For some, purchasing a new home is the only way to go. For others, it’s daunting uncharted territory.
In comparison, purchasing a re-sale home is a much more straightforward process. Afterall, you can walk through the home because it already exists. Purchasing a new home is a significant leap of faith as often, you’re putting money down when all that exists is an empty lot. This is where the credibility and reputation of all involved comes into play.
Your comfort level in the information provided is key. Site plan, floorplans, builder reputation, suppliers and trades info along with surrounding landscape, sales team involved and overall clarity of the process will combine to make for a
successful (or not-so-successful) move.
Some frequently asked questions:
How long does it take to build?
This can vary from a few months to a few years or more. Building a new home from the ground up can range from 6 months to a year depending on the scale of the plans, time of the year and overall site dynamics.
There are sites though where the builder will build the units out to drywall phase. This is particularly common in townhomes or condo apartments. This allows the buyer to come in and select their flooring, kitchen, lighting and decor which can often be ready in another 2 or 3 months.
Condo apartment style can be a few years down the road. It all depends on where they are in the process. Is the site still dirt or is the building rising out of the ground. The benefit to coming in early, particularly in a condo apartment, is your can benefit from early phase pricing since the pricing typically increases as time goes on.
What are the deposits?
In general, you can expect deposits to land somewhere in the 10% of purchase price range. On occasion you’ll find a site with a more palatable 5% deposit but that is certainly not the norm. The good news is these deposits are typically spread out over 2 or 3 months. For example, $5,000 with the agreement, $10,000 upon removal of any conditions, $15,000 at 60 days and a further $15,000 at 90 days.
How are payment for extras handled?
This will vary by builder. Some are more flexible than others while others will have a rigid system. You may be paying the supplier as you go. Other builders will add that amount to the closing costs.
What are the property taxes?
With new builds, taxes are rarely set until after you move in. Sometimes it can take a year to get that assessment and bill in your hands. Once MPAC establishes the assessed value, your tax bill will follow not long after. Remember that HST is typically included in the purchase price so the assessed value will come in under the price not inclusive of HST. For example, purchase at $450,000. With HST adjustment, the registered purchase price will be in the $420,000 range. It is not out of the ordinary to see the assessed value come in $50-100,000 less than that. From there you can go to the Niagara Region Property Tax Calculator online tool, select the city and find your approximate number.
Is HST on top of the purchase?
The vast majority of the time in Niagara, you’ll find the HST is included in the price. As part of the purchase documents, the buyer hands over the HST rebate to the builder who then makes the claim after applying the relevant adjustments. Before we dip into accountant territory, we’ll leave it there.
What other expenses can be involved?
This is an important question to get answered. The agreement including the Tarion warranty schedule will detail out any other associated costs in an effort to avoid surprises at the finish line. These can include utility hook-up fees, Tarion warranty, municipal levies, auditing and engineering fees and various other fees. We always recommend a buyer to bring the contract to their lawyer prior to firming up and proceeding with the purchase.
Can you buy conditional on the sale of your home?
This happens and can happen for various reasons. Weather related, external events (#COVID), labour issues or simply not keeping things on schedule.
In your agreement there will be a Tarion schedule that outlines the dates in a “TARION Critical Date Calculator”. Note: if there isn’t a Tarion schedule in your agreement, you have a whole other series of questions to ask as it is illegal to build and sell a home without Tarion registration involved.
If construction is delayed, depending on the timeline and reasons, there are various factors and remedies to consider. The Tarion warranty schedule is informative but isn’t the easiest read to digest. We suggest you visit the Tarion website where you’ll find clearly laid out info that will help clarify the “what ifs”.
How do we time the sale of our home?
There are various factors to consider here. How long out is the closing of the new build. Is your new home ready in 4 months or next spring?
With new builds, buyers will often time the listing of their home to allow for a window or overlap between the closing of their new home and their existing. Others will sell in plenty of time and arrange for a short-term rental. This is moving twice but it also provides some comfort in that your sale is done and the money is in the bank.
This is where working in close relation with the agent for your new build home will be critical so everyone is on the same page with timelines and closing dates.
How do selections work?
As often is the case, all builders are a bit different with this process. They range from rigid where you have limited things to select all the way to complete custom.
The typical process though is you will be visiting either suppliers directly or a showroom from where selections will be made. Be prepared to grab a coffee and then head out to the kitchen company, then the flooring, lighting and plumbing stores. Other selections can include paint colours, doors, trim and smaller (but important) details.
The builder should have some kind of system or process in place though that lays out the steps you’ll need to take with selections.
Hate shopping? On occasion, they’ll have a model home with samples in it which can expedite the process too.
Questions for us?
We’re happy to have a no-pressure conversation with you.
Call 905-687-9229 or fill out the form below: