Angie Zhang PREC
Nu Stream Realty Inc.

Your path to homeownership

What is a presale?

A presale refers to the process where a condominium developer offers units for sale before the entire development is completed, and often even before construction has started. As a buyer, you acquire the right to the future property. Although you are ultimately obligated to pay the total purchase price, you are not required to secure a mortgage immediately. Instead, you are only responsible for an initial deposit.

This deposit typically ranges from 5 to 10% of the purchase price at the time of purchase, with an additional 10 to 15% paid in installments throughout the construction period. The deposit money is held in a trust account and is not accessible to the developer until the project is finished. If the developer fails to complete the construction, the entire deposit is refunded to the buyer.

Buying resources

why buy a presale?

The response varies based on your objectives, which we'll delve into further below. However, there are three primary reasons that should appeal to all prospective buyers:

  • You will acquire a brand new property once it is completed.
  • You frequently have the option to personalize your unit in ways that are not typically available with existing properties.
  • You can secure a price at the time of purchase, potentially gaining from an appreciating real estate market without incurring the ongoing costs of mortgage payments, property taxes, and maintenance fees.
Buying resources

IS IT SAFE TO BUY A CONDO THAT DOES NOT YET EXIST?

The presale market in the province of British Columbia is governed by the Real Estate Development Marketing Act and ensures a considerable level of protection for buyers.


3 important facts about buying a pre-sale property

  1. You, the Buyer, have the right to cancel the contract to purchase the property for 7 days after the offer has been accepted. This right is part of provincial law and is known as the “7 Day Rescission Period.” It allows you to walk away from the purchase for any reason at all — you are worried about future financing, you fall out of love with the development, or you decide to bet your entire deposit on a Vancouver Canucks game. No matter the reason: you have the right to cancel the contract on the spot.
  2. The developer does not gain access to your deposit until construction is complete. This money is placed in a lawyer’s trust account for the duration of construction, meaning that your deposit is returned to you if a problem with construction emerges or if the developer declares bankruptcy.
  3. The developer must provide you with a Disclosure Statement and you should be sure to read it. This statement contains important information about the future property, such as what is included with your purchase, the size of your suite, and what the building will look like upon completion.

PRESALE QUESTIONS & ANSWERS

What is a presale condo in Vancouver?

A presale condo refers to a unit that is sold before construction has been completed, offering buyers an opportunity to invest early in the development. This often provides benefits such as the ability to choose finishes and the chance to gain from potential increases in market value before the project is finished.

How does the deposit structure work for a presale condo?

For a presale condo, the deposit usually ranges from 5% to 20% of the purchase price and is paid in installments. This deposit secures your purchase and is kept in a trust account until the completion of the project.

What are the benefits of buying a presale condo?

Purchasing a presale condo offers buyers the advantage of acquiring a new property with up-to-date amenities, the possibility of customizing the unit, and the potential for significant appreciation in value by the time the development is completed.

Can I sell my presale contract before completion?

Yes, it is possible to sell a presale contract, a process known as an assignment. However, this requires the developer's approval and may involve specific regulations, including taxes and fees.

Are there any risks involved in buying a presale condo?

While buying a presale condo can be a profitable investment, there are risks involved, such as construction delays, fluctuations in market conditions, or discrepancies between the final product and initial plans.

What legal protections do buyers have with presale condos in Vancouver?

The Real Estate Development Marketing Act (REDMA) provides protections for buyers, including a 7-day rescission period, ensuring deposits are safeguarded and requiring developers to provide detailed disclosure statements.

How can I finance a presale condo purchase?

Financing a presale condo typically involves securing a mortgage closer to the completion date. Initially, buyers need to pay a deposit rather than securing a full mortgage.

What should I look for in a presale contract?

Key details to look for in a presale contract include completion dates, deposit structure, warranties, rights to assign the contract, and any conditions that may allow for changes in finishes or construction details.

How do GST and property taxes apply to presale condos?

Goods and Services Tax (GST) applies to new properties, including presale condos, and buyers may qualify for rebates depending on the purchase price. Property taxes become applicable once you take possession of the property.

What happens if the developer fails to complete the project?

If the developer does not complete the project, the deposits are protected and must be refunded to the buyers. Developers are typically required to have insurance or other guarantees in place to protect buyers' investments.

Ready to make a move?

I look forward to hearing from you!

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