One common misconception many buyers are faced with is that they can decide to buy resale or new based solely on the best deal available. Theoretically, it makes sense. After all, why limit yourself? The reason the decision to buy new or resale should very often be made regardless of prices is because there is a world of difference between the two potential purchases. Here’s an overview.
First off, the idea that buying new guarantees getting a great deal can be misleading. The confusion comes when buyer Noreen, for example, assumes she’s getting a great price simply because she’s buying a home in summer 2007 that won’t be ready until summer 2009. Noreen thinks that the home is sure to go up in value in two years so the purchase is a no-brainer. The overlooked fact here is that the price would go up in two years regardless of whether Noreen buys a new home or a resale home. Of course, that’s not to say that new homes cannot offer good value — in fact, I can think of one particular new development in Markham that is currently offering terrific value — but the fact that it’s new isn’t the main reason behind it.
It’s important to remember that normally, new developments will come with an approximate closing period of six months to three years. These closing periods can be subject to change. Not at all because builders are sloppy but because predicting construction times is tough when you’re considering factors like how long it takes to sell an entire neighbourhood and how many bad weather days will slow the process. The fact that your closing date may be in limbo can lead to other valid concerns such as the closing of your current home, if you have one. The point is that nothing’s perfect. New homes carry many advantages but they can come with certain strings that are important to consider and keep in mind.
You also need to think carefully about the price itself and whether you’re comparing apples to apples. At first glance, new home prices can seem too good to be true. They’re actually closer to almost too good to be true! There will be a number of additional costs the sales agents will make you aware of to factor in. Once you have those, then you are free to compare prices accurately.
Finally, there’s also the matter of the Tarion New Home Warranty. This is a wonderful safety blanket that comes with buying new. Remember, however, that if you’re buying a resale home that’s a few years past the warranty, the owners have already made good use of said warranty.
Aside from the pride, prestige and satisfaction that comes with buying a new home, a wonderful financial gain can also await. However, it’s important to get the facts right and separate the myths from the realities. That way, whether you’re buying new or resale, you’ll be sure to make the best decision for you and your family.
For more information, feel free to e-mail Amit at amitp@rogers.com.
