3 things to keep in mind when considering a presale home

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Image: 604presale

Purchasing a new home via the builder can be a great experience. Approximately one third of all homes sold in Canada each year are new constructions.

Exploring the presale development market is always worthwhile especially when comparing to existing homes in established neighbourhoods. Remember that it is important to keep in mind certain aspects of the home for sale before diving into the deep end.

1. Compare against multiple presales

Image: 604presale

Image: 604presale

  • Explore the neighbourhood of which the presale home will be built
  • REW.ca (Real Estate Weekly) has some tools for finding your new home in the Metro Vancouver region.  Prospective homeowners can find both MLS listed homes for sale and presale developments
  • Exercise due diligence when considering any particular developer or builder
  • Spend a little more time to review the developer’s Disclosure Statement
  • Check the presale contract
  • Get the contract proofed by a lawyer
  • Pre-delivery home inspection shortly before the buyer takes possession of the home
  • Be proactive and get the home warranty in writing

2. Hedge the known risks

Image: 604presale

Image: 604presale

  • When buying a presale home in Vancouver the price you see provided by the developer, or marketing firm is the price before GST and Property Transfer Tax.  Use a PTT and GST calculator for finding out the net cost of a potential purchase
  • If the real estate prices in Vancouver were to decline and the value of the presale home at the time it completes is below what was originally paid, the Buyer is still obligated to complete. In other words, the buyer may not rescind from the completion without involvement of the real estate legal system
  • Buyers may not get exactly what they paid for.  During construction of the home, changes can occur. Very often developers protect themselves in the fine print – Ensure you have ample time to review the contract and disclosure statement
  • Reasonable chance of the pre-sold building to not complete on time and the completion can be delayed
  • Never guaranteed of a profit once the presale has been completed
  • If a presale home needs to be sold before completion or at the time of completion, it is especially hard to compete with other sellers when the market is low
  • Not every bank will fund presale homes. Some lenders will only cover the value at completion.  The downside is the amount could be less depending on the market conditions
  • Buyers could be moving into a construction zone if there are several phases to the development site

3. Acknowledge the foreseen advantages

Image: 604presale

Image: 604presale

  • Small deposit for the interim and save cash while the development is in the works
  • Have the ability to customize elements, and layout of the future home
  • Newly built homes are covered under the Home Warranty Insurance program in BC
  • Home buyers are protected under the Real Estate Development Marketing Act (REDMA) and should know their rights
  • The value of your home can be higher upon completion in a rising market
  • After a down payment has been made, the developer is required to provide at least 1 year warranty to cover issues before building is complete
  • Get the latest trends and technologies integrated into the newly built homes

 Featured Image: 604presale Brentwood 

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Perry Cheung is a contributing writer, and trained as an architect. At Vancity Buzz he shares his boundless passions for architecture, talks about business, commercial development, and local tech.
@pcitybuzz

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