Feb 10, 2025
If you’re considering buying a preconstruction condo in Vancouver, there are some crucial realities you need to be aware of before signing that contract. After selling over 200 preconstruction units, I’ve seen these issues time and time again. Yet, they are rarely discussed. Here are the four ugly truths about preconstruction condos that every homebuyer and investor must know.
1. Marketing Materials Are Not Legally Binding
When developers present floor plans, brochures, websites, and project descriptions, these materials are purely for marketing purposes. Many buyers assume that if a floor plan states 500 square feet, that’s exactly what they will get. However, in the developer’s disclosure statement and contract, these materials are classified as “marketing material” and are not legally enforceable.
Even if a sales representative at the presentation center makes verbal promises, those statements do not hold up legally. It is your responsibility, along with your agent and lawyer, to thoroughly review the contract and disclosure statement to confirm what you are actually purchasing.
2. Your Unit’s Final Size Can Be Smaller Than Advertised
Even if you review the strata plan and believe you are purchasing a unit that is 490 square feet, the final size on completion could be smaller due to a clause in every pre-sale contract called the Variation Clause. This clause allows the developer to deliver a unit that is smaller or larger within a certain percentage range—typically between 3% to 11%.
For example, if the variation clause is 6% on a 500-square-foot unit, the developer can legally deliver a unit as small as 470 square feet without owing you any compensation. Similarly, if the unit turns out larger, the developer cannot charge you extra.
To protect yourself, ensure you measure your unit upon completion and review the final strata plan, which will contain the exact square footage. You have seven days after receiving the final strata plan to terminate the contract if the unit size is unacceptable.
3. Developers Control Pricing and Can Increase It Anytime
Unlike resale properties, where market comparables influence pricing, developers have full control over pricing in preconstruction projects. They can raise prices as demand increases, sometimes significantly.
For instance, I’ve seen developers increase unit prices by $80,000 to $100,000 in just two weeks because of strong demand. Once you sign a contract and pay your deposit, the price is locked in—you cannot renegotiate later if the market shifts.
Additionally, your unit must appraise at the purchase price upon completion. If you overpay and the market doesn’t appreciate accordingly, the bank may appraise your property lower, leaving you responsible for making up the difference. This is why it’s crucial to work with a knowledgeable pre-sale agent who understands fair market value.
4. Early Completion Can Be More Problematic Than Delays
Most buyers worry about construction delays, but what’s even more concerning is when a project completes ahead of schedule. In 2024, I’ve seen projects finish six months to a year early, which can be a major financial setback for buyers.
Early completion means:
You need to come up with your remaining funds sooner than expected.
You may not have had enough time for market appreciation to offset your purchase price.
You could be forced to take on a mortgage earlier than planned.
To avoid surprises, visit the construction site periodically and assess the building’s progress. Ideally, a pre-sale investment should take 2.5 to 3 years to complete, allowing time for market appreciation.
How to Protect Yourself in Preconstruction Purchases
Many buyers fall into these traps because they don’t conduct proper due diligence or work with an experienced pre-sale agent. Not all real estate agents specialize in pre-sales, and working with someone unfamiliar with the nuances of preconstruction can cost you tens of thousands of dollars.
If you’re considering a pre-sale investment, make sure you:
Read the disclosure statement and contract carefully.
Review the variation clause to understand potential size discrepancies.
Track pricing trends and avoid overpaying.
Monitor construction timelines to anticipate completion dates.
Preconstruction condos can be great investments if you go in fully informed. If you have any questions or need expert guidance, I’d love to help. Feel free to book a call using the link below, and let’s discuss how to make your pre-sale investment a success.
