Should you buy new or resale house? Here's what you need to know

There are many decisions to make before deciding to buy a house and one of those is whether to buy a new or a resale one. 

While the end result is going to be the same – owning a home—the process of how to get there and how long it takes might vary between buying new and resale, Taylor Bennet from Bennett Property Shop Broker told CTV Morning Live Thursday.

Purchase price

Bennett says there’s really not much of a difference between the purchase price of a resale or new home.

“However, there could be some hidden costs,” he said. “So, typically the purchase price that you see in there reflects the actual upgrades that you get. Those are additional costs. It also reflects the rebate that the Ontario government gives for new home purchases as well.”

He notes that the government’s rebate might not be valid if you aren’t an investor.

Bennet warns that specific clauses can result in a higher price, citing the cost of construction that includes lumber and labour costs.

“As through the construction process, if the construction costs increase, increase from my end, you might have to pay a higher purchase price in there as well as the buyer. So, if it takes three or four years to be build, lumber might go up, or concrete might go up, and all of a sudden you're on the hook to pay that additional cost,” he explained.

He suggests hiring a real estate agent who is familiar with those hidden costs and procedures.

“Make sure you have somebody who has that experience and walks you through where the pressure points are in that contract,” he added.

Deposit

Deposits for new homes are a little bit higher than those for resale ones, he says. Adding that they are – however – secured.

For example, if the builder goes bankrupt, or if the project doesn’t get rebuilt for whatever reason, you get your money back, explains Bennet.

“Multiple deposits can be due and there's different stages when you buy the house, you might have a deposit due maybe 60 days later, maybe at different phases of construction. But again, that will be part of the agreement that you sign up front,” Bennet explained.

Conditions

For resale homes, the buyer can build their conditions, such as inspection, mortgage financing or legal review, Bennet notes.

Conditions also vary between the buyer and the builder, he adds.

“So, the buyer, of course, you've got your financing, legal approval, things of that nature. But the builder, if you're in the early stages, they might have a condition of, they have to sell a certain amount of homes before they get their construction financing,” Bennet said.

"But, they had to get site plan approval from the city before they can start building. So, they might not have full conditions approved yet in your contract again.”

Finishes and upgrades

A lot of people are misled when they walk into a model home and see the beautiful finishes and extras, as they might assume they come with the newly built house they’re buying, Bennet adds.

“Talk to the salesperson on site and also don't just talk to the person on site, get it in writing, as well, because they might say something, they might just be mistaken. Maybe they had a bad day, maybe they were distracted when they were speaking to you and they said one thing you sign the contract that said the other, it's whatever is in writing will take precedence,” he said.

Meanwhile, some builders may offer some of those upgrades and extras as bonuses and incentives, he says.

Bennet also warns that appliances might not be included in the purchasing contract. He notes that some builders would offer those as a bonus, recommending to also get that in writing.

Closing date

The closing date can also vary between the purchase of resale and new homes.

The buyer and the seller agree upon one date to close on the property in resale, he says.

It’s more complicated when buying a new home depending on multiple factors, such delays in construction.

“That can be a year apart in some cases and the builder will have the right to change that date within 90 days notice. You’re gonna have a three month window before you actually close on these things and it's something you don't get to choose with the buyer. The builder gets to set on that,” he added.

He says that people who buy new homes that are near the completion stage of construction are less prone to get a delay than those who buy in the early stages of construction.