How to Buy a Presale Condo in BC & Vancouver – Beginner's Guide to Purchasing a Presale Condo

Buying a Presale Condo in Vancouver BC Canada

Purchasing presale condos has become increasingly popular among homeowners and investors across British Columbia, particularly in Greater Vancouver. Many potential buyers assume that buying a presale involves simply lining up at the Developer's Display Centre and signing a contract for their future home.

However, the reality is far more complexed, especially in Vancouver's competitive real estate market where presale purchases come with inherent risks. Below, we will delve into the essential steps for buying a presale condo in BC, ensuring you navigate the process effectively to achieve the best outcome.

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

Step 1: Find the Right Agent

Finding the right agent is crucial when buying a presale condo. You need an agent who specializes in presales, as it is a different market compared to resale properties like detached homes, condos, and townhomes. A presale expert has the knowledge and experience needed to guide you through the unique process and help you invest in the best presale opportunities in Vancouver.

Step 2: Research and Financial Assessment

Sit down with your agent to discuss specific information about Vancouver and BC's real estate markets, including different developments, locations, project completion times, and the type of presale you are looking for.

Evaluate your financial readiness, including budgeting, mortgage options, and long-term financial implications. Consulting with experts for insights into presale costs can be highly advantageous, drawing on extensive knowledge of presale purchases. Additionally, collaborating with a mortgage broker and financial planner is crucial to understand your borrowing capacity and affordability.

Step 3: Understanding the Process

Familiarize yourself with the presale process, covering deposit payments, contract particulars, relevant legislation, and buyer obligations. For deeper insights, explore our informative article and video on what is a presale condo!

Step 4: Location and Property Selection

Choose a location and specific project, considering amenities, transportation, and potential property appreciation. Our comprehensive network across British Columbia can provide valuable guidance in selecting a presale condominium.

Step 5: Unit Selection and Purchase

Upon choosing a project, we can assist in scheduling a visit to the display centre to review floor plans and pricing.

Once you've identified a suitable unit, we'll guide you through understanding the presale contract provided by the developer and associated documents such as the Disclosure Statement, DORTS, addendums, and more.

Step 6: Due Diligence – 7-Day Rescission Period

Upon acceptance of an offer, all presale buyers in BC benefit from a 7-day rescission period, allowing them to cancel the contract without penalty for any reason.

This period is crucial for buyers to finalize financing arrangements, review the purchase contract with their Realtor and Lawyer, and conduct any necessary due diligence to make an informed decision.

To learn more about this critical buyer protection, refer to our post on the 7-Day Rescission Period.

Step 7: Monitoring Construction Progress

Stay updated on construction milestones and plan accordingly for moving in or potential delays. Delays are common, so refrain from planning your move until unit completion is confirmed.

Step 8: Preparing for Completion

Prepare for final payments, mortgage arrangements, moving logistics, and adjustments to your financial or living plans as the completion date approaches.

Step 9: Final Inspection or Deficiency Walk-Through

In BC, the deficiency walk-through allows buyers to thoroughly inspect the property before final handover, identifying any issues or unfinished work that must be addressed before completion.

Step 10: Completion Date and Possession

Complete the financial transaction, take possession of your newly constructed condo, and begin enjoying your new home!

Are Presales Risky in British Columbia?

You're going to hear concerns about developers delaying, not completing, or not starting the projects. These are not the biggest risks. These situations arise when changes occur in developments, and as a buyer, you are protected in many ways. If a developer doesn’t start the project, you can cancel the contract and get your money back, simple.

The real risk lies in paying a high premium for a project that may not be worth the price you paid when signing the contract. That is the real risk, and it will take years to recover from it unless you take a loss.

However, with professional preconstruction guidance (like ours), these risks can be mitigated and managed effectively.

3 Common Misconceptions about Buying Presales in Vancouver

They Guarantee Profitability – No! Buyers Can Walk Away if Market Values Decrease – No! Buyers Can Reject the Final Product – No! Buyers remain obligated to complete the purchase, even if the condo’s market value decreases upon completion.

Detailed Benefits of Buying a Presale Condo in Vancouver

Despite its perceived complexity, purchasing a presale condo offers several advantages:

Financial Flexibility: Staggered payment plans enable better financial management, potentially freeing up funds for other investments.

Warranty Coverage: New Vancouver condos come with warranties, ensuring prompt resolution of post-move-in defects.

Energy Efficiency: Modern construction adheres to stringent energy standards, reducing utility bills and environmental impact.

Prime Locations: Presale condos often occupy emerging neighborhoods, providing early access to burgeoning Vancouver areas.

Mistakes to Avoid When Buying Presales

Overlooking Contract Details: Always review the disclosure statement and understand all terms before signing.

Neglecting Research: Investigate the developer’s reputation, including project histories and any past financial issues or delays.

Financial Overextension: A bank's pre-approval isn't synonymous with affordability. Always maintain a financial buffer.

Financial Insights: Maximizing Your Presale Investment

Leverage Presale Deposits: Use the period between deposit and final payment to invest and potentially increase your funds. GST & PTT Obligations: The federal Goods and Services Tax (GST) and BC Property Transfer Tax (PTT) apply to new property purchases. Utilize our BC GST Calculator for more details.

Tax Advantages: Some buyers may qualify for GST/HST new housing rebates. Consult a tax professional to explore potential savings.

Mortgage Strategy: Given fluctuating interest rates, consider locking in a mortgage rate closer to your condo’s completion date.

Financing Options for Presale Condos in Vancouver

Understanding financing options is crucial for presale condo purchases in Vancouver. Traditional mortgages may not cover presales due to the gap between purchase and completion dates.

Certain banks and lenders offer extended rate holds. Inform your mortgage lender about your interest in presales for tailored advice on available options.

Additionally, explore alternative financing like lines of credit and government incentives for first-time Vancouver condo buyers. Engage with a presale-savvy mortgage broker early in the process to secure competitive rates.

Typical Deposit Structures for Presale Properties

Deposit structures vary widely, spanning total deposits from 5% to 35% in installments of 5-10% over 18-24 months in British Columbia.

Factors Influencing Preconstruction Deposits in British Columbia

Certainty: Higher deposits increase completion likelihood by aligning buyer commitment with potential financial consequences.

Perceived Developer Risk: Developers may impose higher deposits in volatile markets to safeguard against price fluctuations.

Lender Requirements: Some lenders mandate higher deposits due to market volatility concerns.

Location & Price: Deposit requirements vary based on property location and price, with downtown Vancouver presale condos often demanding higher deposits, especially from non-resident buyers.

Can You Sell a Presale Condo?

Possibly, via a presale assignment, contingent upon developer approval for marketing and sale.

Confirm your presale property’s sale eligibility by reviewing the purchase contract and consulting your agent to contact the developer for assignment permissions.

We specialize in presale condo purchases and sales, offering expert guidance throughout the process. Contact us at 604-763-3136 for detailed assistance or fill our contact form for more information.

Pro Tips for Buying a Presale Condo in Vancouver

1. Figure Out Your Finances: Determine what you can afford for a presale home. Consult with a mortgage broker or lender.

2. Research Areas in BC: Identify areas where you’d like to live. Need help? Read through a city guide.

3. Contact an Experienced Realtor: Discuss your budget and desired suite configuration, outlook, and location of a presale property with a knowledgeable Realtor.

4. Get a Presale Preview Package: Obtain the floor plan that interests you before visiting the display centre to make the most of your time there.

5. Schedule a Visit to the Presentation Centre: Have your Realtor arrange a visit where you can discuss floor plans and finishings for the presale property.

6. Write an Offer: After deciding on a presale property, prepare for paperwork and negotiations.

7. Make Your Deposit: Once your offer is accepted, make your deposit.

8. Deficiency Walkthrough: Conduct a pre-completion inspection once construction is nearly complete. Walk through the unit to ensure everything meets your expectations.

9. Complete the Purchase and Move In: Finalize the purchase of the finished condo and move in.

Questions on Purchasing a Presale Home? Please Reach Out

This high-level overview covers the process of buying a presale in Vancouver. If you have specific questions during the process, we can help. Feel free to connect with us today!