Presale Process in Vancouver
How do you buy a pre-sale property in Vancouver, Canada?
While there are some differences between Canada and other countries, the basic process is quite similar. First, the developer announces the pre-sale, and once you decide to buy, you make an initial deposit, pay interim costs, and finally settle the remaining balance. Let’s take a closer look at each step.
1. Vancouver Pre-Sale
When a pre-sale opens in Vancouver, developers prepare relevant materials and recruit potential buyers before construction begins.
Once the project launches, developers introduce the materials to licensed realtors, who help introduce potential buyers.
These materials usually include information on location, floor plans, and pricing, and in some cases, model homes may be available for preview. If you’re interested, simply let the realtor know, and they’ll handle the application and keep you informed of the results.
Construction Period for Pre-Sale in Vancouver:
High-rise condo projects can take around four years, depending on the project size, while low-rise condos or townhouses typically require shorter timeframes.
Pricing for Pre-Sale in Vancouver:
The pricing generally reflects the current market values in the area along with inflation (although ultimately set by the developer). Some developers with sufficient resources or confidence in a future increase in property values may choose to start selling closer to the completion phase.
2. Preparations Before Applying for a Pre-Sale in Vancouver
2-1. Financial Planning – Deposit Preparation
You can obtain pre-sale information in advance, often available on our website as well. Reviewing these materials will inform you of the deposit schedule set by the developer for each home.
You pay part of the total cost before construction is complete, usually referred to as a deposit. This amount varies by developer, typically 10-20% of the purchase price.
The deposit is often paid in installments—for example, a portion upon signing the contract and further payments at scheduled intervals. Therefore, it’s essential to have a solid financial plan to meet these deadlines.
2-2. Financial Planning – Full Cost Plan
You can arrange for a mortgage pre-approval through a bank, which secures funding based on the home’s future value. Although the loan won’t be finalized until construction completes, pre-approval can help protect against potential interest rate increases.
Be aware that even if pre-approval is granted, changes in the economy or market may impact the final loan amount. In some cases, you may receive less than initially approved, or even find that the loan can’t proceed, so it’s wise to plan for these contingencies.
3. Contract Execution
After reviewing the pre-sale information and deciding to proceed, you submit an application on the sale date. To avoid mistakes, it’s recommended to complete this with your realtor.
Once you’re allocated a unit, confirm your acceptance and pay the agreed-upon deposit to finalize the contract. Payment is typically made by bank draft, and once the contract arrives, you have about 10 days to review and sign it. If you notice any discrepancies, you can request modifications through your lawyer or realtor.
4. Pre-Inspection and Transfer of Ownership
Once the construction completes, the developer will allow you to perform a pre-inspection. During this time, visit the property to check for any issues, report them to the developer, and they will make repairs. After this step, you pay the final amount and complete the ownership transfer with your lawyer.
5. Other Presale Tips and Cautions
Preparation for Taxes and Other Costs
For new homes, you’ll need to pay the Goods and Services Tax (GST). While GST is not applied to existing homes, new homes incur a 5% GST on the purchase price.
Additionally, there’s a property transfer tax (PTT) based on the purchase price. The tax rates are as follows:
- 1% on the first $200,000
- 2% on amounts over $200,000 up to $2,000,000
- 3% on amounts between $2,000,000 and $3,000,000
- An additional 2% on any amount over $3,000,000
Some exemptions exist, such as first-time home purchases, so it’s best to consult with a tax professional. Restrictions on foreign homeownership may also apply, so expert advice is recommended.
In addition to these taxes, legal fees range from $1,000 to $2,000 (depending on the lawyer), and these should be accounted for in advance. Realtor fees are covered by the seller in Canada when buying a home, so there’s no cost to the buyer.
Calculate Property Transfer Tax in BC
Potential Delays in Completion
Developers provide estimated completion dates, but delays are common. It’s essential to monitor progress and plan your move with flexibility. Selling your current home or making moving arrangements too early could cause inconveniences if completion is delayed.
Considerations When Reassigning a Pre-Sale
If you need to reassign your pre-sale contract due to unforeseen circumstances, know that in most cases, you must obtain approval from the developer.
If the market is strong and the developer has sold most units, they may permit assignment with a fee (outlined at purchase).
If not, reassignment may not be allowed, so plan carefully. Failure to settle the balance could lead to penalties beyond just losing the deposit.
6. Conclusion
This summary covers the general steps and precautions for buying pre-sale properties in Vancouver. Pre-sale allows you to secure future value and purchase a new home in a desired location. However, it’s essential to ensure sufficient funds and consult experts to avoid difficulties. We hope this guide assists in your preparation for finding your ideal home.