Pre-Sale Condo Purchases

A Bet on the Market?

Purchasing a condo pre-sale, or before construction, can be very attractive to investors and first time buyers.  Those who purchase them like the idea of moving into something brand new, as well as the potential return on investment.  Often units in a condominium are sold at very aggressive prices for those who buy early on.  This type of purchase is not without risks.  By buying so far ahead of possession, you are betting on where the real estate and condo market will be when you can actually move in.  For some large condo projects, completion can be as much as 3 years away.  If you are thinking about a pre-sale, being thorough and understanding the risks can protect you from your purchase going sideways.

Will I Be Able To Qualify For My Mortgage Now And At Completion?

Purchasing a pre-sale is not just about qualifying for your mortgage now, but also qualifying and being able to afford it at completion.  Most lenders will confirm that you can still afford your purchase when you actually take possession, particularly for builds over 12 or 18 months.  This may include pulling your credit bureau or confirming your employment and income.  If you don’t qualify, a lender has the right to pull financing or if the value has dropped since purchase, ask you to pay the difference in cash.  You are still responsible for the contract with the developer if financing falls through.  If you don’t purchase the property you lose your deposit and risk being sued by the developer.

Reputation Of The Developer – Who Are You Marrying?

It is crucial to understand who is on the other end of your contract.  Using an experienced real estate professional can definitely help.  They see the buildings that developers have previously built and may be aware of a developer's reputation.  You also want to supplement that with your own research.  What is the developer’s track record?  Have they completed similar projects in the past?  Do they complete projects on time?  Have the developers ever operated under a different name?  What are condo fees in the buildings they completed several years ago?  Have they been sued by the condominium boards at former buildings for building deficiencies?  You are trying to reduce the risk of buying into a building where the developer faces financial difficulties, have extensive build delays, or have such a bad reputation you will have difficulty selling your condo later.

Can You Sell?

This one can be a big surprise for buyers.  Often the answer is “no” or “yes, but…”  Developers can be very restrictive about your ability to sell the property before possession.  Some developers control when or if you can sell or even what price you can sell for, particularly if there are still units available for sale through the developer.  If your circumstances change as a result of a work move or a growing family, you want to understand your sale options. 

Have You Involved A Lawyer?

Independent legal advice is important on any real estate purchase.  On a condo pre-sale it is even more so.  A real estate lawyer can identify restrictive and unusual clauses in the contract so you understand your risk before you commit.  Do this during your condition period, usually a week following you signing the initial contract, so you can still back out without losing your deposit.  If they don’t have a condition period that allows you to have the contract reviewed before a full commitment, run!

Changes In Floor Plan And Building Amenities

One of the biggest risks is the fact that you are buying something without seeing it first.  Developers can change their floor and building plans after you agree to purchase.  And those changes don’t necessarily release you from the purchase contract.  The specifics will be outlined in your contract.  Again, hire a lawyer to review it and help you understand what can change with your unit and the building between purchase and possession date.

Possession Date And Building Completion – Not The Same

Moving into a newly built condo is much like moving into a newly built home.  Early occupants of a condo building must have the patience to face incomplete building amenities, exterior finishing and landscaping.  There may still be units under construction when you move in.  If it will be a project with more than one building, be ready to tolerate the construction mess and noise.

Pre-sale condos are a good option for some people, specifically those who understand the risks of these types of properties and can financially handle the impact of surprises along the way.


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Today’s Bank of Canada rate hold announcement marks almost four straight years that the key benchmark rate has remained unchanged, since September 8, 2010. Great news if you have a variable-rate mortgage or home equity line of credit; the prime rate stays at 3%.


The announcement noted that “the risks to the outlook for inflation remain roughly balanced, while the risks associated with household imbalances have not diminished.” With these considerations, the Bank is maintaining its monetary policy stimulus, and remains neutral with respect to the timing and direction of the next change.


The next rate-setting day is October 22nd.

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