Buying a pre-sale property is a popular real estate option for Buyers in the market for a new home and investors.
A pre-sale is when a Developer sells a Buyer a property before it is move-in ready, frequently before construction has even started. Purchasing a pre-sale is not the actual physical purchase of a tangible property, it is a contract for the right to receive and the obligation to pay for the completed property that will be built in the future.
When purchasing a pre-sale property, just like any other real estate transaction, you should always consider using the expertise of a Realtor® to represent you.
As your Pre-Sale Realtor®:
- I will represent you not the Developer. The Developer employs a sales team that works in their best interest, not you. I will be working with your best interests and have a fiduciary duty to you and only you.
- I will provide my service for FREE! There are no costs to you when you have a Realtor® represent you. My commission is paid by the Developer and you will not get a price decrease by not having an agent.
- I will provide guidance and assistance from start to finish regarding all matters of the pre-sale. I am here to make sure everything goes smoothly, from the timeline of deposits, to contract, term and disclosure statement review to closing costs.
- I will provide you with honest market knowledge. I will inform you of the area, what pre-sales are available, what are fair market prices, future developments that may impact your pre-sale and potential rental prices if you are an investor.
- I will put you at ease and answer all of your questions in an open and honest manner.
- I will be available long after the sale has completed.
I am a member of an elite group of Realtors that specialize in selling residential pre-sale projects in Greater Vancouver. Our group works with some of the most acclaimed Developers including; Westbank, Anthem, Onni, Bosa and Mosaic just to name a few!
Whether you are a first-time buyer or a seasoned investor, when you work with me you will get early access to the very best development projects. Along with early access there are exclusive offers including first choice of units, best floor plans and locations, exclusive discounts, reduced deposits and the best price.
Contact me to learn more about the exciting projects that we are currently working on and gain your early access and exclusive offers.
IMPORTANT FACTS TO KNOW ABOUT BUYING PRE-SALES
- Developers usually require a 20% deposit (down payment) over the course of the construction period. This payment schedule is usually spread out over a period to 1–2 years, allowing you additional time to save for your deposit. Your mortgage payments don’t begin until the property is move-in ready.
- Buyer’s deposits are held in a lawyer’s trust account. This money is not for the Developer to use and they do not have access to the money until the building is complete. The money stays in the account until the building is either complete or if the Developer fails to meet the completion deadline. If the Developer goes under and cannot complete the project, the money in the trust account is not part of the bankruptcy and has to be returned to the Buyer.
“7 Day Rescission Period” BC Provincial Law gives the Buyer of a pre-sale the right to walk away from the contract to purchase the property for any reason 7 days after there is an accepted offer. So if you can’t get financing, you decide it’s a bad idea, don’t want to wait to move until completion. Whatever the reason you can walk away!
Taxes When a pre-sale property completes there will be both GST and Property Transfer Tax (PTT) payable. There are rebates for both GST and PPT if you are a first-time buyer and it is influenced by the sale price.
Timing Pre-sales often happen before the developer has even started construction, so be prepared to be patient. Construction generally completes anywhere from 1 -4 years, so plan to be in your current home while you want for your new home to be ready.
Selling a Pre-Sale In most cases Developers will allow you to sell your pre-sale unit through Assignment of Contract and generally this will be at a higher price than what you paid. There are different restrictions that Developers put on assignments. For example, not allowing assignments until the building is sold out or restrictions on marketing by not allowing them on real estate listing sites. Assignments can be profitable, but make sure you read the fine print of the contract carefully and contact a Realtor® if you are thinking of assigning your contract.
ADVANTAGES OF BUYING PRE-SALE
Price When buying a pre-sale, you will pay a smaller price than what it will be worth when it is complete. If you choose to assign the contract you will generally make a profit on a unit before it is even move in ready. This is why pre-sales attract so many real estate investors.
Get what you want You will get to choose the location of your unit in the building and as we know location is a key factor in real estate resale values. You will also get to pick from the options for your colour scheme, cabinets and flooring. Pre-sales give you a choice!
Warranty Protection When the property completes the property will come with a full 2/5/10 Warranty which in most cases means low cost and low hassle ownership during the life of the warranty.
Low Cost of Ownership When a condo is built by a good Developer, is shouldn’t require a lot of costly and time-consuming repairs of maintenance compared to the costs that can occur when buying in an older building.
Popularity Newer buildings tend to be popular, especially if you are looking to use it as a rental property. Renters are willing to pay a premium to rent in a newer building.
Amenities Newer buildings tend to come with many more modern conveniences than older buildings, such as gyms, pools, amenity rooms, Concierge services, etc…
Growing Value with no additional costs – Once you put down your deposit you will have no further payments until the unit is complete. No mortgage, property taxes, maintenance fees… but during this time the value property should be going up. That’s means your purchase price remains fixed while the property price increases and you have only paid your deposit.
DISADVANTAGES OF BUYING PRE-SALE
Market Falls Something that is very rare in today’s market, but on the chance that the market changes and so does the value of the property, Buyers can’t back out! If the value of the presale at the time it Completes is below what was originally paid for it, the Buyer is still required to complete at the original purchase price.
No Mortgage Guarantee In most cases, it is possible to get a mortgage on a presale property, but there is no guarantee. Especially if the value goes down and you still have to pay the agreed purchase price. It is always best to consult with your lender, bank, or mortgage broker before purchasing a pre-sale.
Not What You Paid For Pre-sale contracts are drafted by the Developers and are not a standard real estate Contract of Purchase and Sale. Developers tend to protect themselves in the fine print, so make sure you are buying from a reputable Developer and read the contract in detail. Don’t be ask your Realtor® questions and you should always seek legal advice for any real estate purchase.
Research To make sure you are investing in the right pre-sale project start by researching Developers. Research their reputation, history, previous projects (did they meet deadlines), visit current showrooms, etc… you want to make sure you are purchasing from a good Developer.
Stay Informed You should also stay up-to-date on the new development projects that are coming to your desired neighbourhoods. You can sign-up with Developers websites to get notifications of new projects.
Work with a Realtor® A Realtor® can help you interpret the contract, review layouts and assist you on selecting units that you meet your needs. You want to pick a Realtor® that has connections in the development community as they will often have details on upcoming projects and can get early access before the general public.