November 3, 2021 What first-time buyers need to know about pre-sale homes
First time homebuyers may be completely new to the concept of purchasing a pre-sale home and what that process entails. Different than a re-sale home, pre-sale developments have their own unique considerations in the real estate world. Pre-sale purchases have more decisions to be made, more variables to consider and a longer timeline from purchase to possession. Read on to answer those initial questions about purchasing a pre-sale home as a first-time home buyer.
Why is a pre-sale home worth considering as a first-time home buyer?
The biggest challenge when buying a resale property is the fact they are limited and typically one of a kind. In today’s market, when there is consistent demand, it can be incredibly challenging to find a home that meets your needs within the location you desire. With a pre-sale, you can be specific about the location and create a home that reflects your tastes. Pre-sale homes are particularly perfect for first-time home buyers, who have the time to wait for the development to be built rather than being pressured by the sale of an existing residence.
Where is the best place to look for a pre-sale home?
After selecting your preferred neighbourhood, there are online resources that will help you find pre-sale options to match your budget and desires. Of course, MLA Canada always shares a list of current projects to explore. Also, Urban YVR and The Daily Hive Urbanized Vancouver are great resources, that generally share pre-sale developments in much early stages of the development lifecycle to give you a heads up on what’s in the pipeline in a given location.
What is my realtor’s role in the pre-sale home purchasing process?
A realtor who specializes in pre-sale homes can be a real asset to a first-time home buyer due to their knowledge about market conditions and industry players, and their ability to stay informed about upcoming projects. They act as a guide through your search and the closing process, ensuring you understand and are comfortable with the steps involved. Often, they’ll have useful insight into promotions and incentives and are able to paint a better picture of the final project within its pre-construction context.
What financial considerations should I take into account?
As a first step, it’s wise to get pre-approved for a mortgage in order to understand your budget. Initially, buyers only need to provide a deposit to secure the purchase during the construction phase. Anyone purchasing a pre-sale home should understand the seven-day rescission period: the number of days after signing a purchase contract during which you can cancel the sale without penalty. Payments towards the graduated deposit structure will be made in stages on a scheduled plan prior to taking possession,when a mortgage would begin. Additional costs to ask about include fees, closing costs, GST, strata move-in fees and utility connection fees. We recommend connecting with pre-sale mortgage experts, Nest Mortgage, for any guidance.
What happens between my purchase and the project completion?
After closing on a pre-sale home purchase, you’ll be given a review of purchase details, contract copies and a timeline breakdown that includes construction projections and key milestones such as your payment schedule. Have your realtor talk you through this timeline, and make sure that either your realtor, agency or the developer will be notifying you for those action items. You’ll also want to start to consider insurance and movers.
When purchasing through MLA Canada, all of this is taken care of for you. MLA Complete delivers you resources and support that go above and beyond throughout your purchasing journey.
If you’re considering purchasing a pre-sale home, learn more by reading about the top tools for shopping for a pre-sale online, along with deposit structures and budgeting tips for a better understanding of the finances involved.
