Although there are many advantages of buying a presale condo, like any investment, it is not without risk. Here are some disadvantages or potential risks of buying a presale condo or home:
- GST/Taxes. On all new developments GST is due and can be a hefty bill come closing.
- No guarantee of a mortgage. Typically lenders will only secure rates for 90 or 120 days, and it could be years before your presale is complete.
- The view may not be exactly what you imagine. The showroom may sparkle and may even have a “fake” view backdrop in the window. Your unit could face a parking lot or another building if you aren’t careful.
- The size may be smaller. Finished square footage allows for a margin of error. It’s important to manage your expectations here and also visualize how big or small your unit may be.
- It takes time. A condo tower can take years especially if it includes excavation which is the longest and most uncertain process.
- You can’t back out. If the market changes or your life circumstances change, you are committed to purchase.
- Assignment rules. It can be hard to sell a presale condo depending on the assignment structure the developer has.
Buying a presale condo an be lucrative and a wonderful way to secure a brand new dream condo. However it is important to understand all the potential risks and consult with a licensed REALTOR® before the purchase.