Presales: What are they?

Mar 24

Presales have been one of the most popular real estate topics in the Lower Mainland over the past few years (and for good reason!). With an influx of expected new residents over the next decade, presales will continue to play a major role in the Lower Mainland’s real estate market.

But what exactly is a presale?

A presale, or sometimes called ‘pre-construction’ refers to a piece of real estate that has not been built yet. More often than not, real estate developers will sell their projects while they are in this phase of development.

How does the process work?

In B.C., presale purchasers are typically required to put down a deposit of 20% of the purchase price in increments over a period of one year. The outstanding amount (agreed upon purchase price minus the deposits paid) will be due upon completion when home or condo is ready to be occupied (usually a number of years later).

Let's look at an example:

Presale Purchase Price: $400,000

1st deposit is due immediately: 10% of the purchase price ($40,000)

2nd deposit is due 6 months later: 5% of the purchase price ($20,000)

3rd deposit is due 1 year later: 5% of the purchase price ($20,000)

Total deposit payable: $80,000

The remaining $320,000 will be due on completion, usually a period of few years later.

It's important to note that not all developers schedule their deposit structure the same, and they almost never use a standard real estate contract. If you're considering buying a presale, always enlist the services of a REALTOR®. The developer pays the REALTOR® for you, so there's no reason not to be professionally represented.