Homes in HRM

Your home for Real Estate Services within
the Halifax Regional Municipality!

Sheila Banser
Phone: 902.830.8757
Fax:     902.455.6738
E-mail: sheilabanser@royallepage.ca

New Construction

Purchasing New Construction homes is a much different experience than purchasing a re-sale home. The purchase of a newly constructed home is more like a retail experience, while the purchase of a resale home resembles more of a yard sale. The biggest difference is that whichever way you choose to purchase the newly constructed home, you will find that there simply is no room for price negotiation - the sticker price is what you pay. This is quite different than in resale homes which typically have 3-5% negotiated off of the purchase price.

Secondly, the purchase of New Home Construction involves HST - while resale homes don't. The nice part is that the HST is often worked into the final price of the home, so what you see is what you pay, not an additional 15% on top. Additionally, for those who qualify (typically first time home buyers), there is a federal and provincial Tax rebate program that can help to reduce costs, although often Builders will simply contract in that you pass along that rebate to them to bring the price of the home down.

Your three basic choices in purchasing a new construction home are:

1. Be your own contractor: this is something I would recommend only to those who are very experienced in the building industry, since you would have to deal with a number of different trades, time their arrivals properly, deal with building codes and inspectors, manage the finances of each draw on the mortgage and much more. Additionally, in this scenario, you are responsible for financing the land (ie. Buying a Lot), while the trades construct the home.

2. Hire your own Contractor: Much less complicated than trying to manage the building process yourself, you hire what is known as a General Contractor to oversee the construction of your new home. Again, you will have to purchase the Lot that the General will oversee construction on.

3. Purchase a Ready Built Home: This is the most common option, particularly for those who are purchasing their first home. The purchaser often doesn't have to purchase the Lot prior to construction, and if they own the lot, the builder will often purchase it from them and then sell back to them the completed package. This process is call “Turn-Key home building.

Allowances:

Particularly in the Turn-Key Situation, but in reality in all situations, you will be granted allowances on the price that the builder quotes for you on the home. For example, the builder will tell you that you can purchase a home for $200,000 with allowances as follows - $7000 for Flooring, $5000 for Cabinetry and $750 for lighting. What this means is that within that 200,000, you have that much to spend on each noted element. If you spend 10,000 on flooring, your purchase price will now be $203,000. Most builders will allow you to swap things, ie. Put in cheaper flooring so you have extra money for Lighting. And of course, if you don't use the entire allowance, you should have the extra money refunded off the purchase price. The lesson here is - look for Larger allowances built-in to the purchase price!

Things to know and make sure of:

1. You should definitely get to know whoever is building your home. After all, you are spending the money, you should know what kind of service it is buying you.

2. Completion Date & Penalties: Once you have a contracted completion date, you should ensure that there are provisions made to compensate you for any lateness on the part of your builder. You should ask for a certain amount of money each day to help defray your living costs wherever you are forced to stay.

3. You should always ensure that the builder you are working with carries considerable insurance on the work that he is doing, so that your investment is protected during the building process.

4. You should be sure to make all the proper applications for the HST Rebate – it could save you Thousands along the way.

5. The New Home Warranty program is something that most reputable builders will place on their newer homes. It warrants for 7 - 10 years the home against major structural defects.

6. You should remember that if you change your mind about something during the building process, it will likely cost you money. The earlier you change, the cheaper the change will likely be (ie, rewiring is a lot easier if walls haven't been finished.) Keep that in mind as you go over the planning stages of the project.

7. Often Builders will have their own Offer sheets and Purchase and Sale Agreements. It is still a great idea for you to have someone working for you, since the agent on the other side is very much working for the builder!

The beauty of new construction is that you get exactly what you want!

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