Pre-Sale Condos: Are They Worth the Risk?

Pre-sale condos are extremely popular, especially among those homebuyers wishing to purchase brand-new condos. As the name suggests, these condos are available for purchase before they're move-in ready and in some cases even before construction begins.

Advantages of Investing in Pre-Sale Condos

The most significant benefit of purchasing a pre-sale condo is having the opportunity to live in a brand-new apartment in a new condominium complex. In some cases, the developer may sell all the new condominium units through pre-sale options. Additionally, many pre-sale condos come with extensive warranties on certain features of the home. Buyers are also able to lock in the selling price, despite any increase in property values during the construction phase.

Disadvantages of Pre-Sale Condos

At first glance, buying a pre-sale condo may seem like a great opportunity, but there are several risks involved. First, property values could drop. This factor, in turn, could make it difficult to secure a loan, or the lender might require a higher down payment. Secondly, interest rates could change significantly prior to closing and result in higher monthly payments. Finally, pre-sale condos typically come with no guarantees regarding size, layout, or even building materials used.

Things To Consider Before Buying a Pre-Sale Condo

Buyers who still want to purchase a pre-sale condo should always work with a real estate agent who can look out for their best interests. It’s crucial for buyers to read the entire sales contract, so they know exactly what their rights and responsibilities are. In fact, it’s advisable to have a lawyer review the pre-sale contract either before signing or immediately after signing since most contracts give buyers 7 days to rescind.