Vancouver Pre-Sale Home Buying Guide
Purchasing a pre-sale property in Vancouver follows a structured process. First, the developer announces the sales launch, allowing potential buyers to express their interest. Once selected, buyers proceed with signing the purchase agreement and making an initial deposit. Additional payments are made in installments according to the contract, and the final balance is paid upon completion of the property. Let’s take a closer look at each step in detail.
1. Devloper announces the presale launch
When a pre-sale project is launched in Vancouver, the developer prepares relevant materials and recruits potential buyers before construction begins. Once the project starts, the developer shares these materials with licensed real estate agents (realtors) to help promote the properties and connect with potential buyers.
The materials usually have information about the location, design drawings, pricing, and more. Some offer pre-construction model homes. If you like what you see, you can tell a realtor that you’d like to buy a home, and they’ll apply for it and let you know the outcome.
Construction time for Vancouver presale
In Vancouver, sales of high-rise condominiums (high-rise apartments in Korea) can take as long as four years, depending on the size of the project, and even less for low-rise condos or townhouses.
Pricing your Vancouver home for presale
The cost of a Vancouver condominium is roughly based on the current price of homes in the neighborhood, plus inflation (up to the builder, of course). If the builder can afford it, or if they are confident that home prices will increase in the future, they may choose to sell at the end of construction.
2. Preparation before applying for a Vancouver home for sale
2-1. Funding Plan – Prepare for Deposit
In Vancouver, you can get pre-construction materials before you apply for a unit (we’re updating our site as well). If you look through these materials, you’ll see that the builder has posted a payment plan for each home.
In Korea, you pay a portion of the contract price of the house before the construction is completed, usually called a deposit. The amount of the deposit varies from builder to builder, but it’s usually around 10-20% of the house price. You don’t have to pay the deposit all at once, some of it at the time of signing the contract and some of it after a certain period of time, so you’ll need to make sure you have a good financial plan in place to pay it within that time frame.
2-2. Funding Plan – Plan your overall costs
In Vancouver, you can pre-qualify for a loan (mortgage) from a bank or other lender for the future cost of your home before you make an offer. It’s kind of like a pre-approval agreement, and the funds won’t be disbursed until after construction is complete, but you can get approved in advance to protect yourself against future interest rate increases. Depending on the branch, there are Korean mortgage counselors at the bank or specialized Korean mortgage brokers (people who find loans from various banks), so it’s okay if you’re not confident in English.
It is important to note that if the economy is good and there are no issues, you may be able to execute what you were pre-approved for, but if the economy turns bad and the surrounding market value drops, you may end up getting less than the loan amount you were supposed to get, or you may suddenly not be able to get a loan even if you were eligible, so it is recommended to have various plans in advance.
3. Proceed with the contract
After deciding on a property based on the information related to the property, you will submit a property application in time for the property sale date. To avoid mistakes, you can fill out and submit the application with a realtor (a licensed real estate agent in Korea) in advance.
Once you’ve been matched with a home of your choice, you’ll need to approve it and make a pre-arranged down payment to finalize the contract.
You’ll pay the down payment by Bank Draft, and when the contract arrives, you’ll have about 10 days to review it, sign it, and the money will be released. If you find any discrepancies in the contract, you can ask your lawyer or real estate agent to amend it.
4. pre-inspection and transfer of home ownership
When you receive your Vancouver condo for sale and construction is complete, the developer will give you a period of time to do a pre-inspection. They will come to your home, inspect it for any defects, and notify the developer, who will then repair any defects. Once this process is finalized, you can pay the final amount and transfer ownership with your lawyer.
5. Cautions for Vancouver Sales
Prepare for taxes and other expenses
When choosing a pre-sale property in Vancouver, there are certain aspects that differ from those in other countries, requiring careful attention. One key difference is that when purchasing a newly built home, you must pay the Goods and Services Tax (GST) to the government. Unlike resale homes, which are exempt from GST, new home purchases are subject to a 5% GST on the purchase price.
Additionally, a Property Transfer Tax (PTT) is applied based on the purchase price of the home. The tax rates are as follows:
1% on the first $200,000 of the purchase price
2% on the portion between $200,000 and $2,000,000
3% on the portion between $2,000,000 and $3,000,000
An additional 2% on any amount exceeding $3,000,000
In some cases, such as first-time home purchases, exemptions may apply, so it is advisable to consult with a professional tax advisor for detailed information.
Furthermore, there are periods when foreign homeownership is restricted, making it essential to seek guidance from an expert before proceeding with a purchase. Note that the Property Transfer Tax also applies to resale homes.
You can estimate the Property Transfer Tax (PTT) using the simulation tool available on the following website (for British Columbia)
Simulate acquisition taxes
In addition to these taxes, legal fees may also apply, typically ranging from $1,000 to $2,000, depending on the lawyer. Some buyers prepare only for the purchase price itself and overlook these additional costs, which can lead to unexpected financial strain. Therefore, it is important to account for these expenses in advance.
On a positive note, there are no realtor fees for buyers in Canada. Realtor fees are covered by the seller, meaning buyers do not need to pay commission when purchasing a home. However, sellers are responsible for realtor fees when selling a property.
Possible variations in home completion timing
When you buy a Vancouver condo for sale, the builder will give you a completion date, which often doesn’t happen exactly on that date, so you may need to sell your existing home or talk to your landlord about your plans to move beforehand. You should always keep an eye on the construction company’s completion date and plan your move accordingly.
What to look out for when considering monopolization
If issues arise due to the previously mentioned considerations and you are unable to secure the funds for the final payment, you may need to resell the property quickly. In such cases, it is important to note that you cannot freely transfer your pre-sale contract. In most cases, you must obtain approval from the developer before proceeding with the sale.
If the market is good and the builder has sold most of the units they own, they’ll give you permission to resell them for a fee (usually disclosed when you receive the unit). But be careful, because if the builder doesn’t give you permission, you won’t be able to resell. If you can’t pay the balance, you may have to pay for other damages beyond just the deposit.
Also, unlike when you buy a home, you will have to pay realtor fees on the sale price, and depending on the contract, you may have to pay some GST.
Therefore, it’s important to check your financial capabilities, consult with a professional, and review the contract thoroughly before purchasing a home.
Closing remarks
We’ve outlined the process and what to look out for when buying a home in Vancouver. Buying a home is attractive because it allows you to lock in future value with a current investment, and you can buy a new home in a location of your choice. However, if you don’t do it right, you could end up running out of money, so it’s important to talk to a variety of experts before proceeding to ensure you get the home you want.