What Should You Think About When Buying A Presale Home?
Thinking about buying a presale property?
There are alot of benefits to buying presale homes, but also potential risks that can be involved. A presale purchase is different from the conventional purchase of a home so knowing your rights and responsibilities is very important.
With a presale you have advantages like being able to customize your property. This includes the fixtures, appliances, flooring, paint colour and sometimes even the layout. All new homes come with a 2-5-10 year warranty program, through the Homeowner Protection Office, BC Housing. Plus all the new appliances will also be under warranty, which can lower maintenance and other costs. Initially there is just the cost of a small deposit to commit to, which can give you much needed time to save for the down payment while the home is in construction.
Purchase of new homes costing less than $750,000 are exempt from Property Tax for Canadian citizens and permanent residents who’ll be living in their place as their primary residence. You’ll still need to pay GST but the provincial tax will be removed.
There are still things to look out for though. Buying an unbuilt home can bring potential problems, looking at renderings and just a floor plan can be scary. You never know 100 percent what to expect. Showrooms can give you an idea of what the finished product might look like. It’s up to you and your agent to assess the potential risks and understand your rights and responsibilities as a buyer.
Key considerations
Disclosure: The developer will disclose anticipated dates for start and completion of a project. The sales agreement will usually allow for three 30 day extensions which if used would be sent to the buyers in a letter well in advance.
Amendments: The developer must keep you up to date with changes to material facts and estimated dates.
Rescission: From the day you receive the disclosure statement from the developer, you have 7 days to change your mind and take your offer to buy the home back. This will give you the time to look over the documentation. Consulting with a lawyer is always a good idea. If you decide to rescind your contract you will receive your initial deposit back.
Down payment: Most the time buyers are required to put 10% down as a deposit to secure the unit, which becomes a part of their down payment. This is not always the case though, it can always be higher or lower.
How can I protect myself from some of the possible risks?
Buy from a reputable builder: Take a look at other developments the builder has built in the past. You want to be confident in the quality of the home and that it will be done in a timely manner. Ask other owners and your realtor about the reputation of the builder.
Get pre-approved by a mortgage broker: A presale is just a contractual agreement to purchase when the product is ready. Find out what you are pre approved for. If you pay the down payment at the times listed in the contract then at the time of completion is when you will need to take on the financial obligations of a mortgage.
Work with a knowledgeable REALTOR®: There is no cost difference with buying a presale with a REALTOR®. There are no fees saved, so working with a qualified agent could get you the unit you really want or a private showing before others see it. This is especially important when you’re in a competitive market. Some places sell out of certain units before they even become open to the public.
Talk to your lawyer: Consult with a lawyer who is familiar with REDMA on the presale agreement. Review the size of the unit, finishing details, appliances, parking, storage lockers, date of delivery, any penalties or additional costs for changes in the property and delay or delivery clauses. Make sure you know what’s included, which items are an optional choice or maybe shown just for display purposes.
When buying a presale condo in Vancouver buy from a reputable builder and always consult with your agent, mortgage broker and lawyer.
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