Homebuying

6 considerations when buying a model home

By: Melanie Chambers on April 19, 2022
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In a new suburb, builders will often have a model home on site to showcase the soon-to-be-built-homes. Fully furnished and beautifully decorated, this home is meant to entice you to buy one in the new neighbourhood.

But when all the homes are built and sold, and the last one remaining is the model home, should you buy it?

The problem with new builds is that because of delays in materials and construction, they might take years longer than you anticipated, causing problems in your ability to secure a low mortgage rate. The beauty of a model home is that you’re getting an “almost-new” home without the wait.

Here are some things to keep in mind when buying a model home.

Negotiate the asking price

Even though no one has lived in the model home, it has been used in the sense that prospective homebuyers are routinely walking through the house and using the washrooms. In many cases, model homes also act as the offices for the home builders.

For this reason, you should always negotiate the asking price. It pays to compare other model home prices, but this is hard as many are not listed on traditional MLS sites. Contact the title company to find comparable home costs.

Inquire about a home warranty and insurance discount

Typically, a new build structure will have anywhere from a seven-year warranty (Ontario) to a 10-year home warranty from the builder (British Columbia). However, model homes may be one or two years old by the time the surrounding neighbourhood homes are finished, leaving you with fewer years on that warranty. The same applies to all the new appliances whose warranties might be expired by the time you move in. That’s why it’s important to discuss warranty extensions with the builder.

Likewise, new builds can usually earn you a homeowners insurance discount. Check with the builder and your insurance provider to see if this extends to model homes as well.

Consider buying the model home "as is”

Model homes tend to have more upgrades than the new builds in the suburb, like expensive granite counter tops in the kitchen, smart technology, and/or built-in appliances. Thus, these homes might be more expensive with these additions.

“Model homes are also usually larger than the rest of the homes,” says Tracy Valko, brokerage owner of Valko Financial Ltd. in Kitchener, Ont.

When you’re negotiating the price, stipulate in the purchase agreement that you want to buy the home “as is” — with the upgrades — otherwise you’ll have to purchase all new appliances and features.

Model homes are often furnished, too. “But keep in mind the furniture isn’t bringing up value in an offer to purchase,” says Valko. “You can’t build in furniture on the purchase price.”

Be realistic about location

Model homes are often built at the entrance of a new subdivision community, near major roadways and traffic, to get more attention from potential homebuyers. If you value your privacy, having such an exposed location might not be ideal.

Get a home inspection

If you have the opportunity, you should always ask for an inspection of the home. Many model homes are built quickly to showcase the new suburb, but the quality can be inferior to that of the rest of the homes in the subdivision.

Shop around for your mortgage

In many cases, the builder may have an existing relationship with a lender, which may be advantageous to finance your model home. However, you should work with a broker to determine your best mortgage option and compare rates online.

In the end, always ask for updated warranties, repairs and replacements before finalizing your purchase of a model home.

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