somewhere else to live in the meantime and the move-in date could be moved more often than you’d like to think about as the builder experiences setbacks.
Buying a pre-construction condo can be exciting, as long as you are patient and you use a reputable builder. Before you commit to buying this type of property, do your research. Make sure the builder has experience and follows through on his promise to build a condo building. Also, make sure you are on board with the decisions you get to make and those that you don’t. You want full disclosure to make sure what you are purchasing is what you imagined.