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What Exactly is Pre-sale Real Estate?

September 10, 2013

Like many industries, there are terms, acronyms and jargon that those of us within the industry accept as normal day-to-day language because we use it all the time.  But recently someone challenged us on the term “pre-sale” and asked what it means.  The more we thought it about it, the more we realized it is a confusing term!

We use the term pre-sale to mean a home that is available for purchase prior to it being move-in ready.  Sometimes it’s available to buy before construction has begun, and sometimes it’s already under construction, but in either case, the home is not ready to live in at the time of purchase. And, to add to the confusion, the same homes that where originally referred to as \"pre-sale\" will start to be referred to as \"new\" once the building is ready for homeowners to move in if there are a few final homes available after construction is complete.

The term and the concept of pre-sale was introduced to Vancouver in the early 1990’s which saw the first high-rise buildings along False Creek sell-out prior to their completion. This new way to buy real estate reduced both risk and capital requirements for housing developers and provided buyers with an opportunity to get in early and invest in the potential capital appreciation before the building was complete, usually up to 2.5 years later. (Read more about other advantages to buying pre-sale.) Since that time we have seen every major property developer in Metro Vancouver offer pre-sales on all kinds of new residential developments.

If there is any other real estate industry terminology you've been wondering about, post a question on our Facebook page and we’ll do our best to de-mystify it!