In Vancouver real estate, a presale refers to the process of selling properties, such as houses or condos, before they are built or completed. It allows buyers to purchase a property that is still under construction or in the planning stages.
During a real estate presale, developers or builders offer potential buyers the opportunity to reserve a property by paying a deposit or signing a contract. Buyers often get the advantage of securing the property at a lower price compared to its expected market value upon completion.
Presales in Vancouver are beneficial for both buyers and developers. Buyers can secure a desirable property early, potentially at a lower price, and have the opportunity to customize certain aspects of the property. Developers, on the other hand, can use presales to gauge demand, secure financing, and ensure a certain level of sales before the project is completed.
It's important for buyers to research and understand the terms and conditions of a real estate presale, as well as the reputation and track record of the developer, to ensure a smooth and satisfactory experience.
Hidden costs of a pre-sale project:
When buying a presale property in Vancouver, there are several potential hidden costs that buyers should be aware of. These include:
1: GST (5%): Buyers of presale properties in Canada, including Vancouver, are generally required to pay GST on the purchase price. This tax is not typically included in the advertised price and can significantly increase the overall cost of the property.
2: Property Transfer Tax (PTT): The PTT is a provincial tax that applies when ownership of a property is transferred. Buyers need to consider that they will still be responsible for paying the PTT upon completion of the presale property.
3: Legal and Closing Costs: Purchasing a presale property involves legal processes, including hiring a lawyer or notary to handle the closing transaction. Legal fees, title insurance, and other related costs can add to the overall expenses of buying a presale property.
Can you sell before completion?
Yes, it is possible to sell a presale property before completion in Vancouver. This is known as an assignment sale. In an assignment sale, the original buyer of the presale property sells their purchase contract to another buyer before the construction is completed and ownership is transferred.
However, it's important to note that developers may have specific rules and regulations regarding assignment sales. They may require the original buyer to obtain their permission or pay assignment fees before transferring the contract to a new buyer. These rules and fees can vary depending on the developer and the terms outlined in the presale agreement.
Additionally, it's crucial for the original buyer to consider any potential tax implications, including capital gains taxes, associated with selling the presale property before completion.
How much deposit is required for a presale property in Vancouver?
Presale properties in Vancouver typically require a substantial deposit, which can range from 10% to 20% of the purchase price. The deposit is usually paid in installments during the construction period.
What are the benefits of buying a presale property?
Buying a presale property allows buyers to secure a property at a lower price compared to its expected market value upon completion. It also provides an opportunity to customize certain aspects of the property and potentially benefit from price appreciation during the construction period.