How to Buy a Home Before It’s Built: Pre-Sale Tips

Thinking of buying a pre-sale condo? You might be tempted by the tantalizing array of pre-sale development units available in the Lower Mainland, some with attractive incentives. (Just check out our Developments section!) Here’s how it works. When you agree to buy a pre-sale unit, you’re actually entering into a contract for the right to receive and an obligation to pay for a finished condo at a set point in the future. This forms the basis for some of the unique opportunities and risks that go along with buying pre-sale.

There are definitely advantages to buying pre-sale. You can pay just a small deposit now, save money while it’s being built, then pay the balance of your deposit when you move in. Or you can pay your deposit in bite-sized increments during the building process.

You can also customize design elements, finishes and even your layout. Because you’re buying a brand-new home, you won’t have to worry about doing costly repairs for at least another decade. And your unit will be covered under the BC government’s 2-5-10 Year Home Warranty Insurance program, so that if something does go wrong, you won’t have to pay for it.

But there are also risks and unique obligations that need to be considered before you sign on the dotted line and hand over your deposit. Here’s what you need to know: your rights and responsibilities under the Real Estate Development Marketing Act (REDMA).

Though there are advantages to buying pre-sale in any market, the greatest opportunities arise in a rising or hot real estate market. That’s because, by the time you move into your completed condo, it’s already worth more than what you agreed to pay for it.

In a softening market, on the other hand, by the time you complete the sale, you might already have lost money. If you’re relying on a mortgage, lenders may only cover the market value of the property at the time of completion, leaving you scrambling to raise more cash for the difference.

The mortgage climate can change without warning as well. Many people who purchased before the federal government administered tighter mortgage rules found they no longer qualified for the amount they were pre-approved for by the time they had to pay up.

So what happens if you can’t raise the cash you need to complete the sale, or your unit is worth less than what you owe when it’s time to pay up? Unless the developer violates the terms of your agreement, you are legally obligated to complete the sale or forfeit your deposit.

Besides market changes, there are other unknowns, from unexpected construction delays to condos that don’t get built at all.

So how can you mitigate some of the potential risks?

  • Long before you’re ready to sign anything, find out everything you can about the builder of each development you’re considering. Do they have a reputation of building on time? Talk to your real estate agent and to homeowners who’ve purchased from them in the past. And if you’re a first-time buyer with a small down payment, consider sticking with pre-sale units that are already close to completion to eliminate some of the unknowns.
  • Talk to an independent mortgage broker as well, to find out what you can afford and to make sure your credit is in shape before you go in. That way you’ll be financially ready.
  • Before you sign a purchase contract, you have the right to review a Disclosure Statement prepared by the developer, according to Section 21.2 of REDMA. The Disclosure Statement lays out everything you will be buying including proposed and filed bylaws, common property and storage allocations, and descriptions of appliances, furnishing, and finishes.
  • Under REDMA, it also has to include an estimated construction start and end date, as well as any “material facts” that could “reasonably be expected to affect, the value, price, or use of the development unit or development property.”
  • The developer is obligated to keep you up-to-date on amendments to estimated dates and material facts. This is important because building a new development is a long and complex process, and things often morph as it progresses.
  • Take time to review the Disclosure Statement carefully and make sure you understand all the terms set out in it. This step is best tackled with an experienced lawyer specializing in residential real estate and, of course, your Real Estate Agent (not the developer’s).
  • After you’ve thoroughly reviewed the Disclosure Statement, look over the pre-sale contract with a fine-tooth comb, and check the small print before you sign.

Buying pre-sale has some unique rewards, but the process can be far from simple. REDMA legislation leaves room for interpretation and is being shaped by a number of ongoing court cases. So it’s a wise move to enlist an experienced real estate agent, mortgage broker and lawyer to help safely guide you through the process and into your swanky, custom home.

For any concerns, please contact: Gino Pezzani.

Real estate industry partners create anti-money laundering recommendations for government

Vancouver, BC – April 2019. Organizations representing key professions in the BC real estate sector submitted joint recommendations to the provincial and federal governments today to help protect BC’s housing market from money laundering.

The participating organizations include the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.

In their submission, these organizations also commit to shared best practices to help keep the proceeds of organized crime out of the economy. Their efforts focus on helping protect the real estate market from unscrupulous operators and ensuring the public can have full confidence in BC’s real estate market. All of the organizations have fully supported and participated in the government’s investigations into money laundering and real estate.

A real estate transaction involves multiple professionals. It will take a coordinated effort by all involved, working in collaboration with government, to stop money laundering. The joint recommendations and best practices submitted by these organizations reflect their commitment to the professionals and consumers they serve.

For more information, please contact: Gino Pezzani.

Stress Test Creating Pent-up Demand

Vancouver, BC – April, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 5,707 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in March, a decline of 23 per cent from the same month last year. The average MLS® residential price in the province was $687,720, a decline of 5.4 per cent from March 2018. Total sales dollar volume was $3.9 billion, a 27.1 per cent decline from the same month last year.

“BC home sales continue to be adversely impacted by federal mortgage policy,” said BCREA Chief Economist Cameron Muir. “The erosion of affordability caused by the B20 stress test has created near recession level housing demand despite the province boasting the lowest unemployment rates in a decade.”

“The sharp erosion of affordability caused by the B20 stress test is now creating pent-up demand, as many would-be home buyers are forced to wait on the sidelines,” added Muir. “Unfortunately, new home construction is slowing as well, which will likely lead to another housing supply crunch down the road.”

Total MLS® residential active listings increased 36.2 per cent to 34,295 units compared to the same month last year. The ratio of sales to active residential listings declined from 29.4 per cent to 16.6 per cent over the same period.

For more information, please contact:  Gino Pezzani.

March 2019 Vancouver Housing Market Insights (Video Update)

REBGV President Ashley Smith provides a summary of the March 2019 housing market statistics.

April Fish!

Across the world, there are several variations of playing an April Fool’s joke on a goodnatured friend, co-worker, or family member.

Although the exact history of where the tradition originated is unknown, the most likely answer appears to date back to when the Julian Calendar was updated to the Gregorian Calendar. When the start of the New Year switched from March to January, April “fools” could be tricked into believing it was a new year.

Whether or not that story is true, the fun of playing a practical joke is enjoyed in countries all over the world on April 1. Here are just a few variances on the tradition:

In France, you are an “April Fish” if you are young enough to fall for a trick. Similarly, sticking a paper fish to someone isn’t uncommon in Italy.

In England and Ireland, tricks are only played in the morning; to play a trick on someone after 12 noon is considered bad form.

Newspapers in Norway and Sweden often publish a hoax story among the real news to have fun by fooling the general public.

The Portuguese sprinkle a little flour on each other’s backs so foolish tricks won’t “stick” to anyone as they go about their day on April 1.

In Scotland, April is begun with a “Gowk” being given a letter or note to drop off with a friend. The contents of the letter instruct the recipient to deliver it to someone else, and so on, throughout the day, rather like a human chain letter.

Canadian Housing Starts – April, 2019

Canadian housing starts increased 16 per cent on a monthly basis in March to 192,527 units at a seasonally adjusted annual rate (SAAR).  The trend in Canadian housing starts was essentially unchanged,  averaging 202,000 units SAAR over the past six months.

In BC, total housing starts were down 10 per cent on a monthly basis to 32,493 units SAAR.  Total starts were down 31 per cent compared to March of last year.  On a monthly basis, starts of multiple units were down 14 per cent to 25,196 units SAAR while single detached starts rose 7 per cent to 7,297 units SAAR.

Looking at census metropolitan areas (CMA) in BC:

  • Total starts in the Vancouver CMA were down 16 per cent on a monthly basis in March at 20,960 units SAAR as multiple unit starts fell 19 per cent from February.   Compared to March 2018, total starts in Vancouver were down 36 per cent.  Housing starts for the first quarter were 16 per cent lower than for the same quarter one year ago.
  • In the Victoria CMA, housing starts fell 49 per to 2,084 units SAAR  after a very strong February in which new starts were on a 4,100 unit annual pace.  New home construction was also down year-over-year, falling 42 per cent compared to last March due to lower starts in the multiple unit sector.
  • There is significant new construction underway in the Kelowna CMA , particularly in the apartment condo market. Total starts jumped 84 per cent from February, including a more than doubling of multi-unit starts.
  • Housing starts in the Abbotsford-Mission CMA were up 24 per cent in march at 1,870 units SAAR. On a year-over-year basis, new home construction was up 51 per cent with double digit growth in both single and multiple unit starts.

For more information, please contact:  Gino Pezzani.

Stats Centre Reports March 2019 for Housing in Great Vancouver

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Canadian Employment – April, 2019

Canadian employment dipped slightly from February to March, though increased 1.8 per cent year-over-year.  In the past 12 months, the Canadian economy added 332,000 jobs including 204,000 full-time jobs. The national unemployment rate held steady in March at 5.8 per cent.

In BC, employment grew by 7,900 jobs in March, including 3,000 full-time jobs. On a year-over-year basis, employment was up 3.2 per cent. Despite strong job growth, the provincial unemployment rate moved 0.2 points higher to 4.7 per cent as the number of people actively looking for work grew faster than employment.

For more information, please contact:  Gino Pezzani.


April Showers

You’ve likely heard the old saying “April showers bring May flowers” and you might even have heard the 1920’s-era song that used the poem as lyrics. However, the original phrase dates back much earlier— 1157, to be exact.  Thomas Tusser originated the phrase as a suggestion that we need a few gray, rainy days to water the seeds in our garden.

One thing I love about the little poem is that it is inherently optimistic. There is no worrying that the rain will never end or that the flowers might not turn up.  The poem is absolute: if we wait through the rain, the flowers will definitely show up. It reaffirms that the best is yet to come. That’s a pretty cheerful thought for a rainy day!

Another optimistic thought comes from the old Japanese proverb, “Down seven times, up eight.” The very idea rings in our ears like the “April Flowers” poem… we just know that although there might be a few down times in life, guaranteed growth is coming around the corner.

Just as the seeds for some gorgeous blooms lie beneath the surface of the earth, chances are that you’ve been mulling over some ideas that are just beneath the surface of life. Are those the seeds of a new job, or a change in lifestyle? Maybe a move or planning a vacation? Perhaps, it might be time to think about watering those seeds and nurturing those ideas into existence.

As the rain clouds dissipate and the days grow warmer, I hope you enjoy what lies in store for you and that there is a veritable bouquet of flowers blooming in the world around you…  May the month ahead be full of life!

Mortgage Rate Forecast (March 2019)

The March issue of Mortgage Rate Forecast is now available on BCREA Online.


  • Mortgage rates falling to start 2019
  • Temporary slowdown in the Canadian economy or something more serious?
  • How high? Mortgage stress test and the neutral rate

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