A pre-sale is when a condo (or townhouse) developer sells the units of the development before it has been completely built and often before construction has even begun. You, the buyer, purchase the right to the future property. While ultimately you are responsible for paying the full purchase price, you do not have to take out a mortgage on the property immediately but are only responsible for a deposit. This deposit usually ranges from 5 to 10% of the purchase price at the time you buy, with another 10 to 15% paid in installments over the course of construction. The developer does not gain access to this deposit money, which is held in a trust account, until completion.
Pre-sale units sold by the developer typically sell at a list price with little or no negotiation room. To purchase a pre-sale, a buyer generally has two options. For example, if a buyer is interested in a $500,000 pre-sale condo he or she could visit the developer’s showroom and enter into a contract for $500,000 – in this situation the buyer has no representation. Option two is to use a buyer’s agent (REALTOR®), the buyer would still enter into a contract for $500,000; however, the developer may pay the buyer’s agent a commission of 3.0%100k + 1.5%balance* or $9,000. As you can see, developers prefer to generate sales directly from the showroom as they don’t have to pay out a commission. Most developers count on approximately 60-80% of their sales being directly through the showroom as it is in their direct benefit.
How does my Pre-Sale Cash Back Program Work?
The Pre-Sale Cash Back Program works by you using me as your realtor to represent you on your pre-sale purchase. I’ve made it very simple. I will give you 50% of the commission that the developer pays me and I will keep 50% of the commission for myself. In other words, I will split with you the commission that the developer pays to the buyer's realtor 50/50. Not only are you able to achieve the best possible net price, you also receive representation from a knowledgeable and experienced REALTOR® who can help guide you through the process while avoiding common pitfalls.
The table below illustrates how much money you can save by using me as your realtor in a pre-sale purchase:
My representation includes an in-depth knowledge of the metro Vancouver pre-sale market, developers, comparable market analysis, review of disclosure statements and contracts, review of unit floor plans, understanding of assignment sales (or limitation thereof) and much more!
*Actual commission may be higher or lower. 3.0%100k+1.5%balance used for illustration purposes only.*