Frequent Asked Question

Presale

1. What Does Presale (or Pre-sale) mean in Real Estate?

The term pre-sale or presale means a home that is available for purchase by a buyer before the home is ready to move in. The home can be any type of properties such as high rise concrete condo, low rise wood-frame apartment, and townhouse. Most often, it’s available to buy even before construction has started, and sometimes it’s already under construction. The buyer cannot move to the new home at the time of purchase. In general, when the building is built and ready for the buyers to move in, the same “home” will be considered as “New Home” instead of “Pre-sale”.

In the early 1990s, this concept of presale was introduced to Vancouver. This new process to buy real estate has reduced potential risk and capital requirements for building developers. From a buyer perspective, the buyers can have the opportunity to get in early and may have better selection (at the earliest stage or VIP Access). In addition, the buyers may invest in the potential capital appreciation prior to the completion of the building. The building completion can be ranging from 1 year to up to 3 years later depends on the stages of pre-sales and type of building (Concrete or wood frame). Since then, there are more and more major property developers in the Greater Vancouver area offer pre-sales on various type of new residential developments.

2. What are Presales or Pre-construction Condos with VIP access?

The presales or pre-construction Condos is a stage in the sales cycle that offers the best pricing to VIP agents and their clients. The clients usually have more choice to select because it is in the earlier stage of presales development projects. During this time, clients can choose the suites they want. Their agents can arrange the preview with their clients and can book an appointment to purchase a selected condo. (Please note that it is not all VIP access events work the same way. Each developer has their own style for preview and presales process.)

Assignment

1. What is an assignment?

In general, an assignment (in real estate term) is a sale of a contract or right to acquire the property. An assignment is a transaction whereby the original purchaser (the “Assignor”) of a property sells, and thereby transfers, their interest, and obligations under the original contract to a new purchaser (the “Assignee”). The Assignee will generally assume all of the Assignor’s duties and obligations under the original Agreement of Purchase and Sale. These rights and obligations are stated in the original Agreement of Purchase and Sale and include terms such as interest payments, taxes and maintenance fees during interim occupancy. Upon completion, the Assignee is granted the title to the real property and will incur all final closing costs.

a) Assignor: An Assignor is the original buyer of the unit from the Builder/Developer.
b) Assignee: An Assignee is the buyer of the Agreement of Purchase and Sale from the Assignor.

2. Can an Agreement of Purchase and Sale, involving any type of real estate transaction, be assigned?

Under normal circumstances, any Agreement of Purchase and Sale can be assigned providing that that agreement doesn’t prohibit assignments.

3. Is an assignment legal?

An assignment is legally permitted unless otherwise expressly prohibited in writing in the original Agreement of Purchase and Sale. An assignment fee may be charged by the developer and is normally a cost borne by the Assignor (the original purchaser).

4. Is it necessary to get permission from the Seller/Developer to assign the Agreement of Purchase and Sale?

You need to consult the Agreement of Purchase and Sale. Generally, Developers will not permit assignments without the Developer’s consent, therefore every situation requires consultation with the Developer and your lawyer. Please note, there have been incidents where an unauthorized assignment has resulted in the termination of the original agreement and the withholding of the deposit.

5. Will the Assignor’s or Assignee’s lawyer’s services be adequate?

It is essential that the Assignor and Assignee each retain a lawyer with expertise in this area of real estate.

6. Can the Assignor’s REALTOR® market on the MLS?

It all depends on whether the developer permits advertising of the assignment. Refer to the original Agreement of Purchase and Sale to see if there are any prohibitions against listing the assignment or consult the Developer (Most Agreements of Purchase and Sale contain such a prohibition).

How long will it take to rent out my property?

There is no simple answer. We will do a detailed analysis of the rental market, factoring in the condition, location, and amenities of your property along with the current rental market. According to our experience, the tenant placement usually takes from 1 – 6 weeks depends on the neighborhood, price, and the condition of the property.

We usually obtain feedback from the prospective tenant after their viewing of your property, and discuss with you to adjust any marketing strategy for making sure the property will be rented out successfully with your best interest.

7. What if the construction, occupancy, closing, or unit transfer date is delayed?

In the event of a delay, the assignment is still valid: the Assignee has agreed to take on their agreement and all responsibilities involved in it.

8. What if the Assignee doesn’t close?

This is no different than in any sale. The Assignor in most cases is not released from the obligations under the Agreement of Purchase and Sale. Accordingly, both the Assignor and Assignee will be liable.

9. What is the cost of assigning an Agreement of Purchase and Sale?

If the Developer consents to an assignment, there will generally be an administration fee and legal fees. These fees will vary. Consult the original Agreement of Purchase and Sale and the Developer.

10. When does the Assignor get their money?

In an assignment, depending on the closing date and the terms of the assignment agreement that Assignor and Assignee agreed on, the Assignor is usually paid when:

a) the Assignee gets possession or occupancy or,
b) when the original seller approves the assignment, if applicable or,
c) when the Assignee obtains the legal title.

11. Who gets the interest, if any, payable by the Builder on the original deposits?

The interest is likely to be paid to the Assignor, unless otherwise specified.

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NewHomePros.ca
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NewHomePros.ca@gmail.com

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