Buying presale condos and townhouses can be exciting, but it can be a very scary process as well, especially if you don’t know what you are doing or what to look into. We have come up with a list of some of the most important things to look for when you are considering purchasing a presale condo or townhouse.
Presale Condo & Townhouse Disclosure Statements
People are often blindsided by the beauty of their sparkly new unit that they forget all about that huge disclosure statement they received… that huge stack of papers that is collecting dust wherever you left it laying around! The sheer size of the document can scare people but this is the MOST important document, even more so than your purchase agreement. It tells you all about your rights or lack of rights. Disclosure statements are written by the developer’s lawyers. So naturally they favour the developer. It is important to review what rights they have, so you can determine if the property is a safe purchase for you.
If you really can’t be bothered to read the whole document, skim through and make sure you look out for each of the below, Your Awesome Realtors will focus on the rest.
I used Anita and Katrina to purchase my presale condo in Vancouver. They were extremely knowledgeable about new developments and the entire buying process. They were able to get me VIP access to the project prior to it being available to the public. Anita and Katrina continue to be extremely helpful and keep me updated on progress with the project. They truly live up to their name of Two Awesome Realtors! – C.A.
Deposits for Presale Condos & Townhouses
Our first stop is the deposit. Who is holding it? Is it the Real Estate Brokerage or the Builder’s Lawyer? These are both relatively safe options. When you want to be cautious is when the deposit is payable to the Developer and is going to be used to build the complex. Why is this a concern? Well if the development goes bankrupt or the builder disappears into the darkness, your money is gone! Spent! Meaning you will not get anything back and you won’t have a new home! Your hard earned dollars are down the toilet.
Presale Condo & Townhouse Outwards Dates
Completion dates don’t work in the same way for presale condos and townhouses as they do for resale properties. For a presale when you walk into any presentation center you are told when your presale condo or townhouse will be ready for occupancy. THIS IS AN ESTIMATE, or rather, a best-case scenario. It’s a “if everything goes as planned” date. Which, more often than not, is not met. You need to look at the outward date. This is the date the developer must be done by and it can far exceed the estimate. It is important to make sure you are comfortable with the worst possible scenario.
Assignment of Presale Condos & Townhouses
Some presale condo and townhouse complexes allow you to assign your contract. This means you can sell your presale property prior to taking possession of it. In order to do this, you will need to pay an assignment fee and need to have written approval from the developer. The assignment fee is not standardized and is up to each complex to determine the amount. You will need to take in to consideration how high this fee is compared to the profits you are making.
Some developments have started to move away from allowing assignments, this can be concerning if your life circumstances change from the time you purchase the unit to when you actually take possession, which is typically a number of years later.
Anita and Katrina helped me buy a Langley presale condo for an investment. It was an easy and smooth process. The property has gone up in value since I purchased, and I will definitely use them again in the future. – D.C.
Alterations to Design and Materials for Presale Condos & Townhouses
In the disclosure statement you will see a little section that allows the builder to adjust the material and design, of the unit, as they see fit, without giving you any sort of notice. They will of course use materials that are of equal or better quality and of a similar look. They cannot change your white counters to hot pink, but they won’t necessarily be exactly what you saw in the presentation center. For this reason, if you are a very particular person, presales might not be for you!
Included Items
The disclosure statement will tell you exactly what is included in the purchase price. The sale center display unit is always loaded with extras (and furniture,) which are not included in the price you are paying. If there is something you want that isn’t listed you will either need to get Your Two Awesome Realtors to negotiate it into the price or pay more.
Presale Condo & Townhouse Rescission Period
The contracts for presale condos and townhouses do not have subjects. They have a standard rescission period, which by law is 7 days. This means you have 7 days to review your disclosure statement and decide if you want to purchase the unit. This period cannot be extended.
Presale Condo & Townhouse Site Location
Make sure you know where the complex you are purchasing into is actually located! This may sound like common sense, but often sales centers are located off site. We have even seen sales centers for Squamish Condos in Vancouver! So, it is probably a good idea to confirm location. You should also confirm where your particular unit is within the complex. What direction is it facing and what the outlook is.
Financing
Last but definitely not least, is financing! Keep in mind that most mortgage rates and preapprovals are only valid for 90 days. So, if you are purchasing a unit that won’t complete in that time frame, you will need to get reapproved just before your completion date. This could be problematic if your financial or employment situation changes during this time.
These are just some of the important things to consider when purchasing a presale property. They can be hard to remember when you are all excited about becoming a home owner, but don’t worry we are here to guide you through the entire process. If you would like more information on the buying process take a look at our Home Buying Guide.
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