If you are thinking about buying a presale home, you have come to the right place. Before becoming a full time Realtor® I was employed by one of the largest residential and commercial land developers in B.C.. What does this mean for you? It means that I am highly trained at everything and anything to do with presale properties. I know all
of the steps involved with development, sales & marketing, construction, as well as, after sales care.
What is a presale?
A presale is a home that’s available to purchase prior to being built. When you enter into a purchase and sale agreement, you are entering into a contract for the right to receive, and obligation to pay for, a finished condo at a set period in the future.
Is It Safe?
Developers have to abide by the by the Real Estate Development Marketing Act
which ensures a considerable level of protection for home buyers. The developer must also provide you with a Disclosure Statement containing vital information about the property. It is crucial that you read this document so you can inform yourself of exactly what you are buying. It will state what is included with your purchase, the actual size of your suite, if you own your parking or lease it, what the estimated maintenance fees will be etc. Upon agreeing to the Purchase and Sale Agreement, the buyer will also have the right to rescind the contract for 7 days after the offer has been accepted. This gives you added protection to allow you to walk away from the deal for any reason.
Timing & Financials
Buying a presale home comes with a bit of a waiting period while construction is completed, which can take up to a few years. In this sense, presale purchases are not ideal if you are anxious to get into your new home. However, the completion period could actually be a very welcome delay for some home buyers as it provides time to save up prior to beginning mortgage payments, strata fees, taxes, and more.
If you decide to buy presale real estate you will be required to put a down payment on the purchase, which then enters you into a contract with the developer stating that you agree to future deposits defined by the developer (if applicable) and finalize your purchase when the home is complete. In turn, the contract requires the real estate developer to deliver the product that was agreed upon in a certain period of time and includes a full 2-5-10 year warranty. From the time of purchase to handover date, you will not be required to expend any additional funds unless the scope of the project changes, which would require a new contract agreed upon by both parties. This means that you will potentially have years to save your money which you can then put directly into the balance owing, or have a cushion for future mortgage payments and other homeowner costs. In this sense, presale real estate can be a great option for first-time home buyers looking to get into the market or even downsizers who are preparing to simplify their life.
Layout, Design & Upgrades
In general, buying a presale home means that you get to pick and choose certain features of what your home will look like - depending, of course, on the specific real estate development as well as available suites. You will likely have a much wider scope of selection on the view, the floor, the size, and the floor plan, allowing you to really choose your ideal home. Additionally, most real estate developers provide colour-scheme and interior design options so that you can adjust the design to your specific taste. As well, many presale homes have upgrade options if you'd like features such as higher-end appliances or premier flooring. Some presale developers will even allow buyers to combine two smaller apartments to create one much larger one - although this is not always an available option as it depends on many factors.
Furthermore, not only does buying presale real estate often mean you will be buying a product that includes the newest trends in interior design, but also the latest environmental standards, saving you money from heating and electricity costs over the years. Your home will also likely not need any upgrades or maintenance work for quite some time and will be covered by the 2-5-10 year warranty that is required in BC.
Depending on the current state of the market, purchasing a presale home could potentially mean that it increases in value during the completion period, meaning you will have already made money on your investment by the time the keys are handed over to you. This fact is what attracts many real estate investors to presale homes, but it is, of course, good news whether you are planning to flip it or not as equity is never a bad thing. Additionally, if you're an investor wanting to rent out the suite, new apartments in new buildings tend to rent at a high rate because of the modern finishings and various amenities.
There are many things to consider regarding the purchase of a presale property. If you have any questions regarding presales, or would like to know more, please do not hesitate to reach out.