Blog by Patricia Houlihan - Personal Real Estate Corporation

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The risks of presale buying

I have always discouraged my clients from buying presale condos, unless they are investors buying to flip and aware of the risks. The reason behind this recommendation is based primarily on experiences some of my clients have had after buying presale (on another note-why do they call it presale-its preconstruction but not presale-did the media make that up?).  Some buyers love the show home and are unpleasantly surprised when they see that the suite they get (with full walls not half walls for example) is not as spacious or bright as expected or has a terrible outlook. One client bought in a lovely building and when they moved in, found that their great downtown suite looked out on a great big grey wall…..so there are a few reasons to reconsider when considering buying “presale”.  And now we have another one with the recent court decision on a Coquitlam project.

 

While it may be the first time in recent memory that we have heard of this happening in the lower mainland, it is definitely not the first time it has happened….and frankly it is surprising to me that, with the rising costs of construction and delays in getting trades and completing projects, it has not been happening more often.  I am talking about the recent Riverbend (Coquitlam) disaster from the point of view of many home buyers (a lot of them first time home buyers) who thought they had done very well buying into a lovely neighbourhood for what now looks like a very good price.  Unfortunately, while they did on paper make a great real estate investment, the reality is that they will never realize on the equity they should now have.  In fact, many of them will never live in the dream homes that they even chose the finishings for. In order for them to move into their homes, these presale buyers must now come up with the difference between the price they contracted to buy for and the current market value.  This is something that many of them cannot do.

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