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Michelle Kam
October 21, 2020

Michelle Kam’s Guide to Buying Pre-Construction Homes in Toronto

The purchase of a pre-construction home in Toronto comes with several benefits. For many people, purchasing a home before it’s complete is ideal. However, there are also disadvantages, many of which buyers are not aware of. So, before jumping into the Toronto real estate market, it’s important to consider all of your options and to understand the pros and cons of purchasing a home in a pre-construction phase.

As a Toronto real estate broker, Michelle Kam is very familiar with the advantages and disadvantages of purchasing pre-construction homes, as well as the process that it entails. She deals with pre-construction homes and condos all over Toronto. She shares her expertise for those considering purchasing pre-construction homes.

Advantages of Pre-Construction Homes

Many people choose to purchase pre-construction homes due to the benefits that they offer. First and foremost, pre-construction properties are no more expensive to purchase than completed homes and therefore can provide a significant return on your investment. Also, buyers have the opportunity to customize their home without having to incur renovation costs. Often, adding or upgrading features can increase the resale value of your home, notes Michelle Kam. One of the most appealing aspects for many is that you’ll end up with a brand new home to move into. And, in terms of the home itself, new builds are always developed with the latest trends, technology, and efficiency in mind. So, buyers can rest assured that their new home will be up-to-date and should not require any additional work or maintenance for years to come. Many warranty programs in Toronto cover repairs on newly built homes.

While there are many advantages to buying a pre-construction home there are also several disadvantages. It’s important to consider both when deciding if a pre-construction home is right for you.


Unfortunately, the overall cost of a brand new home will likely be more than an older home in the same area. Often, buyers will see a show home that is ideal only to learn that much of what they see requires expensive upgrades to the base unit. Therefore, it’s important to keep in mind that your perfect home may come at a much higher cost than originally projected. That said, a good Toronto real estate agent should be able to help you negotiate some add-ons in your contract!

For many people, the biggest downside to pre-construction housing is the possibility of delays. Developers can be behind by years, in some cases, so it’s important to find a trusted developer that you can rely on when making your purchase. Michelle Kam notes that developers are entitled to delay the closing up to three times from the date projected.

Additional considerations include added costs like closing fees and taxes, especially if you’d like to rent out your new home, says Michelle Kam. In some cases, these costs can be minimized, especially with the help of a knowledgeable Toronto real estate agent and mortgage broker. For example, if you live in your home for a certain period before renting it out, you can avoid additional rental taxes. A real estate agent will be able to help identify and explain these additional costs so that you have the whole picture before making your purchase.

While not everyone will follow the same steps when purchasing a pre-construction home, Michelle Kam outlines the basic process.

Michelle Kam Explains the Process of Purchasing a Pre-Construction Home

1. Pick your team wisely

Before you get started, you’ll want to find a Toronto real estate agent that you trust and will work well with. This person will be representing you in negotiations and helping you along the way so, as Michelle Kam explains, you must trust in your realtor’s skills, ability, and expertise. In this case, it’s best to find an agent who has experience with pre-construction homes. An experienced agent will be able to help you make decisions about which upgrades to purchase to increase the resale value of your home, how to structure your offer, and even which new build is most suitable to your needs.

2. Do your research

You must research the builder you intend to buy from before making your purchase. Some builders will be more reliable and trustworthy than others. Since you’re essentially buying a promise that your home will be completed on time and to your specifications, you must find an experienced developer with a good reputation. Your real estate agent should be able to help guide you.

3. Visit your potential new home

It’s always a good idea to visit a model home, as well as the site where your new home will be built. Take a look at the neighbourhood and surrounding area to ensure you can see yourself living there. Michelle Kam suggests exploring the area and evaluating its proximity to schools, shopping areas, and transit. Make sure to inquire about any other plans for new developments in the area, as this can affect your lifestyle, as well as the resale value of your home.

4. Negotiations

You must have an experienced real estate agent on your side during negotiations. A good realtor will be able to help you negotiate your contract and may even be able to have some upgrades included. Your agent should be familiar with the negotiating styles of developers and know what you can successfully work into your contract.

5. Signing

Before signing your Agreement of Purchase and Sale (APS), make sure you are happy with everything in the agreement. Everything you want to be included should be in writing in this document, as verbal agreements are not legally binding.

It’s important to ensure that you understand exactly what you are signing. If you need any clarification, be sure to ask your real estate agent to explain. Make sure you have discussed and understand what will happen in the case of any dispute — if your home is not finished on time or it is not to your specifications. Be sure you are also aware of what is covered in your warranty.

Your real estate agent will inform you of what documentation you’ll need to bring to sign your APS and will help you through the process on the day. Bring a valid government-issued photo ID and your chequebook when you go to sign your agreement.

6. Securing financing during the cool-down period

Familiarize yourself with the cooling-off period in your agreement. During this period, which is typically around 10 days in Ontario, you can back out of the deal and receive the full deposit back. At this point, your home is on hold for you, giving you a chance to secure financing. During the cooling-off period, you’ll want to have a lawyer review your agreement and secure pre-approval for a mortgage. Be sure to find a Toronto mortgage broker that is experienced and can secure you a good rate.

7. Finalizing your agreement

Once your cooling-off period has ended, if there are no changes to the purchase agreement, your contract will be finalized and your deposit cheques will be cashed. You’re one step closer to owning your new home!

8. Customizing

Now that everything is said and done, the fun part begins. You can start working with the developer to customize your home. Michelle Kam suggests consulting your real estate agent to ensure you are adding customizations that will increase the resale value of your home.

9. Inspections

Once your home is completed, but before ownership is turned over to you, you will need to have an inspector review your new home with you. This is called a Pre Delivery Inspection (PDI). During the inspection, write down any issues that you come across and have your builder sign off on them to ensure they will be addressed.

10. Closing the deal

During the final closing phases of your deal, you will encounter an Interim Occupancy stage and a Final Closing stage. Your lawyer and real estate agent will help you with these processes. During these stages, you will meet with your real estate agent and lawyer to pay any outstanding fees and to sign final documents. Once complete, you will officially be a homeowner, says Michelle Kam.

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