Vancouver Condo Presales and New Development Guide
Your Guide to Buying New Developments or Presale Condos in Vancouver BC
What is a Pre-Sale Condo?
"Presale" or sometimes called an "off-plan" investment, is a term used to describe a contract to purchase a condo that will be built in the future. It is both a right to buy, but also a future legal obligation. In many cases it may be several years before the new development is complete and the Buyer may have only a floorplan, a architectural model and some renderings in which to base their decision to buy. For larger projects the sales centre will have a display home which is a professionally decorated mock up of a unit, so you can get an idea of scale and quality.
You will have to sign a pre-sale contract and pay a deposit, or a series of deposits.
So Why Would You Want to Buy A Presale?
1.) Everything is Shiny and New Including the Appliances
Developers use the newest building technology and the most modern up to date designs and finishes. Many new buildings are also LEED certified which means they are a greener choice than most older buildings. Appliance packages are the newest models too.
2,) Under Warranty
The building is covered by 2-5-10 year building warranty insurance which which is the standard new home warranty in BC. This is actually an insurance policy covered by a third party insurance company.
The appliances are also usually covered by their respective manufacturer's warranty.
Early buyers are often allowed to purchase upgrades, choose from color schemes or even customize or combine the units.
4.) Early Birds Get the Worm
Early Buyers get first choice of the prime units, the best floorplans and the best views.
5.) The Upside of a Rising Market
Pre-sale buyers can profit from a rising real estate market with a relatively small investment up front (just the deposit).
Why is it so hard to buy a condo presale in Vancouver?
In general, the hottest new developments are located in urban areas near Skytrain corridors. These highrises are extremely desirable to a broad range of buyers including investors, first time buyers, upsizers and downsizers who are all competing for inventory.
Most Developers use professional marketing firms to sell their product and the sales programs often have several phases with prices increasing as time goes on. VIP buyers will get the best prices and selection. It is extremely helpful to use a real estate agent that has experience in the presale market and who has a great relationship with the developers and marketing companies.
What are the risks of buying a condo presale?
It's important to remember that you are buying something that doesn't even exist yet. A Realtor that is experienced in the presale market in BC can help you assess the pros and cons of a particular development and help you with due diligence on the Developer.
These are the main risks of buying a presale:
1.) Delays: This is unfortunately quite common in the Vancouver condo presale market. The Developer will give you an estimated completion date but there are numerous factors that could delay construction.
2.) The Building Is Not Completed: This is very rare, but in the event that the development is not completed by the outside date in the contract you would have an option to get your deposits back with interest. Note: there are circumstances where the developer could extend the outside date.
3.) Inability To Predict the Market Price On Completion:
Remember that you are signing a legally binding agreement to pay a set price for a unit that will be built in the future. For many years, presale buyers in Vancouver have benefitted by rising market prices, BUT if the market price goes down you are still obligated to complete the contract.
To find out more about buying and selling condo presales in Vancouver and the Lower Mainland check out our sister site www.nestpresales.com