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Condo developer demands 15% more money from buyers after project hits delays


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#1 rambaldi

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Posted 20 February 2018 - 07:18 PM

Any suggestions on how to avoid this situation?

 

Condo developer demands 15% more money from buyers after New Westminster project hits delays
'I do not have the money,' says one buyer who was asked to pay an additional $40,000

Lien Yeung · CBC News ·  Posted: Feb 20, 2018 11:46 AM PT

http://www.cbc.ca/ne...elays-1.4542538


Edited by rambaldi, 20 February 2018 - 09:40 PM.


#2 LJ

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Posted 20 February 2018 - 07:22 PM

Just call it an "unknown factors surcharge", ferries and airlines do it all the time because of fuel costs.


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#3 Sparky

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Posted 20 February 2018 - 08:42 PM

I'm not sure you can avoid anything on a presale. You can certainly perform due diligence on the entity that you are giving your money to.

Some people have done well on presales. Others not so much. Was it the Bamboo years ago on Yates Street where the developer threw in the towel before the building came out of the ground?

The only person that I don't mind giving me a piece of paper in exchange for my money is a bank teller.

#4 Mike K.

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Posted 20 February 2018 - 09:01 PM

Right, Bamboo was a project where it never even began. The Union is in its place now.

Best thing to do at this point is to take your deposit and walk.

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#5 MarkoJ

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Posted 20 February 2018 - 10:12 PM

Any suggestions on how to avoid this situation?

 

Condo developer demands 15% more money from buyers after New Westminster project hits delays
'I do not have the money,' says one buyer who was asked to pay an additional $40,000

Lien Yeung · CBC News ·  Posted: Feb 20, 2018 11:46 AM PT

http://www.cbc.ca/ne...elays-1.4542538

 

I've never heard of this? Not a lawyer but I can't see how the developer can do this? Maybe they purposely delayed the project beyond the "outside date." Tough to say but key is to buy from a reputable developer or just buy a completed (non pre-sale) from a non-reputable developer as then at least you know the product is finished and you can assess it.


Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#6 MarkoJ

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Posted 20 February 2018 - 10:12 PM

Right, Bamboo was a project where it never even began. The Union is in its place now.

Best thing to do at this point is to take your deposit and walk.

 

Problem is prices went up 40%-50% in the last two years. The developer would be jumping up and down for joy if everyone took their deposit and walked.


Edited by MarkoJ, 20 February 2018 - 10:29 PM.

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Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#7 grantpalin

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Posted 20 February 2018 - 10:53 PM

I'd personally have a hard time putting down money for pre-builds because it ties up a significant amount of funds in a promise. Look what that's come to here, and I've heard from others some similar stories. I'd much rather go for something I can actually walk into and inspect first.



#8 MarkoJ

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Posted 21 February 2018 - 08:33 AM

I'd personally have a hard time putting down money for pre-builds because it ties up a significant amount of funds in a promise. Look what that's come to here, and I've heard from others some similar stories. I'd much rather go for something I can actually walk into and inspect first.

 

Most people refuse to buy pre-sale. That is where I step in. I am pretty good at assessing what people will pay a premium for on completion once they can actually walk into it and I buy that at a pre-sale discount to market. For example, I bought a unit at Era or 215k and sold it for 363k a couple of years later. The market did go up substantially but even on completion in a flat market the unit was worth around 240k-245k.

 

As for similar stories they don't really exist in Victoria. Unless you are buying a pre-sale wood framed condo in Langford by someone you've never heard of before that odds are very high you'll get a solid finish product. Most developers in Victoria had a solid track record.

 

Made a video on this topic (why people don't buy pre-sales) recently -> 

 

https://youtu.be/NojLdKDYdRQ


Edited by MarkoJ, 21 February 2018 - 08:35 AM.

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Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#9 rjag

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Posted 21 February 2018 - 08:48 AM

Isnt it a requirement for construction financing on large projects that funds will be released at a certain level of presales? Seem to remember a few projects collapsing because the bank wouldnt release the funds due to low presale numbers



#10 jonny

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Posted 21 February 2018 - 08:52 AM

I bought a pre sale condo. It was one of the best things I have ever done. The deposit funds are held in trust with a lawyer. It's not like your deposit goes to the developer and is at any risk of being lost. 

 

The builder was very reputable and well known around town. As Marko says, it's not like there are many fly by night operators around. 


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#11 MarkoJ

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Posted 21 February 2018 - 09:43 AM

Isnt it a requirement for construction financing on large projects that funds will be released at a certain level of presales? Seem to remember a few projects collapsing because the bank wouldnt release the funds due to low presale numbers

 

This happens from time to time......failure to launch in the first place. The New Westminister developer has run into trouble as he or she pre-sold the development and then construction costs took off.

 

I was worried failure to launch was going to happen at the Janion but the developer delivered.


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Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#12 Rob Randall

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Posted 21 February 2018 - 10:54 AM

Reminds me of something aastra said here once (paraphrased), that before a construction boom is a bad time to build, so is during a boom and post-boom is also a bad time to build.


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#13 Sparky

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Posted 21 February 2018 - 11:25 AM

Real estate salespersons sometimes use a similar adage. (except Marko of course)

 

It's a great time to buy..... and a good time to sell. 



#14 nerka

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Posted 22 February 2018 - 12:06 AM

Real estate salespersons sometimes use a similar adage. (except Marko of course)

 

It's a great time to buy..... and a good time to sell. 

"There's never been a better time to buy or sell Victoria real estate"



#15 tjv

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Posted 22 February 2018 - 07:43 AM

Reminds me of something aastra said here once (paraphrased), that before a construction boom is a bad time to build, so is during a boom and post-boom is also a bad time to build.

For traditional construction delivery model, building just before a construction boom is a great time to build as you get to lock in your pricing before the boom takes off and the contractor is locked in regardless of material and labor increases.  The developer gets to enjoy rising prices

 

For the exact opposite reasons, just before the end of a construction boom is a bad time to build for the developer as they are paying high prices for everything and the contractor can often negotiate some deals from suppliers (not often) from their suppliers and definitely cut labour rates as the recession gets worse

 

The magic question is when does the boom happen?  No one knows so its a crap shoot.  I'm still searching for any economic signs of when this boom might slow and before the NDP budget I haven't found any signs.  I do wonder what their budget will do to construction activity as the boom is concentrated in the residential sector.  


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#16 Rob Randall

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Posted 22 February 2018 - 07:57 AM

^Not only that you have the overlapping and leapfrogging phenomena of residential vs. commercial.


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#17 Mike K.

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Posted 22 February 2018 - 09:21 AM

Typically 25-30% of residences in Victoria are purchased by:

 

1) foreign buyers (typically 5% of that 25-30%)

2) Canadian (non-BC) residents purchasing a vacation home

3) Canadian (non-BC) residents investing in the Victoria market

4) Canadian (non-BC) residents purchasing a future retirement home

5) BC residents not residing full-time in Victoria purchasing a vacation home

6) BC residents not residing full-time in Victoria purchasing an investment

7) BC residents not residing full-time in Victoria purchasing a future retirement home

 

The above buyers are made up of people who either a) do not spend 100% of their time in Victoria but do visit and use their property, b) who never spend time in Victoria (the unit is 100% an investment rental) or never use the property, or c) who either spend limited amounts of time or zero time in Victoria but plan to retire here full-time in the near or medium term.

 

New rental regulations have already impacted all categories on that list as purchasers may no longer offer their unit for rent with a fixed term, unless they a) plan to move into the unit or b) the unit is owned by an "individual" and that individual is moving into the unit even on a short term basis.** This means some units may no longer be purchased as would-be retirement homes, vacation homes or purely for investment reasons.

 

AirBnB regulations have also hurt the short-term rental opportunity the above buyers were counting on, which means, again, some units may not be purchased if they cannot be rented out on a purely short-term basis.

 

And now taxes will come in and further dampen the drive to purchase a home in Victoria. This will particularly hit a) retirees who will be faced with a significant tax hit on their future home and b) renters who, if the landlord wishes to maintain the unit as a full-time rental or a rental prior to retiring in Victoria, will now be paying a higher rent in order to cover the landlord's taxes.

 

The above 25-30% of the buyer pool is a massive component of a developer's financial backing. If that pool is reduced it could literally spell the end of some projects, which means housing for the remaining 70% of local of purchasers won't be built, which means housing costs will climb.

 

** We're still clarifying what the wording from the government actually means in that regard.


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#18 lanforod

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Posted 22 February 2018 - 10:52 AM

As far as I can tell, the standard purchase of a second/third etc. condo/house for investment purchases still works just fine, so long as you rent it out long term and do your due diligence when finding tenants. That scenario is probably the most common one for investment purchases.



#19 MarkoJ

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Posted 22 February 2018 - 12:57 PM

For traditional construction delivery model, building just before a construction boom is a great time to build as you get to lock in your pricing before the boom takes off and the contractor is locked in regardless of material and labor increases.  The developer gets to enjoy rising prices

 

Unless you pre-sell everything like Bosa did at the Encore. They "left" in the neighbourhood of $20 to $30 million on the table.


Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2018 | Fair Realty

www.MarkoJuras.com - MLS® from $899 and $1,000 cash back for buyers | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#20 tjv

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Posted 22 February 2018 - 03:16 PM

^lol of all companies they should have known better



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