How to Buy a Presale Condo in Vancouver - Get a brief overview of how to buy a presale condo in BC - Guide on Buying a Presale Condo in BC & Vancouver

Buying a Presale Guide- Vancouver & Across British Columbia – A Brief How To

How to Buy a Presale Condo in BC & Vancouver - Get a brief overview of how to buy a presale condo in BC - Guide on Buying a Presale Condo in BC & Vancouver

Updated by Mike Stewart Realtor on December 12, 2023

How to Purchase a Pre Sale Condo in Vancouver BC  Canada

Buying pre-sale condos have become a very popular option for many homeowners and investors in Greater Vancouver and across British Columbia.

Many potential buyers think that buying a presale is as simple lining up in front of the Developers Display Centre and signing a contract for a presale home.

What many of these buyers don’t know is that the process is very different from buying a resale condos and that there is an element of risk when buying a pre-sale in Vancouver.

Below we will discuss how to buy a presale condo in BC and how to avoid the risks to get the best result.


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Step-by-Step Guide to Buying a Pre-sale Condo in British Columbia

Step 1: Understanding Pre-sale Condos

Research and understand what pre-sale condos are. These properties are available for purchase before their construction has begun or is completed, and in a rising real estate market at potentially lower prices than the market value at completion. To get more detail on this topic, please have a look at our detailed article covering What is a presale condo?

Step 2: Research

Gather information specific to the Vancouver and BC real estate market, including various developments, locations, and the reputations of builders and developers.

Step 3: Financial Assessment

Assess your financial readiness, including budget, mortgage pre-approval, and long-term financial implications.

Checking in with us to better understand what presales cost what can help and benefit from our deep knowledge of presale purchases. Also, check in with a mortgage broker and a financial planner to best understand what you can afford and how much you can borrow in terms of a mortgage.

Step 4: Understanding the Process

Learn about the pre-sale process, including payment of deposits, contract details, relevant legislation, and obligations. To learn more, please check out this great article and video on what is a presale condo!

Step 5: Location and Property Selection

Select a location and specific project, considering factors like amenities, transportation, and potential property value growth. Again we can help with this as we have a team and network that covers all of British Columbia for the purchase of a pre sale condominium.

Step 6: Choose & Purchase a Unit

Once you have chosen a project, we can help again by getting an appointment at the display centre to review floor plans and price points.

Once a suitable option is decided on, we can also help with an explanation of the presale contract supplied by the developer as well as the related documents like the Disclosure Statement, DORTS, addendums, and others.

Step 7: Due Diligence – 7 Day Rescission Period

Once there is an accepted offer, all presale buyers and new home buyers in British Columbia have 7 days during which they can kill the deal for any reason without penalty.

This is the time for the presale buyers to confirm their financing arrangements with their lenders to confirm mortgage financing, review the purchase contract with their Realtor and Lawyer, or do any other due diligence they deem necessary to allow the prospective purchasers to make an informed decision.

To learn more about this important presale buyer protection, please have a look at our post on the 7 Day Rescission Period.

Step 7: Monitoring Construction Progress

Keep track of construction progress and plan ahead for the move-in or potential delays. Delays are common. Do not plan your move until you have confirmation your unit is complete.

Step 8: Preparing for Completion

Prepare for the final payment and the morrgage, moving plans, and adjustments to your living situation or financial plans as the completion date nears.

Step 9: Final Inspection or Deficiency Walk Through

In BC, the deficiency walk through is when the buyers Inspects the property thoroughly before the final handover and raise any issues regarding deficiencies or uncompleted work to be finished before the completion date.

Step 10: Completion Date and Possession

Complete the financial transaction, take possession of your new construction condo, and enjoy your new home!


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Are Presales Risky in British Columbia?

Sometimes, YES buying a presale is risky!

But, with preconstruction professional help (like ours) you can mitigate and avoid these risks.

I am a huge fan of Vancouver’s development community and the new home options they build.

But at the end of the day, Developers are in the business of making money by selling finished condos.

They will do whatever they need to do legally to ensure that any condo they pre-sell is completed on by the buyers.

The contracts used to purchase pre-sales from developers are written by the developers’ lawyers to protect the interests of the developers only.

3 Common Misconceptions about Buying Presales in Vancouver

  1. They’re Guaranteed to be profitable and make money – NO!
  2. If the value of the Pre-sale goes below what was paid for it the Buyer can walk – NO!
  3. The Buyer can walk if they don’t like what the developer builds them – NO!

If the value of the condo bought as a presale is less upon Completion than what was paid, the Buyer is still bound to complete

Detailed Benefits of Buying a Presale Condo in Vancouver

While the process of buying a presale condo might seem daunting, there are several distinct advantages:

  1. Financial Flexibility: With staggered payment plans, buyers often have the opportunity to manage their finances better, allowing for more significant savings or investments elsewhere.
  2. Warranty Protection: New condos in Vancouver come with a warranty, ensuring that any defects or issues that arise after moving in are addressed by the developer.
  3. Energy Efficiency: Newer constructions often adhere to modern energy standards, resulting in reduced utility bills and a smaller carbon footprint.
  4. Choice Locations: Presale condos are often in emerging neighborhoods, providing an opportunity to live in some of Vancouver’s up-and-coming areas.

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Facts and Myths about Presales

Fact: Deposits for presale condos are held in trust accounts, ensuring they’re protected until the deal is finalized.

Myth: All presale condos come fully furnished. While some might offer this as a perk, it’s not a standard feature.

Fact: Presale contracts can often be assigned to another buyer, but this usually requires the developer’s consent and might come with fees.

Myth: The display suite perfectly represents your final unit. Display suites are often upgraded versions of the standard unit.

Mistakes to Avoid When Buying Presale

  1. Not Reading the Fine Print: Always review the disclosure statement and understand the terms before signing.
  2. Skipping the Research: Research the developer’s track record. Look for reviews, past projects, and any history of delays or financial issues.
  3. Overextending Financially: Just because a bank pre-approves you for a certain amount doesn’t mean you should spend it all. Always have a financial buffer.

Financial Insights: Making the Most of Your Presale Purchase

  1. Leverage the Presale Deposit: Use the time between your presale condo deposit and the final payment to invest and potentially grow your funds.
  2. GST & PTT are Payable on Presales in BC – Keep in mind – The federal government’s 5% Goods and Services Tax as well as the BC Property Transfer Tax is payable on the purchase price of or fair market value of new properties in British Columbia. Please check out our BC GST Calculator.
  3. Tax Benefits: Some buyers might qualify for GST/HST new housing rebates. Consult with a tax professional to understand potential savings.
  4. Mortgage Strategy: With potential interest rate fluctuations, consider locking in a mortgage rate closer to the condo’s completion date.

Financing Options for Presale Condos in Vancouver

When considering the purchase of presale condos in Vancouver, understanding your financing options is crucial. Traditional mortgages might not always be straightforward for presale properties due to the gap between purchase and completion. Some banks and large lenders may offer  longer rate holds, so be sure to inform your mortgage lender that you are interested in presales to best understand what they have on offer.

Also be sure to look into alternative financing options such as lines of credit or special programs aimed at first-time homebuyers. The federal and provincial governments occasionally offer incentives that can significantly benefit first-time buyers in the Vancouver condo market. Always consult with a mortgage broker familiar with presale condos early on in the presale purchase process to navigate these options effectively and secure the best possible rates.

Developer Insights: Choosing the Right Partner for Your Investment

  1. Past Projects: A developer’s previous pre sale home projects can give insights into their quality of work and reliability.
  2. Financial Stability: Ensure the developer has a solid financial background to reduce the risk of project cancellations.
  3. Transparency: Opt for developers who are transparent about their plans, potential changes, and any challenges they encounter.

Legal Considerations and Protections for Vancouver Presale Condos

Buying a presale condo in Vancouver involves several important legal considerations.

From reviewing the developer’s Disclosure Statement to understanding your rights during the 7-day rescission period, it’s vital to be well-informed. This rescission period allows you to withdraw from the contract without penalty, providing a safety net for buyers.

Legal advice can be invaluable, especially when it comes to interpreting complex contract details and ensuring your investment is protected. Familiarize yourself with the legal framework surrounding presale condos to make informed decisions and mitigate potential risks.

Vancouver Presale Condo FAQ’s

When buying a presale condo, does a buyer sign a contract prepared by the developer or by their buyers agent?

In most cases, the Developer contract is what is used.

You can have a Realtor represent you in purchasing a presale and I strongly recommend it, as the Developers and their marketing team will not have an Agency Relationship with you.

We are available to represent you if you want to buy a presale and we can enter into an Agency Relationship with you (that you can end at any time) and help you with the purchase.

Can I put subjects in my presale condo purchase contract?

Yes you can, but it might be redundant as presale condos in BC have the 7-day rescission period. This allows presale condo buyers to walk away from an accepted offer on a presale contract for 7 days after getting an accepted offer.

What is the Typical Deposit Structure for Presale Properties?

The deposit structure for a presale properties varies, but expect total deposits of anywhere from 5% to 35% deposits paid in 5-10% (sometimes 2.5%) installments. Presale condo deposits are usually paid in these installments over 18 to 24 months in British Columbia.

Why do preconstruction deposit structures vary in British Columbia?

Pre sale property deposit structures vary based the following:

  1. Certainty – Developers and all the parties associated with a pre-sale condo purchase want certainty. Higher deposits increase the chance of a presale condo sale completing because of the potential pain a buyer would endure if they did not complete and walked away from their deposit.
  2. Perceived Risk by Developer – When a developer is not borrowing money, but is concerned about the market shifting, they may ask for a higher deposit. Developers do this to ensure their buyers do no walk away from the presale purchase contract if there is 5-15% fall in the value of the pre sale. Likewise a developer may offer a low deposit like 5% if they do not feel there is a risk of prices falling.
  3. Lenders requirements – Some of the lenders loaning money to the developer may require a higher deposit because they are concerned by risks associated with market volatility.
  4. Location – Deposits for pre sale properties vary depending on price and location. Developers may offer lower pre construction deposits to make a less attractive location more attractive to prospective buyers. The opposite is also true. For example, for established and sought after locations like the presale condos Downtown Vancouver offers, typically require 25% deposits with an extra 10% for non-resident buyers
  5. Price – Developers will often ask for higher deposits for pre construction developments with more expensive units because of the higher costs associated with building more expensive homes. Developers also ask for higher deposits because of the higher financial risks to the developer if a buyer does not complete.
Can you sell a presale condo?

Sometimes. Selling a presale condo after buying it from the original developer is called a presale assignment of contract.

They can only be sold if the original developer agrees to allow the marketing and sale of the presale as an assignment.

To find out if your presale property can be sold, review the purchase contract and contact the developer to see if they are currently allowing assignments or not.

We specialize in the purchase and sale of presale condos and are available to help with this process. Please call 604-763-3136 for more information or fill in the form below.


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If I sell an assignment, can that purchaser add their own subjects or are they bound by my purchase contract?

The Buyer of your assignment can put in subjects in the deal with you, but the subject conditions do not affect the contract with the developer.

If interest rates climb significantly by completion & I can’t qualify for a mortgage or sell my presale as an assignment, can I get my deposit back?  Or do I risk being sued for breach of contract?

If you buy a presale, you should be 110% certain that you can complete. I am not a lawyer and I am not giving legal advice, but most instances of a buyer of a presale not completing that I have seen, the developer tends to sue.

Do I need a Realtor to buy a presale condo in BC?

No.

There is no requirement to use a Realtor to buy a presale condo in BC.

That said, using a Realtor for a presale condo purchase is in most cases:

  1. Cheaper – we have access to incentives and decorating allowances and can usually negotiate better payment terms for pre sale purchases
  2. Less hassle
  3. Results in getting a better unit for either owner occupation or investment.

Using a Realtor costs the buyer nothing as the developer pays the commission (and typically will not credit that amount to self represented buyers).

As presale condo specialists, we have access to incentives not shared with unrepresented buyers as well as early access to new presale condos far before the general public. Call 604-763-3136 to find out how we can help you with purchasing a presale home.

When is the GST calculated and due?

Upon Completion of the presale condo. Check out this GST Calculator.

How much should I expect Realtor fees for sale of an “Assignment” to be?

Negotiable, normally I charge 7% on the 1st 100K & 2.5% on the balance. Learn more about this with our great article on this in detail with a real estate commission calculator.

Who decides if a pre sale condominium assignment can be listed on MLS?

The Developer.

What are the challenges of reselling an assignment?

There are many, actually.  Give me a call and we can help with marketing and selling your presale condo assignment.

If I buy a presale condo in North Vancouver, are the presale rules that same as in Surrey?

Yes, most legislation covering presale condos in BC is provincial. The most important provincial legislation governing presales in BC is REDMA

Generally speaking, are deposits held “in trust”?

Yes, presale condo deposits are held in trust as per REDMA.

Who holds the deposit?

The Developers Lawyers lawyer holds the deposits.

Does the developer have access to the presale deposits before completion?

No

Can a townhouse or a single family house be a presale?

Yes! Single family house presales are typically more common outside of the Greater Vancouver area.

Do I have to start paying mortgage payments once I buy a presale condo?

No – Mortgage payments start after the presale condo completes. Typically the first payment depending on the mortgage, the first payment is 30 days after the completion date.

Are presale condos cheaper than existing or resale condos?

No.

Presale condos are in almost all cases more expensive than existing new condos that are on the market. There is no discount when buying a presale condo in BC over an existing condo.

To reduce your risk when buying a Pre Sale condo, having a Realtor help you with the purchase can drastically reduce your risk when buying. Also, get a lawyer and an accountant!


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Pros and Cons of Buying Presale Condos in Vancouver & BC

When considering the purchase of a presale condo in Vancouver, it’s essential to weigh the advantages and disadvantages. This will ensure you make an informed decision that aligns with your financial and personal circumstances.

Pros:

  1. Customization: One of the most significant benefits of buying presale is the ability to customize your unit. From finishes to fixtures, you can often choose the details that suit your taste.
  2. Potential Price Appreciation: If the real estate market rises between your purchase time and the building’s completion, your condo’s value could increase, offering you a potential profit.
  3. Brand New Property: There’s something appealing about being the first person to live in a property. Everything is new, and there’s no wear or tear.
  4. Extended Payment Schedule: Typically, developers require an initial deposit upfront with an accepted purchase contract, but the balance isn’t due until the building is complete. This can give buyers more time to secure the best financing options.
  5. Modern Amenities: New developments often come with state-of-the-art amenities, from gyms to rooftop gardens, enhancing your living experience.

Cons:

  1. Delayed Gratification: One of the most significant drawbacks of buying presale is the wait. It can take several years from the purchase date until you can move in.
  2. Market Uncertainty: While there’s potential for price appreciation, the market could also decline, meaning your condo might be worth less upon completion than what you paid.
  3. Potential Changes: Developers might make changes to the building plan, which could affect the unit you purchased.
  4. Developer Reliability: There’s always a risk that the developer could run into financial troubles, leading to project delays or, in worst-case scenarios, bankruptcy.
  5. Upfront Costs: While you might not need a mortgage immediately, you’ll still need to come up with the deposit, which can be substantial.

Presale Condo Buying Checklist for Vancouver Buyers

To streamline your presale condo buying journey in Vancouver, follow this comprehensive checklist:

  1. Research the Developer: Investigate the developer’s track record, focusing on their previous projects and financial stability. This is especially relevant for “downtown pre-construction condos” where the developer’s experience in managing complex urban projects is crucial.
  2. Understand the Market: Keep an eye on “presale condos Vancouver prices” to ensure you’re getting a fair deal. Market dynamics can significantly affect presale pricing and future property values.
  3. Review Strata Fees and Regulations: Get a clear understanding of expected strata fees and any regulations that might affect your living experience or investment potential.
  4. Check for Construction Warranties: Ensure your presale condo comes with a comprehensive warranty to protect you against construction defects.
  5. Plan for Delays: Construction timelines for presale condos across BC can be unpredictable. Have a contingency plan in place for potential delays.

Pro Tips For Buying a Presale Condo in Vancouver

  1. Figure out your finances and what you’d be able to afford in terms of a presale home. Meet with a mortgage broker/lender.
  2. Research areas in BC that you’d like to live in. Need help? Read through this city guide.
  3. Contact an experienced Realtor to discuss budget and desired suite configuration, outlook & location of a pre sale property.
  4. Get a copy of presale preview package and the floor plan that you are interested in before visiting the display centre to be prepared so you make best use of your time when you visit the presentation centre.
  5. Have your Realtor schedule a visit for you to the presentation centre, where you can discuss floor plans and finishings for the presale property.
  6. After deciding on a pre sale property, write an offer (be prepared for paperwork and negotiations)
  7. Once your offer is accepted, you make your deposit.
  8. Deficiency walkthrough which is effectively a pre completion inspection once construction is essentially complete. You’re able to walk through the unit to make sure everything is what you expected.
  9. Complete the purchase of the finished condo and move in.

Buying a Presale in Vancouver or Across BC?

Mike Stewart and his Vancouver based team and his network of presale specialists can help anywhere in BC with a presale purchase. We are all licensed Realtors in good standing with our local real estate boards as well as the BCFSA. Please reach out and let us know how we can help with a new home or presale condo purchase.

Questions on Purchasing a Presale Home? Please Reach Out

This was a high-level overview of the process for buying a presale condominium. You’ll have specific questions during the process, and that’s where we can help. Please reach out to us at 604-763-3136 at any time for any questions on the process of buying a pre construction home.