How much to invest in personalizing your new home?
It is normal for a new owner to want to add a personal touch to his or her new dream dwelling: a sauna, a patio, a stylish countertop, etc. Here are six key elements you need to know to foresee the "extra" costs of a new construction.
1. Establishing your budget and your needs
Before even starting to plan the costs of the modifications of the basic house or condo model, it is important that you establish your budget and your needs. It is the first advice given by Ginette Larose, who is in the process of buying her third custom-built house, and by Jason Lemire, real estate broker specialized in the new-home market.
According to Mr. Lemire, the most important thing is to set up an ideal budget, not a maximal budget. "Let's say that one has a budget of $ 300,000, then one could look for houses in a price range between $ 275,000 and $ 325,000, maybe even more," he says.
"A difference of $ 25,000 for a home that meets all your needs might seem gigantic, but with a mortgage of 25 or 30 years, it is a discrepancy of $ 50 to $ 60 extra per month," explains the president of the real estate agency Majordome.
2. Validating what is included or not
Don't be afraid to ask questions to the promoter to make sure that you understand what is offered with the basic price. Is air conditioning included? Are quartz countertops an "extra"? Do you need to foresee a supplement for a parking access and a storage space?
Be strategic in your choice of "extras". For example, even if you decide not to finish the basement of your new house, adding the plumbing in anticipation of a future bathroom could be a profitable investment. According to Ms. Larose, this operation during the construction will cost an extra $ 1,000, an amount a lot smaller than what it would cost once the house is built. If you decide to sell, it is also an advantage.
"Nowadays, the real estate market is a buyer’s market; some promoters will include flashy elements like lighting fixtures or even quartz or granite countertops to attract future buyers" mentions Mr. Lemire.
Dare ask questions and wear your negotiator’s hat.
3. Negotiating extras during the signature
According to Jason Lemire, negotiating the price of the "extras" just before the presale contract signature is usually easier, since at that point both parties are motivated to close the deal. Later, during the meeting with the designer to choose the finishing, you will probably have to pay the full price.
Suzanne Jeannotte, a previous custom-built house owner, mentioned having benefited from this opportunity during negotiation. "I was surprised to see that the seller agreed without hesitation to halve the costs of the extras when we told him the maximal price we were willing to pay," she explains.
This does not surprise Mr. Lemire. The margin of profit on these "extras" is usually around 30% to 40%. Therefore, on costs of $ 10,000, for example, the "real" cost of the extras will be around $ 6,000. By halving the costs of the extras the promoter only loses their margin of profit on the extras themselves and maybe an additional one thousand. The latter will still make a profit with the sale of the dwelling.
4. Personalizing your life space
According to the president of the Majordome agency, the buyers of a $ 300,000 home add between $ 5,000 and $ 20,000 to get everything they want. However, this approximation does not include the cost of a parking space. The most common extras for condos, townhouses and semidetached houses are patios, storage spaces and high-end finishing.
As a reference, Cherry Huynh, who is in the process of buying her second custom-built home, specifies having spent around $ 15,000 in extras to get her dream kitchen (including modifications to the counter tops, cabinetry, and the addition of a backsplash) in her new house of a value of $ 600,000.
On her side, Ms. Larose confides that she has paid an extra $ 5,000 for a bathroom at her liking (including a more spacious shower and larger ceramic tiles).
And if the list of extras gets longer over time, make sure that everything is added in writing to the agreement and that you keep a copy just in case of a misunderstanding, warns Ginette Larose.
5. Having access to indoor or outdoor parking
Be alert. The parking spaces are usually included with suburban houses, but are usually considered an "extra" on the Isle of Montreal. According to Jason Lemire, the price varies between $ 15,000 and $ 20,000 for an outdoor parking space, and between $ 25,000 and $ 30,000 for an indoor one. Warning: in downtown Montreal, the price can go up to $ 60,000.
Ms. Huynh specifies that she has paid an additional $ 8,000 for a parking space next to her condo, bought ten years ago . . . and sold without a single problem last year.
6. Benefiting of more luxury (pool, sauna, etc.)
Choosing a patio instead of a balcony or adding high-end finishing are extras, but access to a pool, to a sauna or to a gym is not considered an "extra" in the real estate world. These are services included in the project from the get-go.
Of course, these amenities increase the purchase price and the condo fees. The good question to ask is: do you know if you can (or want to) afford these luxuries?
As a comparison, a basic building of a few units on the Isle of Montreal will cost around $ 0.15 per square foot, according to Mr. Lemire. This amount will increase to $ 0.25 per square foot for a similar building that offers those extra amenities. (These are general estimates since many other factors determine the costs, such as the district, the type of building structure, etc.)
To be better prepared to make one of the biggest purchases of your life, discover extra practical tips concerning the purchase of a new home
And learn more about inspections and visits that you need to plan in advance in order to make sure that the construction of your new home is going according to plan.
Stock images: Shutterstock
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