Nicoleta Kallo
Calgary, AB
Phone: (403) 254 2540 Fax: (403) 366-5157 Email Nicoleta

New Homes versus Pre-Owned

FACT: Only few of the many Calgary realtors have actually worked for a builder!

My experience as a former  homebuilder employee will be a great asset during your New Home Buying Experience. I can advise you on what and how to buy, I understand the construction process and I can help you protect YOUR OWN INTERESTS! Please do not hesitate to ask me to represent you in front of the builders! Yes, I do get paid commission by them, but MY OBLIGATIONS are EXCLUSIVELY TO YOU. It is better to be safe now... then sorry. Call me now! 

As demand for housing grows steadily across the country, new home builders are seeing an ever increasing demand for their products. While new housing starts should be considered a positive trend, the quality of these homes often falls victim to watered down building codes, chain saw carpentry, demands for faster delivery and a general lack of skilled labour. Often consumers are disenchanted with their new "dream home" and find that the largest investment of their lifetime may also be their biggest headache. Disputes with builders, municipal officials and warranty programs are not what the homeowner envisioned as part of the new ownership process.

The days of simply walking into a model home and buying a "problem free" product replicating what they may have viewed in the model, may be numbered. Consumers who feel that newer is a "safer" bet with respect to quality and finish in a home are sometimes very surprised to find that what they thought they bought, was not what they actually received. Then they discover that trying to rectify the matter may be an uphill battle.

 
 
 

 TOP 10 Things TO Do When you are buying a Newly Constructed Home
R
eprinted with permission from Chris Arnold, Mann & Partners - all rights reserved.

1. Make sure the neighbourhood is right for you - Think long and hard about your prospective neighbourhood before visiting any model homes and falling in love with anything. If your wonderful home is in a declining part of town, it may not retain its value. Drive around the neighbourhood at different times of the day, check out location of schools, services, places of worship, and distance to important places in your life before shopping for the specific property.

2. Check out your builder - Once you have narrowed down the neighbourhoods, now check out the builders that are offering new homes in that area. The best way to do this is to talk to actual residents in the neighbourhood you are looking at. Walk around and ask people to chat, or if you are bold, you could even ring doorbells. You need to get straight talk from people who have just dealt with your prospective builder. Some suggested questions: Did the builder let you visit the site during construction? What was after-sales service like? What state was the home in at closing?

3. Don't sign the Agreement! (#1) - You should be careful with relying upon assurances from the Sales Office. They are there to sell you a home. All of them are very polite, most are very helpful, and they earnestly want to assist you in making a difficult decision. However, generally they don't know much about the legalities of the Agreement of Purchase and Sale (the main contract between you and the builder to buy/sell the home) they are presenting to you to sign. They are NOT there to protect your interests. Assurances such as "this is not binding upon you" (see paragraph 5 below) or "we can't let you on the site before closing because that wouldn't be legal" should be taken with a large grain of salt.

4. Don't sign the Agreement! (#2) - The Agreement of Purchase and Sale is a very long and complicated document and there are many terms buried in the small print that may surprise you. It is unwise to sign an unconditional (ie. fully binding) agreement before having the document explained to you by your lawyer. Signing without speaking to your lawyer creates a real risk that you are undertaking obligations you do not understand or want, and also removes any opportunity to negotiate (and improve) any of those terms;

5. Don't sign the Agreement! (#3) - If you MUST sign the contract with the builder to secure your desired lot, then at least have a condition added making the deal "conditional upon approval of the terms by your solicitor". This secures your lot, but leaves a door open to get out of the deal if you really don't like the terms (once they are explained to you);

6. Understand that every new home contract contains clauses that allow the builder to move the closing date. It is hard for a builder to unconditionally promise that your home will be ready on a particular date because the builder may be delayed by labour or material shortages. For example, a closing date of October 1, 2002 may turn into January 15, 2003. If the builder gives you proper notice (often 60 days, but check the contract) you will have no right to complain. This often causes havoc for those moving out of rental accommodations and makes the provision of notice to your landlord difficult. If you can't handle a moved closing date, you might want to look at the used-housing market where fixed closing dates are the norm.

7. Get a home inspector involved immediately - I can't stress this enough. Your builder may be very reputable, and come very well recommended by your friends or family, but when it comes right down to it, that doesn't mean anything when the crew begins building your house. A home inspector will ensure that what they are building complies with the specifications you and the builder agreed to, with the material grade and quality agreed to, and most importantly, that the proper construction methods are being followed. For more details (and horror stories) consult other parts of this web site, or call a qualified home inspector.

8. Visit your home site - This is the best way to ensure that you are not going to be surprised by anything after closing. As much as the builder and the crew will let you, and as much as you can afford the time, go out to the site and examine what is being done. You can often ask questions of the crew and you will, literally, feel that you know your house "inside and out". You may spot some errors or deficiencies and be able to advise the crew or the supervisor right there. Hopefully, that will lead to the builder fixing those deficiencies before the construction proceeds too far or that crew disappears from the site. Furthermore, the information gathered will be useful to you later on as a homeowner - when doing your own repairs or renovation, or when dealing with contractors.

9. Be picky during your "Pre-Delivery Inspection" - The inspection done by you and the builder just prior to closing to determine what deficiencies remain in the home is called the "pre-delivery inspection" or "PDI". It pays to be picky during that inspection. Make sure ALL deficiencies are listed. Try not to be bullied by the builder into not putting something down because "that is normal" or "we don't fix stuff like that". One large local builder's rep. actually told my clients that the pre-delivery inspection was "for him" and that my client's inspection happened "after closing". That is 100% untrue. It is YOUR inspection. Try to bring your home inspector to this inspection to be sure all the deficiencies are discovered and noted. The list of deficiencies forms part of your Ontario New Home Warranty file and if a deficiency isn't on the list, you might face a claim that it occurred after closing and is not covered. Protect yourself!

10.  Document everything - You may be caught later in a fight with your builder or the Ontario New Home Warranty Plan about deficiencies with your property. Proof will be essential. Document any phone calls, with a time, date and who you spoke to. Write a brief description about the call - what did you want, what was the builder's response, etc. Also take photographs and record the date you took them (or turn on the feature available on most cameras to date the film itself). Good preparation will assist in the protection of your rights in any future dispute.

 

New Or Pre-Owned? What You Need To Consider When Deciding On A Home
 

 There are many decisions you'll need to make before striking out on your house hunt.  Things like what area of town you want to live in can really be impacted by such not-so-minor details such as property tax rates or the quality of the school district. 

 

What kind of city amenities are being offered?

 

Parks, pools, golf courses or other recreational facilities can impact not only your personal quality of life, but the eventual re-sale value of your investment.  Here are some questions you'll need to ask yourself when deciding on where to buy your next (first?) home:
  • Do I want an older/more established neighborhood...with trees and mature landscaping?
  • Do I want a newer area of town that is convenient to schools, churches, malls and shopping centers?
  • Does the area I'm considering have increasing (yes!) or decreasing (no!) property values?
  • Do I want to live in the city, experience suburbia or the challenge of a rural lifestyle?
  • Do I want to live close to my job or am I willing to sacrifice the drive to live in the country?
Based on your answers to the questions above, make a list of questions prior to settling on a final location of your next home. 
New or Pre-Owned? Sooner or later, you'll need to decide whether you want to own a new or a pre-owned home. There are advantages and disadvantages for both; check out the list below...

New vs. Pre-Owned Homes

Whether you're thinking seriously about buying a new home versus a pre-owned home, each one has it's own unique set of advantages (and disadvantages!). Let's run them down and let you make the final decision...

Pre-Owned Homes-Advantages
    - Mature landscaping
    - Established neighborhoods
 
Homeowner added amenities.....
    - Sprinkler systems
    - Pool & hot tub
    - Draperies & window treatment
    - Shutters and blinds
    - Special paint and wall finishes
 
 
Pre-Owned Homes-Disadvantages
 
May need updating.....
    - Carpeting
    - Painting
    - Kitchen & baths outdated
    - Smaller rooms/smaller bathrooms/lousy closet space
    - Lower ceilings
    - Maintenance issues need to be addressed: Potential necessity of a new roof, new air conditioning system, new plumbing
 
New Homes...Advantages
    - Fresh "pallet" to work/create from
    - Never lived in
    - May be able to choose finish-out items such as carpeting, painting, wall papers, etc.
    - No immediate maintenance needed
    - More upside to increase value in early years
 
 
 
New Homes...Disadvantages
 
You may need to budget the purchase of a slew of amenities out of pocket:
    - Landscaping
    - Sprinklers
    - Fencing
    - Pool or Hot tub
    - Draperies, shutters and blinds
    - Wallpaper, special wall painting treatments, etc.
    - Builder grade finish out materials used (you may want to upgrade)
    - Floor coverings
    - Plain one color walls
    - Lighting fixtures and ceiling fans
    - Neighborhood not well established
    - Lots of construction still in progress (which means the potential of noise and mess)
    - May be several years until neighborhood sold out and complete
 
 
Building vs. Buying A New Home
 
While searching for the perfect home, you may end up deciding on a brand new house in which to create your home.  A house free from the usual pitfalls of a "pre-owned" model: No chance for the previous occupants to mess up the carpets, scratch up the walls, neglect the maintenance or forget to mow the yard or trim the hedges. It's your opportunity to start from scratch and have a "fresh pallet" to work from and create your own home.
 
You may have spent your weekends over the last six months visiting beautifully decorated model homes in an area that you're hot for...and may have even found the perfect new home. The question you've got to ask yourself? "Will this home fit our lifestyle and will it be "the perfect home" six months from now? What about sixty months from now?"
 
Spend time reviewing the floor plan of your potential new home to (try to) make sure your "perfect home" is truly perfect.  Here's yet another Advantages-vs.-Disadvantages list to mull over in your decision making process.
 
 
Building A New Home:
 AdvantagesDisadvantages
 You choose the planBuilding takes 4 to 8 months
 You choose the finishesConstruction Delays
 You choose the exteriorsCost over runs
 Have it done your wayRising costs as you build
Summary:Your dream home (hopefully!)Can be a very frustrating experience
 

Buying An Existing Home:

 AdvantagesDisadvantages
 Move in quickly You get what you see
 Builder may be more negotiableChanges generally not allowed
 The price is set "Blah" finishes chosen by builder
Summary:Less Stress & FrustrationYou may not get what you want

 

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