Once upon a time, the Pre-Sale market in Greater Vancouver was an excellent way to afford a brand new condominium. In recent times, it has felt more like a lottery.
With so much pent-up demand due to the severe shortage of condo supply across the Lower Mainland, developers have created systems that leave prospective buyers with little control in their attempts to buy a new home. In a previous era, these same developers incentivized home buyers to consider purchasing not yet built product by establishing advantageous layaway payment plans, offering discounts, and throwing elaborate events to bring the public in. Fast forward to the summer of 2017, you are considered lucky to score a property in a 300 suite new build, let alone your most desired choice of home.
So how does this process look now?
The billboards and website arrive first, announcing a new project coming to market some months ahead. This alone creates the initial wave of hype and sends real estate agents into a frenzy to be the first to notify their clients and members of the public. By promising early access to the project, it becomes a race for agents to motivate numerous clients. Developers will grant priority access to agents with multiple clients.
Previews begin. First, and most secretly, the developer has their friends and family through the doors to see the freshly created sales centre. During this phase, it is not uncommon for the developer to reserve several homes for their most preferred circle. As previews progress, the doors open for REALTORS® and their clients to check out the latest offering. This is usually done by appointment with the agents who have done prior deals with the developer getting in before their colleagues. Finally, the public has a chance to view the sales centre.
The sales process mimics the preview order. The pecking order continues allowing family and friends to go first, followed by the real estate agents who are bringing in a bus load of clients or have established a relationship with the developer on past projects. This explains why members of the public sometimes feels like the best units are gone before even having a chance to see a new development.
From there, the rest of the selling commences in one of two ways. Option one includes a first come, first serve line-up. While this is the most transparent method, it can often involve clients and REALTORS® spending 4-5 days outside in unfriendly weather conditions to have a chance at landing a home. As well, developers do not take any responsibility for the lineup process. As a result, it is not unheard of for people to pay others to line up as placeholders. In worst case scenarios, the competitive nature of some in combination with physiological exhaustion has even led to fights breaking out on occasion. The second method truly feels like a lottery. The developer enables prospective buyers and agents to pick up a 'Suite Request Form'. This is a document where a buyer's top choices are written. They write down their top three picks of floor plan and level, with only a very general price range to help estimate a potential specific cost. Once this is handed in, you can expect a minimum of a two week wait time before hearing back.
Finally, the results come out. Following the Suite Request Form system, the developer will piece together the puzzle of which buyer gets which home. Once they have completed this, they will call back whoever was lucky enough to get selected and ask if they want the home at a given price. If the answer is no, the next person in line is called.
Although these systems don't seem entirely unfair, things become problematic when astronomical demand is coupled with very limited supply. Developments that launched over the past 3-6 months (Spring & Summer of 2017) have seen upwards of 1,500 suite requests despite having a maximum of only 300 homes to offer. With as few as one or two projects launching at a time, demand continues to build up and results in subsequent projects being bought up immediately.
All in all, what this creates is a feeling of randomness for those hoping to buy into a Pre-Sale. After filling out your Suite Request Form, the property purchase is essentially out of your hands and becomes a luck of the draw scenario. Unfortunately, unlike buying a lottery ticket, buying a home is a much more significant decision that people opt to make...
Wondering how you can get in and improve your odds at the next Pre-Sale? Feel free to email me at firstname.lastname@example.org.
All the best,