We often get questions from home seekers about buying pre-sale homes and how it works. Spring is a great time to start your home search and to visit presentation centres. There is a large supply of new condo inventory in Greater Vancouver so you will have many projects and neighbourhoods to choose from.
This is Part 1 of our introduction to pre-sale development, and we wanted to share a few frequently asked questions to help educate you about the process.
Q. How does the pre-sale process work?
A. This is an opportunity for a buyer to secure a home in the pre-construction phase. You can visit a presentation centre to familiarize yourself with the new development from walking through a display suite, reviewing the floorplans and amenities to getting an overview of the community. To buy a pre-sale home you submit a contract and deposit which holds your home until the building is complete, at which time you will have full ownership.
There are many upsides for pre-sale homeownership such as allowing you time to budget, selecting your colour scheme and options, and moving into a truly new home.
Q. How do I get notified about new projects?
A. Register on the project’s website and get your realtor to sign-up for updates too. Often the developer will host a realtor event prior to the public launch, this allows your realtor to gather information on the development, pricing and timing of sales. In a highly active market like our current one, it is important to respond to emails and phone calls from the sales representatives – if you wait, you will likely have far less selection if any at all.
Q. What can I afford?
A. To understand what you can afford speak with a financial planner or mortgage broker to get yourself pre-approved. We strongly recommend arranging your financing at the time you write a contract on your presale home. By locking in at today's rate, you will protect yourself from climbing rates that may occur over the course of the building’s completion.
Q. What is the best way to manage the deposit?
A. Most presale homes require a total deposit of 20% of the purchase price, paid out in stages. Typically, the 20% installment structure is 10% for the first deposit, then 5% due within 6 to 12 months, and the final 5% is required between 12 to 18 months. Developers are often subject to requirements from their banks which is why this deposit amount and payment schedule is needed. Make sure you review the deposit structure and timing of payments with your sales representative and/or realtor to understand your obligations and when deposit money is due.
Q. After I sign a contract, when is it a legally binding contract?
A. Once a contract is signed by both parties there is a seven-day rescission period in which you can cancel your contract without penalty. After this rescission period, your contract is legally binding and both parties are expected to execute their obligations as per the terms.