How to Purchase a Pre Sale Condo in Vancouver, BC, Canada
Buying pre-construction condos have become a very popular option for many homeowners and investors in Vancouver.
(If you’re not sure what a Presale Condo is, check out this great Video Here!)
Many 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. What many of these buyers don’t know is that there is an element of risk when buying a pre-sale in Vancouver.
Are Presales Risky in Vancouver?
I am a huge fan of Vancouver’s Development Community and the condos 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 Presales in Vancouver
- They’re Guaranteed to be profitable and make money – NO!
- If the value of the Pre-sale goes below what was paid for it the Buyer can walk – NO!
- 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
Here are some common questions about Presales in Vancouver
- As a presale, do I have to sign their Agreement, or can I have a realtor represent me and draw my own Agreement? 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. Read more here. I am available to represent you if you want to buy a presale and I am able to 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 Agreement? Financing? For an assignment, absolutely. For a presale, no, as there is the 7-day rescission period. Inspections? The property is not built, so no.
- If I sell an Assignment, can that purchaser add their own subjects or are they bound by my Agreement? The Buyer of your assignment can put in subjects in the deal with you, but they don’t affect the contract with the developer.
- If interest rates climb significantly by completion & I can’t qualify for a mortgage or sell as an “Assignment” (assuming I have a “subject to financing” clause), can I get my deposit back? Or do I risk being sued for breach of contract? If you buy a presale, you should be 100% certain that you can complete. I am not a lawyer and I am not giving legal advice, but in all the instances of a Buyer of a presale not completing that I have seen, the developers sue.
- When is the HST calculated and due? Upon Completion. Check out this HST/PTT Rebate 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 here.
- Who decides if an “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 discuss further.
- Generally speaking, are deposits held “in trust”? Yes
- Who holds the deposit? Developers Lawyers
- Does the developer have access to them before completion? No
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!
Steps For Buying a Presale Condo in Vancouver
- Figure out your finances and what you’d be able to afford. Meet with a mortgage broker/lender.
- Research areas in BC that you’d like to live in. Need help? Read through this city guide.
- Contact an experienced Realtor to discuss budget and desired suite configuration, outlook & location.
- Have your Realtor schedule a visit for you to the presentation centre, where you can review floor plans and finishings.
- After deciding on a unit, write an offer (be prepared for paperwork and negotiations)
- Once your offer is accepted, you make your deposit.
- Deficiency walkthrough which is effectively a pre completion inspection. You’re able to walk through the unit to make sure everything is what you expected.
- Complete the purchase of the finished condo and move in.
This was a high-level overview of the process for buying a presale condo. You’ll have specific questions during the process, and that’s where a Realtor is your best friend. Lean on them for any questions or concerns you may have.