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I have bought presale, newly completed and resale condos in the past. For the first two options, the chance to move into a brand new unit was definitely one of the main reasons why I chose to buy new. However, there are several things people might not be aware of when you buy and move into a brand new condo. I am sharing them with you today to help you make a more informed decision.
With me, I always try to base my decisions on what makes the most financial sense. If the only difference between the brand new unit and a two-year-old unit is the price, I would jump on the cheaper one that is comparable in location, quality and condition. The $10,000 I save on the slightly older one can be spent on small renovations and furnishing. I have also been in situations where I simply can not afford that extra $10,000 without jeopardizing my emergency savings. In that case, buying what I could afford is the only way to go.
I am in no way trying to convince you away from buying a brand new condo because the hype is real: everything is brand new! However, I want you to put a price on how much you think that (on top of everything discussed below) is worth and base your decision on that.
RELATED POST – The Process of Buying a Pre Construction Condo
It Could Take Over A Year For The Developer to Fix In-Suite & Common Area Deficiencies
If this sounds ridiculous to you, note that this does not necessarily mean the developer is bad. This process takes as long as it does because of the following reasons:
- the developer wants to address the same non-critical problem after more units moved in (to save time and costs)
- the deficiencies were reported shortly before the one-year deficiency reporting deadline is up (so they will be coming in to fix them after the anniversary)
- the parts or materials or labour were not immediately available
- the first couple of solutions did not fix the problem so more analysis is required (this would usually be applied to the bigger problems in the common areas)
In my experience, any critical and/or time-sensitive deficiencies would be addressed in a timely manner. The ones that take months to fix would be something less time-sensitive like a burnt under-counter lightbulb and slanted front door. Also, as the building settles for the first year, the wall would sometimes develop these cracks that need to be filled and re-painted.
Security Might Not Be Perfect For A While
Unfortunately, I have not lived anywhere brand new with the perfect security system on Day 1. Luckily, I have not experienced any serious concerns. However, I have moved into buildings with nuisances such as a gym with a non-user-friendly lock that was prone to it being left unlocked. Depending on where you live, this might or might not turn into a serious and/or costly problem. If a break-in happens, this could translate into higher strata fees due to equipment or furniture replacement in the common areas.
What would normally happen is the owners reporting these deficiencies/problems to the strata council who would then discuss and settle on a solution. For example, in the lock for the gym case, the lock would simply need to be replaced.
There Will Be People Moving In Constantly In The First Few Months
We were one of the first units that moved into our building we are currently in. Over the next few months after we moved in, the elevators were almost always covered in the protective blanket and the lobby’s door was kept open for the movers during the day.
Since our unit was not on the ground floor, the public access did not concern me too much. Our neighbourhood was also a relatively safe residential area so security was not too big of a concern. However, if I lived on the ground floor in a more commercial area with a lot of foot traffic, I would probably find that a bit unsettling.
Your Strata Fee Might Increase More Than You Expected After The First Annual General Meeting (AGM)
I personally have had rather good luck with this (strata fee going up ~<10% after the first year) but I have heard horror stories from others. There are a couple of reasons I can think of for a large strata fee increase (>20%) after the first AGM:
- a lot of maintenance or work needs to be done that is not covered by the developer in the first year
- the developer advertised low strata fees to attract buyers which contributed to a low contingency fund
Unlike when you purchase a resale condo, you are not able to read the minutes from previous AGMs to find the pattern for strata fee increases. For a resale, if the strata have a healthy contingency fund that increased every year with only modest increases to strata fees, you can safely assume that the trend will continue (unless the insurance for strata went up again as it did in 2020).
Your Unit Is Not Going to Look Like The Show Home…
until you furnish it.
This is applicable to people who purchased a brand new condo without ever seeing the actual unit. Rather, the only comparable you saw was the professionally furnished show home. Whenever I have inquired about the designers or products used at a show home, I would be shocked by how expensive they were. This makes a lot of sense if you think about the dollar amount this show home is bringing the developer. If spending $100,000 renovating and furnishing the show home will help the developer sell 80 units for an average of $500,000 each, that is a $100,000 expense for $40 million in sales.
So, for those of you who are expecting to move into that perfect home you saw at the sales centre, be prepared to wait a few months and spend a few thousand dollars (if not more). Alternatively, you might be so good at interior decorating that it will turn out nicer than you imagined.