Buying a Pre-Sale Home

With pre-sales if you find a place and write an offer the process is very much similar to buying an existing property except the paperwork and the terms in the contract are a bit different.

All pre-sale contracts come with a Recission Period of 7 days. This is like the Subject to Financing clause in the purchase of an existing home. Basically it gives you 7 days to change your mind for any reason so we treat this as the period we have to 100% secure the financing so you know you have the mortgage.

We get the financing all in place and set the completion date out for 120-days, as far as we can. At the end of the 120-days if we need more time to completion we update the credit checks, provide new pay stubs and get the bank to extend it out another 120-days at the rate they’re offering at the time.

The only way to get a rate that is held and guaranteed to the end of the construction process would be to go direct to the bank that the developer used to fund the construction process. That bank has a vested interest in the units being sold so they will hold the rate for potential buyers but at a MUCH higher rate than what is competitive.

There are also a couple of banks that have 6-month and 12-month rate hold periods but their rates are also much higher than the most competitive on the market so most times it really isn’t worth it.

One other consideration to entering a contract of purchase on a new build is to ensure the contract has the option to “Assign” the contract before completion. This way if for some reason you are unable to secure the financing to buy the property when complete you have the ability to “sell” the contract to another potential buyer and get your deposit money back.

If there is a lengthy time between when you enter the contract and the completion date on construction you could also see an increase in value and possibly share in the appreciated value.

If this is a purchase you are considering I recommend working with a realtor who is knowledgeable with these types of transactions and you may even want to get some advice from a real estate lawyer as to your options.

If you’re looking at buying a pre-sale, get in touch today! Just looking, but want to know where you stand? Reach out for a free qualification and personalized game plan. Your dream home is just one click away

Kristin Woolard