Purchasing a presale condo in Vancouver can be very advantageous for many home buyers. Some of the benefits include the ability to customize your future home’s features, to request specific views, and to secure a purchase price before the condo has been built, which has the potential to be a tremendous investment opportunity.
It’s no wonder that many home buyers and investors alike are lining up for new presale developments.
Keep in mind that as beneficial as purchasing a presale condo may be, it isn’t free of risks. An experienced realtor, like Paris, can help you assess whether buying a presale condo in Vancouver is the right choice for you.
Here are a few facts and tips, both good and bad, that you should know about the presale condo process.
1. Visit the Presentation Centre
Don’t underestimate this important step in your presale condo buying journey. Presentation centers are designed to give you an overall glimpse into what the condo, the building, and the neighborhood will be like. You can get a sense of color schemes, materials used, floor plans, distances to local amenities and attractions, anticipated views, and more.
2. For the best price, buy your presale condo ASAP
This statement isn’t a sleazy sales pitch telling you not to wait a moment longer – purchasing real estate is a huge decision, and you need to make sure that you’re ready. However, do keep in mind that as construction on a building advances, developers do tend to raise the prices of units.
3. Each unit comes with a warranty
Most presale condos in Vancouver come with a warranty – separate from that of the building at large – for each individual unit. This warranty tends to cover cosmetic flaws in the unit’s interior construction, such as scratches and chipped paint, so you can rest assured that your condo will be in good shape.
4. Financing is based on pre-approval
The mortgage and interest rates that you’re quoted at the time of purchase may change depending on factors such as your personal financial situation at the time of payment. If you no longer qualify for the same mortgage once the condo is finished and payments are due, you are still contractually responsible for paying for the condo.
5. Don’t forget about GST
You are required to pay 5% in GST on top of the quoted sale price. Make sure you account for that in your financial planning when purchasing a presale condo in Vancouver. If you are a first-time home buyer, you may qualify for the BC First Time Home Buyers’ Program, which will exempt you from paying GST on your presale condo. I’ve helped many first-time home buyers with this excellent program – check out my blog post about it here.
6. Read the Developer’s Disclosure Statement – Thoroughly
When deciding to purchase a presale condo, don’t skip this important step. Read and understand this critical document outlining everything connected to the development project. You can always contact Paris with any questions about the material.
7. You can rent out your new condo
The developer of a presale condo project files a Rental Disclosure Statement, which entitles you, as a buyer from the developer directly, to rent your condo out. We’re seeing an increasing number of Vancouver parents purchase presale condos for their children and rent them out until the kids are grown up.
8. The completion date is an estimate
Many factors can delay the completion date of a presale condo development. Whatever the reason for the stall might be, keep the potential uncertainty in mind when planning your relocation. It is worth noting that unfortunately presale development projects do occasionally get canceled altogether, but all deposits are paid back in these rare cases.
9. There is room for negotiation
When purchasing your presale condo in Vancouver, take the time to discuss frequently overlooked features of the arrangement, such as storage space and parking. You might be able to get a larger locker or closer parking spot.
10. You don’t have to start paying your mortgage until the condo is built
One of the terrific benefits of purchasing a presale condo is that you do not need to start making mortgage payments until the condo is fully finished. Upon agreement to buy the condo, you are required to make a deposit to the developer and then make a few more incremental deposits throughout the building period, altogether usually amounting to 20% of the total purchase price. Once the condo is completed, you begin making your mortgage payments that are calculated for the remaining 80% of the purchase price.
11. Upon signing the purchase contracts to your presale condo, you have a 7-day Rescission Period
So you’ve signed the contracts and officially bought your presale condo in Vancouver! After the wave of initial excitement wears off, you still have seven days to do your due diligence and research. If for any reason whatsoever you change your mind about the condo, you can back out of the deal with no penalties.