Another Pre Sale Fiasco
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- Опубліковано 18 вер 2024
- Starting to see more fallout from the spike in interest rates hitting the pre-sale condo market. A large development in Richmond where buyers put down large deposits in 2019 has been in limbo since 2020 with no end in sight and an outside date of Fall 2026. I will also discuss what is known as the 'Coiled Spring Effect' where demand continues to grow, but new development has slowed to a trickle, and how this is going to be felt down the road.
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OWEN BIGLAND
Bigland Realty Group
MACDONALD REALTY WESTMAR
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A sad state of affairs. Rents will continue to rise and so will our condos. I would never buy a pre-sale since it seems too risky. 😮
Can’t beat re-sale as it is tangible and much lower cost per square footage.
I would only buy a pre-sale from the big known developers. Would never buy from a small time one.
Owen why have prices lagged soo much in the Dt core since 2017. Appreciation has been basically flat for a lot of units I've seen, the replacement cost for a unit is soo much more today for these units you'd think prices would reflect that increase.
Dt is dead basically after covid
Thanks for your consistent advice over the years. Great discussion as always
My pleasure! Reza
Hey Owen, great video. Can you share which mortgage brokers and newsletters you subscribe to? Cheers
Sure.. David Ford Sparo Mortgage and Aldo Heberlein Primaria mortgage both these guys do an excellent monthly newsletter. I also get one from my mortgage rep at TD Bank
Supply and demand ! Simple as that !
No major price corrections from sellers, lets see 8%
Do you think the presale contracts should be reformed? Did the buyer really know that his 250k could be kept from him with no interest for 7 plus years? What a terrible arrangement
contracts are fine, buyers should read them properly before signing
The buyer should have know about these outside dates but probably never took the time to read the contract or the 150-200 page developers disclosure statement.
Many buyers of pre-sale condos walk into the display center and sign the developers contract of purchase without having representation.. big mistake. Once they sign the contract the developer will provide them with the disclosure statement they have 7 days to cancel the purchase. If after 7 days they do not cancel in writing then the contract automatically goes firm and the 1st deposit is collected.
You always want to hire a Realtor like me to represent you in the purchase of a pre-sale. It costs the buyers nothing as i get paid by the developer when the deal competes 3-4 -5 years later. Developers love it when someone buys without representation as they don't have to pay any co-operating commission.
With my pre-sale buyers i will do a number of things. First i will give them some comparable listings that are tangible and ready to move in for comparison , so they can evaluate the value of this purchase and if they still feel it's something they want to buy. . If they still want to move forward with pre-sale then i will go into the display/ sales center with them. Help them select the best unit ( Floorplan , outlook etc and review the developers contract of sale and all the clauses and obligations that come with it. I will also try and negotiate a better price or perhaps get some allowances included... never hurts to ask. Storage locker, Bike Locker, appliance package upgrade, decorating upgrade etc etc.
Next i will review the disclosure statement this can be over 200 pages depending on the development and contains lot's of important information that every buyer should be aware of. Prior to the 7 day rescission period ending i will provide my buyers with a summary of all the important terms, conditions and clauses of the disclosure statement. These would include.
Deposit schedule and how much is due at each date
Estimated completion date
Outside date.. Is there a clause to extend and what's that date.
The disclosure statement will include a strata plan it will also talk about changes that might need to be made prior to completion for instance if certain appliances or finishings are not available the developer reserves the right to switch them. In other words what you see in the display home might not be exactly what you get. Parking? You may end up with a parking space that's got low clearance or duct work in the back. Basically once you read the disclosure statement and let the 7 day recission period go by .. there is no turning back and pretty much all the rights are in the developers favour and they can make many many changes from the original strata plan by filing disclosure statement revisions that all buyers will receive as the project moves along. Keep in mind if you don't like some of these changes.. too bad , the developer can make any changes they deem necessary to keep the project moving along and perhaps to move forward on permits and inspections. Lot's of risk with pre-sale that i find many buyers are not aware of. It's night and day from what pre-sale used to be 15 years ago. Buyers could buy below what tangible product was selling at, had much more flexibility, lower deposits, shorter build times plus they could assign the unit , put it on the MLS and not pay a penny to the developer if they sold it prior to completion. Most of that is all gone now. I have done at least 10 in depth videos on buying pre-sale over the past 10 years . It can make sense in some special situations and with some buyers. I did a blog on one i was involved in Olympic village 6 years ago. I bought one and sold 2 others to clients.. it was the deal of the decade. Can also make sense if it's a luxury unit with views and finishings that cannot be duplicated in the tangible market.. very rare.
I hired 2 different Lawyer doesn’t know what it is outside date. And how it works. I have self investigation what is the real outside date. I will never buy presale + after take possession, water plumbing issue guaranteed + increase monthly maintenance fee = no way
@@OwenBigland Thanks for the thorough reply, I had no idea a realtor could help with a presale purchase, I figured it was like a sort of retail purchase and i'd be on my own to sweat the contract, good to know!
I totally agree that variable is the best choice. We’ve reached the ceiling on interest rates. Once the BOC kills the economy they’ll need to build it back up. This means lower rates. Always love your take on real estate and the economy in general!!
Apparently developers in the presald market could care less about word of mouth endorsements😅