Guide to Buying a Pre-Construction Condo
What if you could purchase a brand new property by locking in your preferred price, while competing with fewer buyers?
There are many ways to participate in the real estate market, either as an investor or home owner. Buying a resale condominium that’s fully constructed is the conventional path for many — but purchasing a pre-construction condominium could be a great way to keep costs down and buy something completely brand new. Although buying a pre-construction condominium is less common, many cities across the US offer this option with savvy buyers enjoying the potential savings and other benefits they offer.
What is a Pre-Construction Condo?A pre-construction condominium is a condo that you purchase before or during construction. Even if you’re not familiar with pre-construction condominiums, at Caydon we have been using this process for a long-time with thousands of condominiums sold worldwide with plenty more in the works.
Buying prior to construction commencing generally means you are getting the first choice of the floor plans and views and sometimes the ability to personalize your home. The developers provide floor plans, a sales center, and artist impressions of what you’re purchasing to help you visualize your new home. The price is locked in from the day you sign, so even if construction costs or house prices rise during the building process, you won’t pay anymore than the agreed price - which is great if house prices in your city are set to rise.
The beauty of a pre-construction condominium purchase is that you can secure your new home with a small deposit — usually only between 3-10% of the total purchase price. Plus, there are no mortgage repayments until closing, so you won’t have to start paying until you can move in. This also gives you plenty of time to save a larger deposit for your lender, so you can reduce repayment costs once you start paying.
Purchasing a Pre-Construction Condo with Caydon
Caydon has over 20 years of pre-construction condominium sales as well as exceptional condo design and build experience. Based primarily in Australia but with several developments across the U.S. as well, the team at Caydon are expert pre-construction managers and can help you every step of the way while you’re considering your purchase options as well as during and after the purchase journey.
Benefits of Buying Pre-Construction
There are plenty of compelling reasons you may want to consider buying a pre-construction condo. Here are just a few:
- Premium lifestyle and location
The median price of a pre-construction condo is usually significantly lower than an established traditional single-family home, which makes buying in your desired location far more achievable. Our developments are always close to the city center, ensuring that all of life’s necessities are well within your reach.
Urban living is no longer just the domain of young professionals and singles. Across American cities many couples, families, and retirees are choosing to live close to the action, in walkable, well-appointed metropolitan pockets surrounded by cultural institutes, entertainment and landscaped parks.
- Lock in your price
The cost of your pre-construction condominium is locked in from the moment you sign your contract. This means that the price won’t change, even if the property increases in value throughout the build.
- Low maintenance and repair costs
New buildings are typically more energy efficient, saving you money on power bills. There’s also the added bonus of minimal repair and upkeep costs when compared to a traditional single family home.
- A personalized space
Buying early in the construction process, or even before construction starts often means you have more choices in terms of color schemes, fixtures and fittings. So you can make your new home a more personal reflection of you.
- More time to save
Need a little more time to get your finances in order? When buying a pre-construction condo, you only need to pay a deposit upfront with the remaining balance only due once the property is complete. This means you’ll have more time to save for a larger deposit and still lock in today’s market value for your new condo.
- HOA offers value for money
The Home Owners Association (HOA) OA offers condominium owners excellent value and security, covering the kind of amenities that simply don’t exist in your typical single-family home. For example, in a Caydon condominium you could enjoy a combination of concierge services, secure package lockers, valet, electronic access passes, skyline views and on-site wellness facilities. HOA fees also cover some maintenance fees and other ongoing costs including the upkeep and cleaning of communal areas.
Risks to Buying Pre-Construction and How to Avoid ThemAs with any property purchase or large investment, it’s important to be aware of any risks to watch out for. As you can’t see what you’re buying yet, it’s a good idea to visit a sales center where you can see a prototype of the kitchens, bathrooms and standard fittings that will be included in your condominium.
As long as you do your due diligence, the risks are low. The two main things you’ll want to consider are:
Typically timeframes are one of the main concerns when it comes to pre-construction condominium sales. Like any major construction project, complications can arise and timelines can be challenging. However, a way to manage this is to work with an experienced condominium developer whose experience and expertise will go a long way towards mitigating this risk. With Caydon, you can trust our 20+ years of pre-construction condominium management experience and know that you’re in good hands.
UncertaintyVery occasionally, certain condominium developments that involve pre-construction sales are cancelled or altered. This can happen even with pre-sales, as the developer will, for a variety of reasons, choose to fully refund the deposits paid. As with the risk of missed timelines, this uncertainty is mitigated by working with a reputable and experienced condominium developer such as Caydon who also provides peace of mind through regular and professional communications and updates throughout the pre-construction journey.
How Does Buying a Pre-Construction Condo Work?It may seem daunting if it’s new to you, but we can take you through the entire pre-construction purchase process in just seven steps.
1. Give your finances a health checkBeing well prepared will set you up for a smooth pre-construction experience, and there are a few things you’ll want to have checked off your list. Firstly, speak to one of our Preferred Lenders to get an idea on how much you can afford to spend.
Our preferred lender network is well briefed on our development projects and well placed to provide accurate, timely advice to you. They are also 100% independent of Caydon, taking no commissions or financial incentives in relation to our projects.
2. Visit the sales center and choose your new condominiumOnce you’ve got your finances prepared, you’re ready for the fun part. With the help of your agent or sales consultant, review the available floor plans and prices and choose your new home.
You’ll want to check out the color schemes and material choices available, as well as any upgrade options you’d like to add. The ability to make changes and choose color schemes is only available early on in the project. Once construction reaches a certain point, these won’t be able to be changed – so be sure to chat with a consultant early for more choices. Once you’ve considered all the options and made your selections, it’s time to lock it in.
3. Signing and paying your depositWe’ll send you an electronic Purchase and Sale Agreement (PSA) as well as all disclosures and addendums. We always recommend having your attorney review the PSA for your own peace of mind before signing and making the deposit payment.
Depending on which project you purchase at, instalment payments may be an option — check with your agent or consultant. Once paid, the amount is kept safely in escrow until you close.
4. ConstructionNow that your contract is signed and you’ve made your deposit payment, you can sit back, relax, and get excited for what’s ahead. At Caydon, we keep you updated at every step of the construction journey with regular communication once construction starts.
We also provide you with access to My Caydon. Log in any time to view your floor plans and access your documents, including a copy of your PSA. You can also stay informed and involved along the way by participating in your neighbors meetup events.
You’ll also be able to take advantage of having more time to save for a larger final deposit on your condominium payments before closing – potentially resulting in lower interest repayments.
When the building is close to completion, you’ll be invited to an information evening to help prepare you and your neighbors for the next steps: closing and move-in.
5. Pre-closing inspectionBefore you close, you’ll have the opportunity to inspect your condominium to make sure everything is in order. You’ll get to walk through your condo and note any items you’d like to have reviewed by the construction team.
The Caydon closing team will contact you to arrange your pre-closing inspection which will typically take around 30 minutes and can be scheduled to fit into your day.
6. ClosingIf you worked with one of our preferred lenders, they will have already submitted your documentation, making the closing process fast and efficient. Your lender will let you know what’s required, such as recent pay stubs, credit history, W-2 forms, etc.
You’ll be given a summary of the closing costs payable ahead of time so you’ll know what you need to pay when the closing date arrives.
7. Moving in
Your condo is ready and the pre-construction journey has come to an end. But it’s just the start of the next exciting step: building your home and growing your investment. Once the purchase is closed, we’re ready for handover and key collection.
A member of the Caydon closing team will give you:
- Your condominium keys and swipe cards
- Your designated car parking space
- Steps on how to move in
- Information about how to connect your utilities
- Instructions for how to access the Caydon HQ app so you can reserve amenities, get building contact information, log issues, connect with neighbors and much more.
After closing and once you’ve moved in, you’ll have a further rectification period for you to log any issues or items requiring attention. This is governed by your state’s laws and can be actioned easily through the Caydon HQ app.
What to Look for In a Pre-Construction Condo
Now that you know about pre-construction condominium sales, the benefits, considerations, and process, here’s a recap on the main points to keep in mind as you plan your purchase.
- The location
Does it offer value, desirability and capital growth potential?
- The developer
Are they experienced and reputable?
- The condominium inclusions
Are you certain of what your condominium will include as standard rather than what’s been shown in the display gallery but costs extra?
- The amenities
Have you factored in the local amenities and on-site common amenities that add value to the condominium?
- HOA fees
Are you clear on the HOA fees, requirements and have factored these into your overall budget? Remember that though HOA fees may seem high compared to older buildings, the value gained could be considerable.
Does the condominium development take sustainability measures in its design and build to benefit your comfort, utilities cost and the environmental footprint of your home? Have you checked out the insulation and soundproofing as well as smart thermostats and other technology that can be built in to save you money and cut down carbon emissions?
Now that you’ve done your research, it’s time to take the next step. Browse our current and upcoming projects to find your future home.