Comparing Presale Vs Resale Homes: Pros And Cons

If you’re in the market for a new home but aren’t sure what is best for your personal situation, you’ve come to the right place. Here we’ll take a look at the pros and cons of buying a presale home (typically a condominium which has not been built yet), or whether buying a resale home is a better option.

Presale Homes

  • Pros

    • You’ll have a brand-new home to live in. Everything will be clean and shiny!
    • You’ll get to pick the finishes and fixtures. Choose your own flooring, paint colors, lighting and more etc.
    • Maintenance will be low since everything is new. You’ll have more free time to do the activities you love and less time worrying about jobs you need to do around the house.
    • You shouldn’t have any major repair bills for the first number of years.
    • You’ll have a new home warranty.

  • Cons

    • It may take a couple of years or more for construction to be complete.
    • Mortgage financing can be more difficult to secure since construction will take time.
    • You’ll have to pay GST on the purchase price.
    • Strata fees can be high depending on what types of amenities are in the development. Generally, the more amenities there are, the higher the strata fees.
    • Construction delays can occur.

Resale Homes

  • Pros

    • The home is already built so you can move in right away. This will be negotiated during the offer stage and can sometimes be as quick as 30 days.
    • You can see the actual property before committing to purchase it.
    • No GST is applicable on the purchase price.
    • Financing is easier to obtain since the home already exists.

  • Cons

    • The property may need updating or upgrades depending on its age and condition. Paint and flooring may need to be redone to make it suit your needs.
    • You won’t be the first person to live in it so expect there to be some chipped paint, and marks or minor damage to walls.
    • No warranty if the home is older although some warranty may still be available if it is under 10 years old.

Market Considerations

Comparing Presale Vs Resale Homes: Pros And Cons
Image by Lukas Kloeppel

In either scenario, market fluctuations can impact the value of the home. The risk with presale units is the home may have lowered in value before you even move in. While this is less likely in the Vancouver area than in other areas of the country, it is still a possibility since construction can take over two years or more to complete.

Conversely, the home may be worth more than when you entered into the purchase contract, providing equity in the home before you take possession. If you plan to live in the presale unit long term, the value will likely be more than the purchase price a few years down the line.

Strata Issues

  • Presale Units

With presale units, there won’t be a strata corporation or strata council until some time after the completion of the project. This means you won’t have a history of minutes or financial statements to review before making your decision.
There shouldn’t be any large expenditures in the first number of years once construction is complete, so you shouldn’t have to worry about unexpected special assessments or levies for large repairs.

  • Resale Units

Before purchasing a resale unit, make sure to review at least two years of minutes from the Strata meetings, as well as financial statements, operating budgets and the depreciation report. Also make sure to find out if there are any outstanding or pending special assessments or levies, and if so, how much would be your responsibility.

If you are seriously considering whether to buy a presale unit or not, contact an experienced real estate agent with experience in this type of transaction.