Vancouver Presale: 3 Common Mistakes to Avoid

As a presale expert in Vancouver, I’ve seen countless buyers make the same mistakes when investing in presales. Having been involved in hundreds of presale contracts and speaking with numerous clients who’ve encountered these pitfalls, I can confidently say that these errors are not only avoidable but also costly. If you’re considering a presale investment, here are three common mistakes to avoid—trust me, your wallet will thank you.

1. Buying Directly from the Developer

One of the biggest misconceptions I’ve encountered is the idea that walking into a presentation center without an agent will get you a better deal. Many believe they can negotiate a lower price by cutting out the middleman, but this couldn’t be further from the truth.

When you purchase a presale, you’re essentially buying a contract—a piece of paper that represents a future home. This contract can span three to four years, and during that time, there can be a multitude of challenges. From contract reviews and negotiations to structuring the deal and deposit schedules, having an expert to guide you through the process is invaluable. Developers’ sales teams are focused on selling, not on ensuring you get the best deal or protecting your interests.

Once a project is sold out, the sales reps often move on to new projects, leaving you with no direct line of communication. This is where having an experienced agent by your side is crucial. Not only is their representation free for you, but they also have the knowledge to navigate the presale market effectively. I’ve seen firsthand how clients who hire an experienced agent save thousands of dollars by avoiding common pitfalls.

2. Investing in a Project That’s 70-80% Sold

Another mistake I frequently see is buyers investing in projects that are already 70-80% sold. At this stage, you’re often paying a premium for units that aren’t as competitively priced as they were at the project’s launch.

Here’s why: Developers typically start selling units at a lower price to meet certain presale thresholds required by lenders. As the project sells and hits these thresholds, prices increase. By the time 70-80% of the units are sold, those who bought in early have secured the best deals, and what’s left are units sold at a premium. These units often come with less room for appreciation, making them less lucrative as investments.

In my experience, the only time it makes sense to buy into a project at this stage is if you plan to move into the unit yourself. As an investment, it’s likely not worth it, and I’ve had to advise many clients against making this mistake.

3. Buying a presale Unit for the Sole Purpose of Flipping

Flipping presale units has become a popular strategy, but it’s also one fraught with risk. Many buyers assume that if their contract allows for assignments (the ability to sell the contract to another buyer before completion), they can easily flip the unit for a profit. However, this is not always the case.

Most contracts come with conditions that can severely limit your ability to assign the unit. For instance, the developer might require that 90-95% of the units be sold before they approve any assignments. Even if you have a buyer lined up, the developer can block the assignment if they haven’t met their sales goals, leaving you stuck with the unit.

I’ve seen buyers who planned to flip their units end up having to close on them, leading to unexpected financial strain. As a rule, I never advise clients to buy a presale with the sole intention of flipping it. The risks are too high, and the potential rewards often don’t justify the gamble.

Key Takeaways

The Vancouver presale market offers incredible opportunities for those who approach it with the right strategy. By avoiding these common mistakes, you can ensure that your investment is a lucrative one. From buying early in the sales cycle to working with a knowledgeable agent, the decisions you make today will determine your success tomorrow.

If you have any questions about navigating the Vancouver presale market or want to explore how to make a profitable investment, I’m here to help. Book a call with me—I’d love to chat and guide you toward a successful presale investment.