What is a Pre-Sale
Presales are real estate developments such as condos or townhouses that are sold before construction is completed. Buildings that are completed and still have units available can also be considered Presales since it is brand new and being sold by the Developer.
Why Buy a Pre-Sale? The Pros.
Potential increase in value.
Depending on the development, there is a typically a construction timeline of 2-3 years. The buyer only has to put down a deposit and can potentially have the home value appreciate before having to complete the sale, arrange a mortgage, incur any maintenance fees or property taxes.
More choices and options.
Buying from a reputable developer in a prime location secures future demand for it. The Presale advantage allows you to select from a variety of floor plans, square footage, the view, outdoor spaces, the floor of the building and more. You can customize the interior finish, upgrades appliances, chose colour schemes to your liking.
More time to secure financing.
Generally, developers allow you to pay deposits in installments. This is attractive for first-time home buyers making the transition as you don’t have to worry about a mortgage, strata fees and property taxes until the development is complete.
The Pre-Sale Cons.
The risk of value depreciation.
With any investment in property, value can depreciate. Market conditions, delays in construction, development funding issues can all contribute to a loss in the value of a Presale. Should the value go down, you are still obligated to complete the sale at the original price you agreed upon. Ofcourse, there have been exceptional cases where developers adjusted pricing on the current market value. However, they are not obligated to do this.
What you see isn’t always what you get.
Seeing a floor plan on paper versus walking through a ready made unit is entirely different. Not everyone is comfortable buying something they have never seen. You have to consider the layout, finishings and even the view made differ from what you expected. We always suggest researching the developer and its previous project history.
Completion dates are estimated and cannot be exact. You need to be prepared if it completes earlier than planned and be aware that delays in delivery are quite common for Presales.
Developers requiring more funds.
Although this is rare occurrence in the Vancouver Presale market, but it has happened. Developers have under budgeted projects resulting in asking buyers for additional funds and a new contract. Again, researching the developer’s history is pivotal and will help in avoiding these situations.
Your Vancouver Real Estate Agents
If you are looking for homes & condos in the Metro Vancouver Area, call our Vancouver real estate agents. Phone (604) 899-3368 to get started!
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