Considerations when buying a model home

For many buyers, model homes offer something increasingly rare in real estate: a level of certainty. You can see the finishes, test the layout, and get a feel for your potential home before you make an offer. While the benefits of a model home are plenty, there are blind spots you should avoid.

Model homes aren't quite the same as either a brand-new build or a typical resale property. Before making an offer, it's important to understand how buying a builder’s showcase house is different, potential risks to watch out for, and whether premium upgrades are really worth the price.

What is a model home?

A model home is a property built by a developer to showcase layouts, finishes, and features available within a new housing development. These homes are often professionally decorated and equipped with upgraded appliances, premium finishes, and landscaping designed to attract prospective buyers.

But while a regular new home is typically sold before or shortly after construction, a model home may spend months or even years hosting prospective buyers before it is eventually sold.

"The biggest misconception is the belief that you are simply purchasing a 'new home’,” Tracy Valko, Owner and Broker at Valko Financial, told LowestRates. "In reality, a model home is often one of the most heavily used properties in a development."

Advantages and disadvantages of buying a model home

A ready-to-move-in home outfitted with upgrades can be attractive to some buyers, but there are a few downsides to consider.

Beyond the obvious appeal of upgraded finishes, buyers should also consider the long-term costs associated with those upgrades.

"Many buyers fall in love with the upgrades and finishes without considering whether they're paying a premium for features they may never have chosen themselves," says Christian Lane, Mortgage Broker with Invis Mortgages. "The key question is whether the purchase price aligns with both the home's market value and the buyer's long-term financial goals."

How to negotiate a better price on a model home

One advantage buyers may have when purchasing a model home is that builders are often motivated to sell. By the time a model home reaches the market, most of the surrounding development has already been sold, and the builder may be looking to close out the project.

Learn more: New build homeowners' insurance discount

That doesn't always mean you'll secure a substantial discount on the purchase price.

Instead of focusing solely on price reductions, buyers may find more value by negotiating additional incentives.

"Buyers may be able to create more value by negotiating financial incentives rather than focusing exclusively on the purchase price," says Lane. "Rate buydowns, closing cost credits, deposit flexibility, and appliance packages can have a meaningful impact on affordability."

It's also worth comparing the asking price against similar resale properties in the area. While premium upgrades can add value, buyers should ensure they aren't paying significantly more than comparable homes simply because the property was used as a showcase unit.

Why is home inspection necessary prior to purchase?

Because model homes are relatively new, some buyers assume a home inspection isn't necessary. But that could become a costly assumption.

According to Valko, model homes often feature a builder's best work, but these units may have also experienced months or even years of daily foot traffic from prospective buyers. Although it’s unlikely anybody has lived in a model home.

In some cases, these spaces may also have functioned as sales offices for the builder.

A professional home inspection can help identify cosmetic issues, worn flooring, damaged cabinetry, plumbing concerns, HVAC problems, and other signs of wear and tear that may not be obvious during a walkthrough.

Buyers might also consider hiring an independent inspector rather than relying on one recommended by the builder.

Why pay attention to warranty coverage

One of the biggest differences between a model home and a typical new build is that certain components may already be several years old by the time the property is sold.

Appliances, fixtures, heating systems, and other installed features may have been in place since the model home first opened to the public. As a result, portions of their manufacturer warranties may have already expired or be closer to expiration than buyers expect.

Before purchasing a model home, consider asking:

• When were the appliances and fixtures installed?

• What warranty coverage remains?

• Are warranties transferable to a new owner?

• Will the builder extend any warranty coverage as part of the sale?

Understanding what warranty protection remains can help buyers avoid unexpected repair or replacement costs in future.

If used exclusively as a sales office and never lived in prior to sale, a builder's showcase property can also qualify for Tarion Warranty coverage. The Tarion Warranty program in Ontario was established in 1976 as mandatory coverage builders provide to protect new homes from construction defects, major system failures, and structural issues for up to seven years. 

What to watch for in the purchase agreement

Model home purchase agreements can differ from standard resale transactions, making it important to review all terms carefully.

Pay particular attention to what's included in the sale. Features such as appliances, custom lighting, built-in shelving, landscaping, smart-home technology, and window coverings may appear permanent during showings, but aren't always included automatically. It is recommended to get all inclusions confirmed in writing.

Buyers should also watch for leaseback arrangements. In some cases, builders may wish to continue using the property as a show home or sales office after the sale closes (usually for one to two years), paying the buyer rent until the development is fully completed.

Be sure to review closing timelines, occupancy dates, and any special conditions carefully before signing.

Is insurance different for a model home?

In most cases, a model home can be insured much like any other owner-occupied property. However, its history as a show home or sales centre can create some additional considerations.

"A model home can have a different risk profile than a traditional new build," noted Valko. "If the property served as a sales centre or had substantial public access, buyers should disclose this to their insurer to confirm there are no underwriting concerns."

Valko also recommends reviewing any builder-installed systems, such as security equipment, smart-home technology, or specialty fixtures, to determine whether they require additional coverage.

Speak with your insurer before closing to help protect against unwanted surprises once you take possession of the property.

When a model home is and isn't a good fit

Ascertain whether purchasing a model home suits your lifestyle. Here are some guidelines.

"Model homes appeal most to buyers who value convenience and move-in readiness," says Valko. "They are often ideal for busy professionals or downsizers who want a turnkey property with designer finishes and completed landscaping."

Lane notes that buyers should also consider the long-term financial picture.

"They may be less suitable for buyers who are stretching their budget to qualify," he told LowestRates. "A higher purchase price often means higher mortgage payments, property taxes, insurance costs, and ongoing maintenance expenses."

Frequently Asked Questions

Is a model home cheaper than a new home?
Not necessarily. Model homes often include premium upgrades that can increase the purchase price, though builders may offer incentives or concessions to help close the sale.

Should I get a real estate agent when buying a model home?
Many buyers benefit from having independent representation. A real estate agent can help evaluate pricing, negotiate terms, and review builder agreements.

Is insurance cheaper or more expensive for model homes?
Insurance costs are often similar to comparable homes, but buyers should discuss the property's history and features with their insurer before closing.

Should I get a home inspection even though the show home is almost new?
Yes. Model homes may have experienced years of visitor traffic and could have cosmetic or maintenance issues that aren't immediately visible.