The Differences Between Buying Pre-Con and Resale Homes
Buying pre-construction is a different ball game than purchasing a resale home.
A pre-construction home means buying a detached, semi-detached, townhouse, condo, etc. before its build. The purchaser typically buys directly from a developer at an early phase in the project. This approach offers several advantages, but it also comes with timelines and processes that differ from a standard home purchase.
Buying a resale home means purchasing a property that has already been built and previously owned. Unlike pre-construction homes, which are bought before they are built, resale homes are move-in ready, offering a glimpse into the space and surrounding community before you commit.
There are benefits to both options.
For pre-con, the benefits may include: customizability, price stability, brand-new home, phased payments, investment potential.
For resale, the benefits may include: immediate move-in, established communities, what you see is what you get, room for negotiations.
Here is a list of some of the key differences between pre-con and resale homes:
Timing:
Pre-con: you buy the home before it’s built occupancy often being years later
Resale: the home is already built, and you can move in shortly after the purchase is finalized
Customization:
Pre-con: often allows you to choose finishes, layouts, and upgrades, offering a more personalized experienced
Resale: you purchase the home as-is with any customization requiring renovations or remodeling after purchase
Price and payment structure:
Pre-con: price is locked in at the time of purchase, often with a staggered deposit structure over several months or years
Resale: requires a significant down payment upfront, usually around 5-20% of the total prices, along with closing costs at the time of purchase
Condition:
Pre-con: brand new, no wear and tear, often equipped with modern energy efficient systems and modern features
Resale: home may show signs of use and may require repairs or upgrades depending on its age
Closing costs:
Pre-con: includes additional fees such as development charges, Tarion warranty enrollment (in Ontario) and potential HST on upgrades
Resale: generally limited to standard closing costs like legal fees, land transfer tax and home inspection costs
Mortgage process:
Pre-con: mortgage approvals may need to be re-evaluated at the occupancy date as construction can sometimes extend over several years
Resale: mortgage approval is tied to the immediate purchase and closing process, with rates locked in for a shorter time frame
Inspection process:
Pre-con: involves our “Welcome Home” session which is a pre-delivery inspection/ new home owner orientation to identify deficiencies before occupancy
Resales: typically includes a home inspection during the conditional offer period to evaluate the home’s current condition
Availability and market conditions:
Pre-con: availability depends on new developments, and buyers secure units based on floor plans or models
Resale: Availability is based on the current housing market and what is listed for sale
Community readiness:
Pre-con: surrounding areas may still be under development, with amenities and infrastructure taking time to fully establish
Resale: located in an established community
Investment potential:
Pre-con: often appreciates in value during the construction phase, offering potential financial gain by the time its ready
Resale: immediate value depends on the current market, location and home condition with appreciation taking place over time
Warranty coverage:
Pre-con: comes with warranties like Tarion warranty in Ontario, covering structural defects and other issues for a set period
Resale: may not include a warranty unless its a newer home still covered by the original builder’s warranty
Pre-construction purchases are usually ideal for buyers looking for modern, customizable homes and those with flexibility around timelines. If you value having a say in your home’s design and are comfortable navigating a slightly different process, pre-construction can be a rewarding option.
A resale home is a great choice for buyers looking for convenience, established communities, and the ability to see exactly what they’re purchasing. If you prefer to move quickly or want the charm of a mature neighbourhood, a resale home could be the perfect fit for your needs.