| Buying a presale means buying real estate that | | | | divorced, need to move away, whatever the |
| has not yet been completed by the developer. In | | | | case may be. Many of these people might actually |
| many cases the developer will need these | | | | need their deposit money back due to unforeseen |
| confirmed sales, with deposits in trust, to prove | | | | circumstances and they're now looking for any |
| to the bank that there is sufficient demand for | | | | little thing to fight with, and potentially sue the |
| the project. Many lenders will include a certain | | | | developer for to get their deposits back. I believe |
| percentage of presales as a prerequisite or | | | | ‘faulty fireplaces' is what they decided to go |
| condition to committing funds. | | | | with down at the Olympic Village. |
| Buying a presale unit is a great way for the | | | | The Lesson: This has NOTHING to do with |
| consumer to get into the new condo market. | | | | fireplaces… |
| However, just like any other investment, it's | | | | Do your homework before committing to a |
| buyer beware and the more you understand the | | | | presales contract. Research the developer's track |
| risks of buying presales the better you're going to | | | | record; ask them to show you evidence of other |
| fare. It's great in a market that's moving up – | | | | similar projects that have been completed on |
| everybody wants to ‘complete' once | | | | time and on budget. Speak to some of the people |
| occupancy permits are obtained because the units | | | | who have bought units from this company, ask if |
| are ‘in the money' (meaning that the market | | | | they are happy with the product and would they |
| has gone up and their unit could be sold for more | | | | buy another unit from the same group. If no, ask |
| than what was originally paid). | | | | why not. |
| It's a very different story when the Vancouver | | | | Make sure you understand the purchase |
| real estate market is either flat or going down. | | | | agreement and disclosure statement in its |
| Suddenly now your condo is ‘out of the | | | | entirety. Have a lawyer who is familiar with |
| money' meaning you could never sell the unit for | | | | presale transactions look over these documents |
| a profit and could potentially lose a chunk of cash | | | | and ask for clarity on issues you don't fully |
| if you are unable to complete for whatever | | | | understand. Also, ask the lawyer to identify |
| reason. | | | | anything unusual about the conditions, something |
| This brings me to a prime example of the | | | | that you might think is standard or not think |
| Olympic Village development in Vancouver. Many | | | | about at all. |
| of these units were sold as presales by Millennium | | | | The marketing of presale units in BC is governed |
| Developments / City of Vancouver / Fortress | | | | by the Real Estate Development Marketing Act |
| Hedge Fund and, even though prices haven't | | | | (REDMA) and the Superintendent of Real Estate. |
| dropped significantly yet, the market has certainly | | | | Be sure to have your REALTOR explain what |
| cooled. The result? Presale contract owners who | | | | your rights and obligations are under this act. If he |
| don't really want to complete not only because | | | | or she gives you a blank look when you ask this |
| their prized investments are now money losers | | | | question, it might be worth interviewing a |
| but also because their situation might have | | | | REALTOR who has some experience in this area |
| changed. Perhaps they've lost their job, got | | | | of buying and selling real estate. |
