Expert Article | Buy New? Or a Previously Loved Home?
Homebuyers are being afforded the freedom to be able to choose from more options than they ever have been over the last few years. Having worked for a developer in the peak of the real estate market, I encountered many occasions where potential homebuyers were lining up for hours (or days) to get first dibs in selecting their home and where prices were constantly rising by the week. Lately, many new developments have been promoting innovative marketing strategies and incentives to entice homebuyers to purchase their projects, like free avocado toast or wine for a year (yes, please!). But while most realtors don’t have a year’s supply of wine, let’s explore what is a better deal for you as a homebuyer – should you buy a new home or one that has been previously loved?
You are grandfathered to the original rules
The first, obvious benefit of buying a new home is that you will be the very first to live in it. As the first homeowner, you are often “grandfathered” into the building or complex, meaning you will always benefit from the original rules from when you first moved in. For example, if the building changes its bylaws later on about pet or rental restrictions, you will not be affected by those changes. However, you cannot pass on those entitlements to the next homeowner when you go to sell your home.
First Selection of Unit
When you buy your property directly from a developer, you often have a choice between units. You can choose a unit based on location or your Realtor can potentially negotiate a storage locker or additional parking stall into your contract.
Negotiate, negotiate, negotiate!
However, prices in new construction are generally not negotiable whereas your Realtor will be able to negotiate on your behalf in homes previously loved.
Pay (slightly) less tax
When you buy new construction, the homebuyer is obligated to pay Goods & Services Tax (G.S.T.) on the purchase price. It is an additional 5% on top of the purchase price over $450,000. If the purchase price is under $450,000, there is a rebate that can be applied to lower the G.S.T. Fortunately, if the purchase price is below $750,000, the homeowner can be exempt from paying the Property Transfer Tax (P.T.T.). For purchase prices between $750,000 and $800,000, there is a partial exemption of the P.T.T.
More Flexible Dates
Developers will often give you an estimated completion date, but they also protect themselves by giving a range of dates that they can fall back on without being liable. This makes planning for your move more difficult. If you have an existing home to sell, you would have to ensure you list and sell your home with dates that match the developer’s completion date or be able to find alternative accommodations by renting or staying with family or friends for a short period of time.
Buying a home, whether new or previously loved, is an exciting time! Make sure you find the right Realtor to help you along with the process of buying so you don’t have to worry about the details. The best thing you can do is find yourself a Realtor that you get along well with who understands your priorities to help you find your perfect home.
Happy house hunting!
Jade Wong, Re/Max Sabre Realty