Pre-construction real estate risk and rewards

Recently, I sat down with Daniel Char, a mortgage broker who helps real estate buyers obtain mortgage financing. We talked about a lot of things affecting home buyers, including some risks and rewards of buying pre-construction homes.

The Reward: When buying a pre-construction home, you’re typically required to put down a deposit of around 20% of the purchase price, and the builder is contractually required to provide occupancy of the home within a few years. If the housing market keeps on rising, by the time the home is completed, the fair market value of the home may be worth more than the purchase price.

The Risk: The housing market does not always go up. There is a risk that the fair market value of the home falls below the purchase price when the builder finishes construction and requires you to complete the closing of the property. That’s when having a mortgage broker like Daniel can help you get the mortgage financing that you need to complete the purchase.

Check out our full conversation here:

Pre-construction real estate risk and rewards

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