A brand-new home with finishes you picked yourself is a great thing to buy. It's also a home you can't move into yet. That gap is what this choice really comes down to.
The short answer: it depends on when you need to move. Resale lets you move in within months and see exactly what you're buying. Pre-construction spreads out your deposit and gets you a brand-new home, but closings can be delayed for years. Buyers who need a home soon usually do better with resale.
Here's how the two compare, and what to check before you sign either one.
The timeline
This is the biggest difference, so start here.
Resale: most buyers take one to three months to find the right home, then 30 to 90 days to close. A firm deal can close in about 30 days if your lender and lawyer are ready.
Pre-construction: you're buying from a builder before the home is built, often years ahead of closing. And that closing date can move. Closings can be delayed for years, so a date in the agreement isn't a date to plan your life around.
Ask yourself one question first: where will you live if the home is late? If you have a lease ending, a growing family or a home to sell, that answer may make the decision for you.
What you're buying
Resale: you see the real home. You can walk through it, look past the staging and check the layout, the light, the roof, the windows and the age of the furnace. You can bring in a home inspector, which usually costs $400 to $700 in the GTA and takes two to three hours.
Pre-construction: the price is set today, you choose your finishes, and you get a brand-new home. You're also trusting that what gets built matches what you signed for, which is why the agreement matters so much.
How the money works
Resale: in the GTA, a deposit of about 5% of the price is common, usually due within 24 hours of your offer being accepted. It's held in trust by the listing brokerage. Then plan for about 2% of the price in closing costs on top of your down payment. We break that down in closing costs for buyers in Vaughan.
Pre-construction: deposits are spread out over time instead of landing all at once, which is a big part of the appeal. The catch comes at the end. New homes can add development charges, utility hook-ups and HST adjustments at closing. These can surprise buyers who only budgeted for the price on the agreement.
Your way out
The two are very different here.
Resale: there's no cooling-off period. Once your deal is firm, you're committed. Your conditions (financing, inspection, status certificate for a condo) are your way out, and only until their deadlines.
New condos from a builder: under section 73 of Ontario's Condominium Act, you can cancel within 10 calendar days of receiving the signed agreement and the disclosure documents, and get your deposit back. This doesn't apply to resale homes or assignments.
Use those 10 days. Have your lawyer read the agreement and the disclosure documents right away, not on day nine.
Before you sign with a builder
- Check the builder. Every new-home builder in Ontario must be licensed by the Home Construction Regulatory Authority (HCRA). Look them up in the Ontario Builder Directory before you sign.
- Know how your deposit is protected. Tarion protects deposits on new condos up to $20,000, and the Condominium Act requires deposits above that to be held in trust or secured. Freehold homes have their own Tarion limits.
- Read the closing costs. Find out what the agreement lets the builder add at closing.
- Read the assignment rules. If your plans change before closing, you'll want to know what the agreement allows.
We read the agreement with you and your lawyer, so there are no surprises. See our pre-construction page for more.
What this means for you
- Need to move soon? Resale is usually the better fit. Start with our buyer guide.
- Have time, and want brand new? Pre-construction can work well, as long as you can handle a delayed closing.
- Selling to buy? Be careful about tying a sale to a builder's closing date. Our guide to buying first or selling first covers how to plan the move.
- Either way, get pre-approved early and know your full number, not just the price.
Not sure which one fits?
Tell us when you need to move and what you want to spend, and we'll help you work out which path makes sense. Call or text 647-694-3109 or get a free home evaluation below.
Michael Barillari, Broker, RE/MAX Premier The OP Team, Brokerage.
General information only; talk to your lender/lawyer/accountant about your situation.