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Logistics of selling condo & building a house - HELP

We are seriously considering building a house but it wouldn't have a possession date until Jan/Feb 2010. After talking to lots of people and thinking about things I have a couple of questions for anyone who has built a house.

1. Can you put conditions on your offer to the builder (ie. conditional upon sale of our current residence)?

2. Can a builder change the possession date even if the contract has a specific possession date written in it?

3. Are there any hidden costs when building?

4. Are there any closing costs with building? Would we have any closing costs associated with selling our condo?

5. What kind of research should I do on the builder (we've already looked at the BBB website)? They are new in Alberta but have been in eastern Canada and the USA for years.

Anyone that can offer input on any kind I'd be very appreciative.

 

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Re: Logistics of selling condo & building a house - HELP

  • CBLCBL member

    It varies from province to province, but I'm thinking (based on Ontario)

    No

    Yes

    Yes

    Yes

    Check with the Alberta new home warranty program www.anhwp.com

  • Mel and Lana will probably have better answers but:

     

    1)  Yes, you can put conditions on the builder (i.e. not to start to build until your house sells - but then you might have to either have a long close on your condo, or you may have to move twice, because the house may not be ready until after your condo sells)

    2)  I suppose they could, if it wasn't finished.  I think that usually it is done "enough" that you can move in, but may not be fully complete

     3)  Unless you are building a house EXACTLY like a model, you may find that things you want are "upgrade" that weren't included in your original quote.  And sometimes the allowances aren't enough to get what you want...so it is a good idea to look into things you like (like cabinets, lighting, flooring) so you have an idea of how much of allowance you need. 

    4)  You may have some closing costs with selling, mostly real estate commission if you plan to use an agent.  I would budget also for legal fees for the sale.  You will have to ensure that your property taxes are paid to the date of sale, if they aren't this gets adjusted on closing.  The closing costs on building will be legal fees, land transfer tax (not sure if they have this in AB)  You may also have to pay for utility hook ups.

     5)  Not too sure on this one.

  • I?m a Realtor in Ontario so my answers might not be accurate for your area and I?ve never personally built a home but have experience in new home sales so I will do my best.

    1. For new builds you can, but the construction of the home will not commence until your condo is sold firm or until you waive that condition.

    2. Yes, and they likely will.  This has recently changed in Ontario and builders can now push back the closing date up to 2 years!

    3. Yes, upgrades etc

    4. Yes, lawyer fees, warranty fees & land transfer tax (if applicable in your area). For your condo aside from the commission, which is also gst applicable, count on about 1.5% of the sale price.

    5. I would ask for reference of past clients, you may want to see other homes they have built etc.

    I hope this helps and best of luck!

  • . Can you put conditions on your offer to the builder (ie. conditional upon sale of our current residence)? Depends on the builder.  Some do, some don't.  I would assume that they would in this current market just to get a deal out of it.

    2. Can a builder change the possession date even if the contract has a specific possession date written in it? Absolutely!!  Never EVER go by the original date they give you!  They will give you a tentative date, they wont give a speicific date from the beginning.  As it gets nearer to completion they will give you a specific date.  We had to wait an additonal 3 months for a house once!

    3. Are there any hidden costs when building? yep yep!  Depending on what you want, they start with a basic model.  If you want crown molding, or granite it may be an upgrade, depending on the builders "package" that they offer.
    Also, consider landscaping, blinds, appliances, garage door opener, fence.. all these things we have had to add on ourselves to our houses... it gets expensive!!

    4. Are there any closing costs with building? Would we have any closing costs associated with selling our condo? legal fees are expensive.  fees paid to your realtor when selling your condo...

    5. What kind of research should I do on the builder (we've already looked at the BBB website)? They are new in Alberta but have been in eastern Canada and the USA for years. check with people that have built with them, they are your best bet.  Walk around the neighboorhood that you are interested it and talk to people on the street.

    I don't know if you are interested in my 2 cents or not, but here it is.  We built 3 brand new homes, and just bought this last one from previous owners a year old.  I don't like building.  The builders are nice from the get go, then once you are in and have problems they suck. Blinds are expensive, landscaping sucks, and buying appliances add up.  Fixing paint problems, nail pops, scratches, deficiences SUCK.  If it were me, I would go to the neighboorhood you want and look for homes that are for sale by owners, maybe only a few years old.  Then everything is done for you, you just add your touches.

    Plus I find they are more willing to budge then some builders.  We got our house $30,000 cheaper than building the EXACT same model- we looked into it.  The sellers were desperate to get out, their other house was ready to move into right away and they didn't want 2 mortgages.  Something to consider....

  • image albertabride06:

    We are seriously considering building a house but it wouldn't have a possession date until Jan/Feb 2010. After talking to lots of people and thinking about things I have a couple of questions for anyone who has built a house.

    1. Can you put conditions on your offer to the builder (ie. conditional upon sale of our current residence)?  I don't think you can but we didn't build.  This could also delay the start of your house being built

    2. Can a builder change the possession date even if the contract has a specific possession date written in it?  YES!!!  Now that residential has slowed down it may not be as big of a deal as it was a year ago.

    3. Are there any hidden costs when building?  Upgrades (granite, hardwood floors)  but these depend on the builder

    4. Are there any closing costs with building? Would we have any closing costs associated with selling our condo?  For selling the condo there will be real estate fees if you use an agent, lawyer fees.  I am sure there will be the same type of closing costs for building.  Pam hit on a lot of the fees land titles ect.

    5. What kind of research should I do on the builder (we've already looked at the BBB website)? They are new in Alberta but have been in eastern Canada and the USA for years.  What builder are you looking at?  I think taking a GOOD look at the show home will help to.  Make sure that there is good workmanship.  I think you can ask about their labour and how much experience they have.  I know that in Alberta a lot of the framers do not have their tickets, but electrians and plumbers should so ask about that!

    Anyone that can offer input on any kind I'd be very appreciative.

     

     Sorry that got long!

  • We are in this exact situation right now. Our condo has been on the market since November, and we are realistically looking at carrying two properties at once. My suggestion is to seriously consider selling your condo *first* and then renting while the house is being built. That way you know exactly how much money you have from the proceeds of you condo and you also don?t run into possession date issues when you house takes longer than it should and a buyer wants you out of the condo before you can move into the house.

    1. Can you put conditions on your offer to the builder (ie. conditional upon sale of our current residence)? No. The contract you sign with your builder is for the construction of the home only. No builder will construct a house knowing full well that they may be stuck with it in the end.

    2. Can a builder change the possession date even if the contract has a specific possession date written in it? Yes. They cannot guarantee a possession date due to contractors/supplier issues, etc. and also will guarantee possession due to things like delays due to weather, etc. There is likely no way you will find a contractor to guarantee price or possession date. If you do, they?re lying.

    3. Are there any hidden costs when building? YES!!! Double, triple, and quadruple check the ?specs? used to calculate the quote you are given by the builder. Everything you add along the way really adds up. It?s always best to not make changes along the way. Our house is a custom build, so there wasn?t really anything ?spec? but we have already run into over $50,000 worth of upgrades during construction (little things that you don?t even think about). Make sure you get a list of specs from the builder and also make a wish list. Make sure that the builder is aware of all of your ?wants? before the quote, and then ? if the cost is too high ? you can take away big ticket upgrades.

    4. Are there any closing costs with building? Would we have any closing costs associated with selling our condo? Yes, same closing costs as buying any home. There are also ?opening costs? if you will ? deposits equal to a % of the total quote for the house (careful, this usually includes the cost of your lot too). Usually you have to pay lawyers fees for both properties ? talk to a lawyer that may give you a discount if you use them for both transactions (that?s what we?re doing and saving about $700).

    5. What kind of research should I do on the builder (we've already looked at the BBB website)? They are new in Alberta but have been in eastern Canada and the USA for years.

    Make sure that they are members in good standing with the Canadian New Home Warranty program. Make sure that they have no outstanding claims against them with the BBB. Ask for references and to look at their previous projects! Ask them for a liust of their sub-contractors and check with them to make sure that there are no outstanding issues and that they have a good working relationship.

    Anyone that can offer input on any kind I'd be very appreciative.

    A couple of other things to consider:

    Depending on the time of year that you are building, be sure to have a "seasonal holdback? clause worked into the contract. This is an incentive for the builder to have all the work done when able, as the holdback amount is paid to the lawyer, not to the contractor in the event that items are unfinished at the time of possession.

    Hire a building inspector to do a walkthrough of the new house *before* you take possession. Address any outstanding issues with the builder immediately.

    Stay in regular contact with the builder. Double check that the project is on time and on budget ? don?t take ?no? for an answer.

    Do regular walk-throughs of the house?get a key if the builder will allow you to have one.

    Make *detailed* notes of each and every discussion with the contractor(s). Forward those notes to you builder and ask for his input or revisions. Make sure that you are all on the same page or you?ll run into trouble. I got a huge upgrade in my house for free b/c the builder misspoke (committed himself to something) and then forgot that he?d said it, and never bothered to review the notes I?d sent him on the meeting.

  • 1.  i suppose it never hurts to ask but I haven't heard of it.

    2.  Yes, I believe the wording in the contract allows for this and the dates can change either way (early or late).  You may be able to have it written in that you will not take possession before x date.

    3.  Everything.  Upgrades, even if it includes hardwood you may want a different type of wood or finish or color that is more expensive.  Moving things can cost, we had to pay $1500 to move our fireplace from the corner to middle of a wall.  Things that may not be included - deck, fence, landscaping, blinds, appliances (BIL found out he wasn't getting a washer/dryer, our builder included ours), and as mentioned, you may see something in the showhome that is actually an upgrade so you have to ask about everything you like, the cabinet style, railings, paint (they will paint but it's not always a quality paint)

    4.  It was for us as long as we used the builder's lawyer for everything.  Our bank was going to charge us for an appraisal but we talked them out of it because we were putting so much down.  This was different from the first time we built but that time we used a bank that was running a promotional rate through the builder.

    5.  Not sure, we used a builder with a history in our city and then built with them again.  Of course our two experiences were night and day. 

  • I think some of the answers to these questions depend on what you mean by building a house.  Do you mean:

    a) buying a house in a new subdivision where you pick from one of their floor plans and they build your house?

    or

    b) you hire a contractor to build a house for you on a lot that you bought?

    Depending on which you are talking about would definitely effect your third question.  We did option A, so I can answer questions about that. But if you mean B then I'm not likely any help.

  • image katie8-27-05:

    I think some of the answers to these questions depend on what you mean by building a house.  Do you mean:

    a) buying a house in a new subdivision where you pick from one of their floor plans and they build your house?

    or

    b) you hire a contractor to build a house for you on a lot that you bought?

    Depending on which you are talking about would definitely effect your third question.  We did option A, so I can answer questions about that. But if you mean B then I'm not likely any help.

    We would be doing A. It is a new community, the price of the house includes, house, lot, GST, Fridge, Stove, Dishwasher and and additional $5000 in upgrades.

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  • image albertabride06:
    image katie8-27-05:

    I think some of the answers to these questions depend on what you mean by building a house.  Do you mean:

    a) buying a house in a new subdivision where you pick from one of their floor plans and they build your house?

    or

    b) you hire a contractor to build a house for you on a lot that you bought?

    Depending on which you are talking about would definitely effect your third question.  We did option A, so I can answer questions about that. But if you mean B then I'm not likely any help.

    We would be doing A. It is a new community, the price of the house includes, house, lot, GST, Fridge, Stove, Dishwasher and and additional $5000 in upgrades.

    I don't want to be a downer, but $5000 in upgrades isn't that much. Whatever you decide to do, just be careful to get solid quotes for upgrades *before* you agree to the change!

  • 1. You can but I probably wouldn't unless you plan on having a really long closing date on the condo.

    2. Yep. I have seen it push back by close to a year (so I wouldn't put my condo on the market until the house was 95% complete).

    3. Tons - upgrades etc

    4. Closing costs for your condo - REA fees, legal fees, mortgage fees/penalties (if you are getting out of it early). Closing cost on building - lawyer fees, downpayment, title transfers, land transfer taxes etc etc

     

     

  • Melozia - I know that $5000 isn't a lot....they did give us a price list of additional upgrades (ie. additonal windows, changing the master bathroom, roughed in pluming in basement, etc.). I do understand that there are still a lot of other upgrades to consider as well, like countertops, lightening and flooring.
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  • image albertabride06:
    Melozia - I know that $5000 isn't a lot....they did give us a price list of additional upgrades (ie. additonal windows, changing the master bathroom, roughed in pluming in basement, etc.). I do understand that there are still a lot of other upgrades to consider as well, like countertops, lightening and flooring.

    yikes!!  don't upgrade to lightening in the house!!  Just stick with standard lightning, the non explosive kind.

    :P

  • lol, Amy, how can you tell I was typing fast?
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  • Awww, man. I didn't know I could have lightening! back to the light store I go...
  • We had to make all of our upgrade decisions within 21 days of buying the house.  So we knew at that point the final price of our house.  We could either add that to our mortgage or cut a cheque.  After that point we couldn't make any more changes, so no, there were no additional additional fees after that point.  We got a price list of all of the upgrades when we bought the house, so IMO none of the upgrades were hidden costs.

  • Also, 5000 may or may not go far.  We put about 12000 in upgrades in.  It all depends on what the standards in the house are (laminate versus tile, etc) and your taste.  If tile is standard, they very likely have really nice standard tiles that you can pick for no additional cost.  But if you want something different than you may want to upgrade. Often 12x12 tiles are standard, but if you want 18x18 you would have to pay.  If laminate is standard and you want tile, then there are probably different levels of costs.

    My parents bought 11 new houses growing up, so I feel like I am a bit of an expert in this area!

  • I'm sorry I can't help you.

    Our situation was VERY different. We bought our land, sold our house, then built our house ourselves (no contractors) well living in a travel trailer.

    We had to get all quotes ourselves and pick out everything from scratch.

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