Presale 101

Presale 101: A Step-by-Step Guide to Buying a Presale

Buying a presale property can be an exciting way to secure a brand-new home or investment property before it's even built. Here’s a step-by-step guide to help you navigate the process with confidence:


Step 1: Understand What a Presale Is

A presale is a property that is purchased directly from the developer before construction is complete. Buyers commit to purchasing the unit based on floor plans, renderings, and other marketing materials provided by the developer.

Key Benefits:

  • You lock in the price at today's market rates.
  • You often have time to save for your down payment while construction is underway.
  • You get a brand-new unit with modern designs and warranties.
  • You have a lot more choices in floor plans, direction, floor, colour scheme etc. as opposed to re-sale where you might have to wait for the right home to come onto the market.

Potential Risks:

  • Market fluctuations may affect property values before completion.
  • Construction delays can extend the timeline.

Step 2: Research the Developer and Project

Before diving into a presale, thoroughly research:

  • Developer's Reputation: Look for reviews, past projects, and customer satisfaction.
  • Project Details: Understand the location, amenities, features, layout, and surrounding infrastructure such as transportation, new roads etc.
  • Strata Fees: Estimate monthly fees for building upkeep. Remember, the estimate is based on today's cost. Once the building is done in a few years, the cost would likely might go up.

Step 3: Understand the Deposit Structure

Presale purchases require a deposit, typically spread over several payments. For example:

  • Initial Deposit: Often 5% due upon signing the purchase agreement.
  • Subsequent Payments: Remaining deposits (e.g., 10%-15%) are spread across construction milestones.
  • Total Deposit: Usually 20% for a brand new launch, and 10-15% for later selling cycle. 5% is usually just right before completion. You might see a lower TOTAL deposit of less than 20%, but that might come with a risk of the project not going ahead due to developer financing.

Step 4: Secure Financing Pre-Approval

While you don’t need a mortgage immediately, getting a mortgage pre-approval ensures you’ll qualify for the loan when the unit is ready for possession. Remember:

  • Extended Rate Holds: Some lenders offer rate holds for presales.
  • Special Construction Rate: Some lenders work with the developer to offer a special rate for the buyers.
  • Down Payment Savings: Continue building your savings during the construction period.

Step 5: Attend the Sales Launch or Preview Center

Developers often host preview events where buyers can view floor plans, models, and pricing.

  • Be Prepared: Bring ID, a checkbook for the deposit, and your real estate agent (if you have one).
  • Choose a Unit: Decide based on location, size, layout, and view preferences.
  • Negotiate: Some developers may offer incentives (e.g., reduced deposits, upgrades, or discounts) during early sales phases.

For many VIP early sales opportunities, you will need a VIP REALTOR with the developer to get in early to get the best unit and pricing. We are and you should register with us to be on our early bird list.


Step 6: Sign the Purchase Agreement

Once you’ve chosen your unit:

  • Cooling-Off Period: In many provinces, you have a short period (e.g., 7 days in British Columbia) to cancel the agreement without any penalty.
  • Review the Contract: Understand all terms, including deposit schedules, completion dates, and what’s included (e.g., parking, storage).

Consider hiring a real estate lawyer to review the agreement for hidden clauses or unusual conditions. Or use a specialized presale REALTOR such as Michael Sung.


Step 7: Wait for Construction

During the construction phase:

  • Monitor Progress: Stay updated on construction milestones through developer newsletters or portals.
  • Plan for Financing: Confirm your mortgage closer to completion.

Construction can take 1-3 years, depending on the project's size and scope.


Step 8: Final Walkthrough and Closing

Before you officially take possession:

  • Pre-Delivery Inspection: Ensure the unit matches agreed-upon specifications.
  • Closing Costs: Budget for additional costs such as:
    • Property Transfer Tax (if applicable).
    • Legal fees.
    • GST (5% in Canada).
    • Strata documents and initial fees.
    • Insurance

Step 9: Move In or Rent Out

Once the final paperwork is completed:

  • Move In: Enjoy your brand-new home!
  • Rent Out: If it’s an investment property, begin finding tenants.

Additional Tips

  • Work with a Realtor: A knowledgeable realtor specializing in presales can guide you through the process and may know about exclusive deals. A good realtor can save you tons of headache and money.
  • Understand Assignments: If you need to sell your unit before it’s complete, check if the developer allows assignment sales.
  • Be Patient: Delays are common in presales, so plan accordingly.

Conclusion

Buying a presale condo is a great opportunity to secure a modern home or investment. By understanding the process, researching thoroughly, and staying financially prepared, you can confidently navigate the presale market and enjoy the rewards of your new property.

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OUR LISTING PROCESS

Clear and stress-free steps to guide you through the complexity of listing your property on the market, public or private.

STEP 1

Fill out the Seller inquiry form

This is your initial contact point. Submit the listing inquiry form, and we will reach out to you via email or phone to schedule a discovery call. You can also specify a preferred time for us to call you back in the message field.

STEP 2

Two way discovery

We will ask you a series of questions to determine the best approach for selling your property. We will also provide details on our listing strategies and packages for you to choose from. Additionally, this step allows you to ask any questions you may have about our process.

STEP 3

You pick how you'd like to proceed

Once you have a day or two to digest everything we discussed, we’d love to hear your decision. Let us know: 1. Which strategy you’d like us to implement for selling your property. 2. Which Tiered Service Level best suits your needs, so we can tailor our approach accordingly.

STEP 4

Reporting and pricing your property

After receiving a clear intention from you, we will proceed with conducting a Comparative Market Analysis and providing you with a detailed report. This report will help us determine the most effective pricing strategy for your property. This step can be completed either in person or remotely.

STEP 5

Decision and contract

At this stage, you will have gathered all the necessary information about our process, costs, strategies, and your property's value. The decision on pricing, listing duration, and other details is entirely up to you. To comply with the Real Estate Act and regulations, we will need to meet in person for the listing contract signing.

STEP 6

Listing preparation

Depending on the chosen service level, we will conduct a property photo shoot, 3D tour scan, floor plan measurements, brochure printing, and/or staging before the listing goes live to the public

STEP 7

Listed!

Your listing is live! The listing process is now complete, and we are moving full steam ahead with advertising, digital promotions, and social media marketing. At this stage, we are fully engaged in the 'Sales Process,' which includes open houses, private showings, offer negotiations, and more.