A presale in real estate means a buyer commits to a purchase contract before construction is either started or is not yet finished on a development – usually a condominium or townhome.
If the buyer then decides they no longer want to complete the transaction, they can often times, sell the presale contract to another buyer. This is known as a Presale Assignment. But why would you want to buy a presale assignment?
You Get A New Home
Buying an Assignment on a presale home means you’re getting a brand-new home that no one else has ever lived in. The finishes, fixtures and appliances are all new, with no wear and tear and the potential for deficiencies and breakdowns is minimal.
You’ll Have New Home Warranty
New homes construction comes with a 2-5-10 year warranty in BC. This insurance protects new homes from construction defects including labor, materials and structural problems.
The 2-year materials and labor warranty covers defects for materials and labor supplied by various trades such as electrical, plumbing, heating, air conditioning and more. It also deals with issues relating to exterior cladding, windows, doors and caulking.
The 5-year warranty relates to the building envelope. This means anything that separates the inside from the exterior including exterior walls, the roof, the foundation and again, windows and doors.
The 10-year warranty deals with structural defects that have the potential to negatively affect the use of the home for residential living. If you’re considering buying a presale assignment, make sure you understand the 2-5-10 year warranty before taking on the Assignment. Speak with an experienced professional to get answers to any questions before you commit.
You Can Choose Interior Finishes
Depending on the stage of construction the property is at when you purchase the Presale Assignment, you may have the opportunity to select the interior finishes. Customizing the home to your personal preferences and conveniences is always exciting. Cabinets, flooring, counter tops, appliances, paint and more can all be done to your specifications (within the
parameters offered).
You Can Same Money
Since real estate values generally increase over time, buying a Presale Assignment can be cheaper than waiting to buy once the property is complete.
The Property Will Likely Be Higher Once Construction Is Complete
Buying a Presale Assignment means you’ll likely make a profit when the time comes to sell the home in the future since real estate tends to appreciate over time in most markets.
Less Competition
The pool of buyers for presale assignments is much lower than the traditional pool of buyers in a real estate market which means you’ll have less competition. And less competition means there’s less chance of a bidding war developing, resulting from multiple offers on the presale assignment.
Less Likelihood of Delays
Presales comes with the risk of construction delays caused by a variety of factors. By buying a Presale Assignment, it’s more likely construction has already commenced and the time to completion of the property or development is closer than if you originally purchase the presale unit directly from the developer.
If you’re considering buying a Presale Assignment, make sure you read and fully understand the original purchase contract between the original buyer and the developer before signing on the dotted line. Speak with your legal and financial experts to ensure you understand any legal and financial implications that may affect you.
Once you have a clear picture, you can sit back and wait for your new home to be completed!
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