{"id":93,"date":"2022-05-31T11:44:17","date_gmt":"2022-05-31T15:44:17","guid":{"rendered":"https:\/\/www.victoriahomesgroup.com\/blog\/?p=93"},"modified":"2022-05-31T11:44:17","modified_gmt":"2022-05-31T15:44:17","slug":"understanding-presale-condos","status":"publish","type":"post","link":"https:\/\/www.victorianewhomesgroup.com\/blog\/2022\/05\/31\/understanding-presale-condos\/","title":{"rendered":"Understanding Presale Condos"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Presale Condos have become increasingly popular among homebuyers in Vancouver Island as well as other locations in North America. With investing and renting made easier, predictable costs, and as little as 5% to 10% deposit benefit, there\u2019s no doubt this type of real estate property is so compelling.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">But the thought of buying a presale condo can be intimidating due to the unconventional process it follows. If you are new to buying properties or new to presale condos, here\u2019s a simple guide based on collated FAQs. This basic manual will give you a better view of the whole process, which will eventually narrow down your options in finding the perfect condo to call home.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>What is a presale condo?<\/b><\/p>\n<p><span style=\"font-weight: 400\">The simplest way to explain this is to distinguish \u201cbuilt\u201d from \u201cpresale\u201d properties. From the word itself, built properties pertain to properties that are already constructed. These are tangible properties for sale. On the other hand, presale properties are properties that are yet to complete but are already marketed. The rights to own the soon-to-be-built homes are already being sold by the developer to the buyer.<\/span><\/p>\n<p>&nbsp;<\/p>\n<div id=\"attachment_41\" style=\"width: 396px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-41\" class=\" wp-image-41\" src=\"https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/03\/Sapphire-300x169.jpg\" alt=\"\" width=\"386\" height=\"217\" srcset=\"https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/03\/Sapphire-300x169.jpg 300w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/03\/Sapphire-1024x576.jpg 1024w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/03\/Sapphire-768x432.jpg 768w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/03\/Sapphire-310x174.jpg 310w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/03\/Sapphire.jpg 1200w\" sizes=\"auto, (max-width: 386px) 100vw, 386px\" \/><p id=\"caption-attachment-41\" class=\"wp-caption-text\"><em>Westbay Quay &#8211; Sapphire: Presale Condominium in Victoria by Tenfolds Project.<\/em><\/p><\/div>\n<p>&nbsp;<\/p>\n<p><b>Rescission Period<\/b><\/p>\n<p><span style=\"font-weight: 400\">Also known as the \u201ccooling-off period\u201d, is the 7 to the 10-day period right after a presale buyer enters a Purchase and Sale Contract with a developer. This is the time when the purchaser has to<\/span> <span style=\"font-weight: 400\">perform his\/her due diligence on the presale property that he\/she is purchasing. Within this time, the buyer is given the right to withdraw from the contract in case he\/she has a change of heart. British Columbia has already mandated a cooling-off period for presale developments.<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p><b>Deposits and Schedules<\/b><\/p>\n<p><span style=\"font-weight: 400\">The first thing to do when purchasing a presale condo is to place a deposit down on the property. After a rescission period, a small initial deposit followed by a 5% to 10% (and usually at the most 25%) deposit is placed. A series of deposits shall be made from here up to the date of completion.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Let\u2019s take an example with easy numbers: Say you bought a downtown condo in 2021 scheduled for completion in 2023. You will pay $400,000 for the condo and pay $40,000 upfront. After the rescission period, the remaining 10% of the purchase price is due. Another 5% of the purchase price will be due a year after the offer has been written. An additional deposit of 5% of the purchase price will be due 6 months after this date.<\/span><\/p>\n<p><span style=\"font-weight: 400\">By this time, a total of 20% deposit has been made. You shall now be ready to secure a mortgage and move to the unit at the completion of the property.<\/span> <span style=\"font-weight: 400\">A trust account will be holding the deposit until the completion of the transaction.<\/span> <span style=\"font-weight: 400\">The developers do not have access to these funds until construction is fully completed.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p><b>Funding<\/b><\/p>\n<p><span style=\"font-weight: 400\">A critical element that can enhance your presale home buying journey is knowing how to navigate your mortgage. The only time that a presale purchaser should secure a mortgage is when the property has been completed and fully registered, and when the right of ownership is already transferred to him\/her.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">A lock-in rate or rate lock is most likely when buying a presale property that will be completed in less than a couple of years. This stipulation means that your interest rate won\u2019t change between the offer and the closing of the contract, provided that you close the deal at a particular period without any changes in your application. This comprehensive financing solution can be an option that you might want to discuss with your lender. A commitment letter is essential to lock in rates if you\u2019re trying to secure a mortgage at today\u2019s rate.<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p><b>Developers<\/b><\/p>\n<p><span style=\"font-weight: 400\">One obvious reason why developers presell developments that are set to be completed at a later date is to enable them to finance the construction of the project. They are one of the key players in a real estate transaction and should be treated as a major factor when purchasing a home. They manage the necessary financing and public approval like zoning laws and building codes. They have the power to change the completion date or to cancel the project entirely. Researching the developer\u2019s background will give you a better view of what the future of the project will be. A good developer is a company with a reputable track record.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400\"> <img loading=\"lazy\" decoding=\"async\" class=\" wp-image-95 aligncenter\" src=\"https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/josue-isai-ramos-figueroa-qvBYnMuNJ9A-unsplash-300x218.jpg\" alt=\"\" width=\"420\" height=\"305\" srcset=\"https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/josue-isai-ramos-figueroa-qvBYnMuNJ9A-unsplash-300x218.jpg 300w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/josue-isai-ramos-figueroa-qvBYnMuNJ9A-unsplash-1024x746.jpg 1024w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/josue-isai-ramos-figueroa-qvBYnMuNJ9A-unsplash-768x559.jpg 768w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/josue-isai-ramos-figueroa-qvBYnMuNJ9A-unsplash-1536x1119.jpg 1536w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/josue-isai-ramos-figueroa-qvBYnMuNJ9A-unsplash-2048x1492.jpg 2048w\" sizes=\"auto, (max-width: 420px) 100vw, 420px\" \/><\/span><\/p>\n<p>&nbsp;<\/p>\n<p><b>Realtors<\/b><\/p>\n<p><span style=\"font-weight: 400\">The biggest advantage of hiring an agent, particularly those specializing in presales, when buying a presale condo is that it can help you select the most reputable and well-funded developer. Aside from having an intact client base, realtors have a network of developers and know the negotiation process with them by heart. Their connections with other agents as well as with their clients will be highly beneficial to you.<\/span><\/p>\n<p><span style=\"font-weight: 400\">During the transaction process, as opposed to consulting with the development\u2019s sales team, realtors will give you honest market knowledge without skipping over the negatives.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Taking the burden of tedious paperwork and dealing with financial transactions is apparently the obvious reason why hiring an agent is a must especially for purchasing a presale property.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">But the craziest thing about using a buyer\u2019s agent is that they\u2019re literally FREE!\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p><b>Advantages<\/b><\/p>\n<p><span style=\"font-weight: 400\">Apart from the aforementioned low-priced deposit, here are other advantages of buying a pre-construction condo:<\/span><\/p>\n<p><span style=\"font-weight: 400\">You can save money by opting for presales instead of resales. Add-on fees like closing fees and inspection fees are usually part of the cost when purchasing a resale property. These additional carrying costs are avoided with pre-construction condos.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">There\u2019s an opportunity of profiting from a possible uptrend in the market price if the price of your condo rises after the completion of the construction.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Choose from a set of layouts that matches your taste. Talented designers are usually part of the development. They conceptualize color schemes and finishes to give you options to match your taste.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">New homes in British Columbia are mandated by the government to register in the 2-5-10 Home Warranty. This insurance program covers extensive protection for presale homes. It covers three different aspects of property development: 2 years on labor and material, 5 years on the building envelope, including water penetration, and 10 years on the structure.<\/span><\/p>\n<div id=\"attachment_61\" style=\"width: 401px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-61\" class=\"wp-image-61\" src=\"https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2-300x169.png\" alt=\"\" width=\"391\" height=\"220\" srcset=\"https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2-300x169.png 300w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2-1024x576.png 1024w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2-768x432.png 768w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2-1536x864.png 1536w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2-310x174.png 310w, https:\/\/www.victorianewhomesgroup.com\/blog\/wp-content\/uploads\/2022\/05\/2022_01_27_06_14_59_penthouse_a01_2.png 1920w\" sizes=\"auto, (max-width: 391px) 100vw, 391px\" \/><p id=\"caption-attachment-61\" class=\"wp-caption-text\"><em>Westbay Quay &#8211; Sapphire: Penthouse Interior Feature<\/em><\/p><\/div>\n<p>&nbsp;<\/p>\n<p><b>Risks<\/b><\/p>\n<p><span style=\"font-weight: 400\">There is no backing out once you\u2019ve signed a contract. If you do, things can get ugly and will definitely result in financial and even legal complications. Buying a presale needs a hundred percent certainty that you can complete the purchase.<\/span> <span style=\"font-weight: 400\">While realtors and other sources can give you a forecast of what the market would look like in the next couple of months or so, predictions for the next few years are uncertain. The market can be highly volatile at times, and there are only two possible outcomes by the time your pre-bought condo is completed \u2013 its value dropped or increased.<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">So, that\u2019s pretty much what a presale condo is. Once you get a full understanding of its basics, the next step is to know the whole process. A Presale condo is a great investment, but the return could be greater if you are well-equipped with its know-how\u00a0before entering the transaction.<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Presale Condos have become increasingly popular among homebuyers in Vancouver Island as well as other locations in North America. With investing and renting made easier, predictable &hellip;<\/p>\n","protected":false},"author":3,"featured_media":94,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,4,10],"tags":[12,13,11],"class_list":["post-93","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-architecture","category-buildings","category-resources","tag-condo","tag-preconstruction","tag-presale"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Understanding Presale Condos - Victoria Real Estate Updates and Trends<\/title>\n<meta name=\"description\" content=\"Presale Condos have become increasingly popular among homebuyers in Vancouver Island as well as other locations in North America. 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