Buying property off the plan (new development/ pre-sale) is different in many ways than buying an established, re-sale property. There are the obvious differences such as the absence of a physical space to inspect, the longer wait time between contract and completion date, and the options and upgrades involved with the initial purchase.
Here at Move to Squamish we help buyers navigate the residential property market to find the perfect home or investment property. In this article we breakdown the process of buying a pre-sale from first-steps, completing paperwork, completion and more.
Buying a Pre-sale First Steps
If you are seriously considering buying off the plan, having your mortgage pre-approval in place should be top priority.
Many mortgage brokers work with lenders on longer term pre-approvals for financing of new developments- be sure to inquire. Your real estate agent can recommend a list of local brokers if you don’t yet have a relationship with one. It’s important to understand what you can afford before getting into a pre-sale transaction.
If you are not yet familair with pre-sale opportunities in Squamish, schedule a 1.5 hour discovery tour to get to know the different neighbourhoods, where the development sites are located, and where the current and upcoming pre-sales are.
Some developments may have a display suite you can visit to get an idea of floorplans, finishings and upgrade options. Once you have decided which development(s) you are interested in, the next step is to review the site plan and floorplans and decide which units are of interest. In a hot market it’s best to have your top three choices, as its likely you may miss out on your first pick. With your pre-approvals in place and your desired selection of units, you are ready for the next step.
Completing the Paperwork
Unlike re-sale purchases, with new construction there is typically a set purchase price. There may be room for negotiation but this depends on the market, the developer and your position as a buyer. When you are ready to move forward with the purchase, you will obtain the Developer’s Disclosure Statement which will include information such as developer info, phasing, insurance and financing information, strata plans, draft bylaws and more .
The next step is to complete the purchase agreement, this is different than writing an offer on an existing property as typically the developer’s contract is used instead of a contract of purchase and sale. Along with this contract you will receive a floorplan, site plan, and a copy of the disclosure statement to review and initial.
When buying pre-sale in British Columbia purchasers are entitled to a 7-day Rescission Period. This period begins once the purchase agreement is signed. During this period the purchaser can thoroughly review the disclosure statement (and seek legal council if desired), and can ensure all financing and other details are in order. If for whatever reason the purchaser does not wish or is unable to move forward with the purchase, they can rescind the deal as long as its within the seven day period.
Additional Costs of Buying Pre-sale
When buying a pre-sale it’s important to consider the deposit required. Deposits are typically 20 percent of the purchase price due at staggered intervals. The first deposit, usually 5-10%, is due upon the signing of the purchase agreement. The following deposits are scheduled in conjunction with building permit or financing, generally 3-6 months later.
It’s important to note that all new construction in British Columbia attracts a 5% GST fee. This amount is due upon completion of the deal (when the unit is ready to move into).
Completion and Move In
The time period from contract signing to move in can be anywhere from six months to three years depending on the development. It is often good to add on a few months from the initial projected completion date as it’s common for developments to take longer than expected.
About a month or so before move in date buyers will have the chance to walk through their new property and make a deficiency list of faults that need to be corrected. Working with a Buyer’s Agent will provide protection to the buyer who otherwise may be unaware of certain deficiencies.
Finally, the long awaited completion date. This is the date when mortgages are finalized and conveyancing transfers title from the developer to the buyer. It’s important to note completion date isn’t the same as move in day, usually buyers can move in a day or two after final completion.
Why Work With a Buyer’s Agent
Buying a pre-sale can be a complicated process. From choosing a new development that is right for you, to understanding development and local municipal agendas and community plans and having a good understanding of the location, a local expert that’s not affiliated with the developer is key to navigating this important decision.
Buyer’s agents work without a fee or charge to buyers and represent buyers during a real estate transaction. This service involves assisting the buyers in finding the right property, navigating disclosure statements and contracts, connecting with professional services, and ensuring the process runs as smoothly as possible until after completion and move in day
Buyer’s agents represent all development neutrally so are able to provide unbiased advice when it comes to choosing a pre-sale. With new rules coming into effect in British Columbia banning the practice of dual agency (where one real estate agents represents the buyer and the seller), it is now more important than ever to have a real estate agent representing your specific needs and wants.
The Team at Move to Squamish would be happy to help you find the perfect pre-sale opportunity in Squamish. To get a general orientation of Squamish and the new developments taking place schedule a 1.5 discovery tour or feel free to email us at movetosquamish@gmail.com for more info.
- DUPLEX FOR SALE: 38035 Sixth Avenue & 38033 Seventh Avenue - December 5, 2019
- Squamish Real Estate Stats | March 2019 - April 14, 2019
- Buying Pre-Sale or Re-Sale | Weighing up the Pros and Cons - April 14, 2019
2 thoughts on “What You Need to Know Before Buying a New Development”
Comments are closed.