9 Things you MUST know when purchasing a NEW BUILD in Ontario

Recently a certain builder in Waterdown released a new "Phase" of homes they were building in the area. What I found shocking was the response of potential purchasers. They camped outside the builder's Sales Center overnight, just to get a chance to buy one of the new homes. It gave me visions of the Apple Store when they release a new iPhone... buyers lined up around the block all day, chomping at the bit ... to spend half a million dollars.

As someone who has bought a newly built home in Ontario, and has over a decade of experience in the Real Estate industry this event inspired me to write a blog post for those of you who are considering doing the same.

Here are a few things to expect and be prepared for:

1. Be prepared to wait.

The closing date of your new home is often a minimum of 12 months away from being completed. New condo buildings are often 3-5 years from being finished. Be prepared to wait a long time for your new home to be finished. This is great if you want more time to save up a deposit while locking in pricing, but bad if your lifestyle will suffer because you need to relocate more quickly.  

2. Rarely, if ever, will you close on the day that you agreed to years earlier.

When my wife and I bought our newly built home, I was told by the builder "I've never missed a closing date before". Knowing what I know, I took that statement with a grain of salt. It's a good thing I did. Not surprisingly there was a month delay to our closing - and we only found out 2 weeks BEFORE our scheduled closing date.  Be prepared.  The odds are extremely slim that you will close on the day agreed to years earlier.

3. Don't EVER agree to something without having it put in writing.

The statement "We don't need to change the agreement, it's a lot of extra work and we can just take care of it" is one of the most common statements from builders. What will you do if you ask for your ceilings to be "stamped california" style instead of the sprayed "popcorn" style and the builder doesn't do it? It's not just about the money. It's about getting the dream home you want. Buying a new home is an exciting time, but make sure you get everything in WRITING.

4. Depending on the market, the builder might intentionally want you to cancel the contract.

When property values increase 5-10% a year, serious money can be made on new construction. I have heard numerous stories of builder's who want the client to cancel the contract so they can re-sell the property for a substantially higher price. If you feel like your builder is intentially delaying construction of your home to try and have you "back out of the deal", call your lawyer immediately and have them deal with the situation.

5. If possible, visit the site often, to ensure progress and quality

One of the nicest things about a newly built home is that you can watch it being built from the ground up. Visit the site often (obviously according to the agreement you signed and any applicable by-laws) to become familiar with your home. You will also be able to catch anything that is being done wrong like a missed upgrade or cut corners.

6. The squeaky wheel gets the grease.

If you want something done, you will likely have to call the builder NUMEROUS times to get it done. Be persistent!

7. Understand that the trades are paid "by the job", not by the hour.

I have many friends and clients who are trades people involved in new home construction. Know this, the pressure by the big builders on these small business people to do more for less is FIERCE. Trades are paid "by the job" or "by the home", not by the hour, so speed on the job is critical.  Keep a close eye that construction is completed properly and to your satisfaction. 

8. Expect a LARGE list of defects

The amount of defects in new homes are long, often running several pages. Be prepared after closing to have trades people back often to make repairs to your new home.

9. You will likely live in a construction zone for several years yet to come.

Unless you are the last person to move into the subdivision, you will enjoy many months/years of waking up to construction all around you.  Having a realistic expectation of your new neighbourhood will make your transition an easier one.

Be an educated purchaser

The new home market continues to boom in Ontario. While there are lots of pros that come with owning a new home (I had my new home completely retrofitted for highspeed fibre optic internet), there can be many challenges. By being aware, you will save yourself as much headache and financial hardship as possible.

*photo courtesy of Maximal Construction