A Buyer’s Guide to Pre-Sale Purchases in the Lower Mainland

With limited inventory, historically low interest rates, and more people looking to live among the natural beauty of British Columbia, demand has perhaps never been higher for properties in the Lower Mainland.

Real estate in Greater Vancouver has long been preferred by investors. The prospect of owning property in the region has only become more attractive as inflation increases.

In real estate, it is said that the best time to buy was 3 years ago. For over 10 years, there has been a decidedly upward trend in the BC housing market spanning single-family and multifamily submarkets.

These factors, along with a rapidly increasing population, contribute to a huge demand for real estate; but supply cannot keep up with demand. The longer one waits to buy, the more likely it is that they will be priced out of the market.

Pre-sale construction helps solve that problem.

How it works

Pre-sale developments are properties – both multi-family and single-family homes – that are offered for sale before they are fully constructed. Compared to resale homes, there is a slightly different deposit structure. Usually, deposits for pre-sale homes total 20% of the purchase price, broken up into increments of two or three until the date of completion. Often, there are incentives in place which allow buyers time to free up the cash needed to make deposits.

This is especially useful for first time home buyers, as it makes it possible for them to lock in properties that would otherwise be out of their price range. The time horizon from pre-sale to final completion can take anywhere from several months to a few years. By locking in a unit in the pre-sale phase, buyers protect themselves from the price hike that occurs as the building completes.

The process usually involves visiting a project’s Presentation Centre to understand details like material, floor plans, strata fees, and other pertinent information. Once a unit is chosen, the potential buyer places (under contract) it on hold via an agreement that allows them a seven day rescission period. If, within the seven days, the parties decide to complete their purchase, they pay the first deposit into a trust account administered by a law corporation. Having the deposit in the lawyer’s trust account ensures that the money is released to the developer in agreement with the contract; this helps protect both parties in case of delay or unforeseen circumstances.

How to Start

  1. Get Pre-Approved. Before you seriously begin looking for a pre-sale home, it helps to know what you can afford. Visit a mortgage broker or financial advisor to determine what you are pre-approved for; that way, when you find something you like, you don’t have to worry about missing out due to a delay in financing.
  2. Know What You Want. Are you buying a property for yourself, or do you want to offer the home for rent? How many bedrooms do you need? What area are you looking at? Each pre-sale project has its own policies around renting and reassignments (selling your pre-construction home right before it is completed), so it is important to be clear on your intentions for your home before you make a commitment.
  3. Watch the Market & Enlist the Help of a Real Estate Professional It is possible to do your own market research and find a pre-sale opportunity that works for you; you can subscribe to newsletters from major developers and project marketing teams like Pacific Real Estate to be notified of upcoming pre-sale developments. Sometimes, all you have to do is ask: you can reach out to the professionals on project marketing teams to get you on VIP lists that help you find a pre-sale home that fits your needs. View our current pre-sale listings here.
  4. Visit the Presentation Centres Visit the Presentation Centre for the project you are interested in. Be ready to place an offer if you find something suitable. Remember: there is a seven day rescission period after you put a home under contract, which means you can cancel the offer in that time without penalty.
  5. Wait to Receive Updates. After you have successfully secured your pre-sale home, the developer will contact you from time to time with updates on the project’s stages. Take note of the deadlines for the second and third deposits and ensure you have them ready.
  6. Completion. When it is time for completion, you will have the opportunity to do a deficiency walkthrough with a serviceperson to view the quality of finishes and make note of anything you would like fixed. Once you move in, you have 1 year to report any major concerns to the developer.

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