When thinking of buying a new home, you usually have four options open to you. It would be best to choose between buying a resale home, a spec home, a custom home, and a presale home. For most buyers, the resale home is the most familiar option.
A resale home has had a previous owner. The home is not new but has had at least one occupant before you. Spec homes are another common option. Property developers build these homes in the hope that they will be able to find buyers for them.
On the other hand, a custom home is one you build from scratch. This is risky because it requires a lot of planning and expertise. However, building a custom home has specific advantages; this option will give you everything you want in your new home.
The final option is a presale home. Buying a presale home is the best way to acquire your new home. As Lyon Property Management in Warwick explains, this is because a presale home combines the advantages of spec and custom homes but doesn’t have the drawbacks associated with those other options.
Like a spec home, a presale home is new and built by a property developer. But unlike the spec home, the home is purchased before it is made. When you buy a presale home, you acquire the property even before construction begins.
Why would you want to buy a home before it is built? What are the advantages of taking this option?
Eight benefits of buying a presale home
You own a brand-new home
Buying a presale home means you are the first occupant of the home. You don’t have to worry about inheriting the previous owner’s or occupant’s problems. In addition to the building’s structures and systems being new, the appliances are new also. Everything in the home is at the start of their warranties, and you won’t need to spend on repairs or replacements for a few years.
You can customize your home
Unlike when you buy a resale home, you can modify the design of your presale home to make it suit your lifestyle. Most developers will let you customize colors, finishes, or even the floor plan of the presale home. You won’t get a home designed according to someone else’s ideal home. You also avoid the need to spend on costly renovations.
Flexible deposit payments
You must only make an upfront deposit when buying a presale home. This deposit is held in a trust account which is not accessible to the developer until the project is completed; your money is safe. Deposits for presale home range from 15 – 25% of the home’s value, but you are not required to pay it all at once. A payment schedule of 5% every six months is quite common.
No mortgage payments until completion
You will not have any mortgage payments in the 2-4 years it takes to complete your home. Your mortgage starts to count after the house. Buying a presale home takes the pressure out of the home-buying process. You have a firm contract with the developer, so there is nothing to worry about. At the same time, you have enough time to save for your new home.
New home warranty insurance program
As mandated by the Homeowners Protection Office (HPO), your new home is covered by obligatory third-party home warranty insurance since a Licensed Residential Builder builds it. Your new home is covered by a 2-5-10 warranty, which is good for a minimum of 2 years on labor and materials, 5 years on the building envelope, and 10 years on the building’s structural integrity.
2-4 years of no strata fees
Developers of presale homes often give incentives to buyers. These incentives can include a partial or complete waiver on strata fees. Strata fees are the monthly fees condo owners pay for the upkeep and development of their buildings. These fees cover the maintenance cost of the amenities in the building and can amount to hundreds of dollars monthly.
Price appreciation in a rising market
When you deposit on a presale home, you are technically in the market because of your contract with the developer. If, between the time you made the initial deposit and when the home is completed, the market increases, you will see an increase in your equity in that home. You can choose to sell the house and pocket the profit.
