How to Buy or Sell a  Pre Construction Home in Calgary

Housing starts in Calgary have been on the rise over the past years. In 2022, 17,306 housing starts were recorded, and the city broke the 17,000 threshold only twice before - in 2014, with 17,131 and in 2006, with 17,041.

If you are in the market for buying or selling a new home you built and need to know what the process is like, this blog is for you.

Buying a Home from a Builder

If you are planning on buying a home from a builder, there are many incredible builders you can choose from. Follow the steps below to ensure you are working with the right people and avoid getting into a situation you can't escape.

Meet with your real estate agent before setting a meeting with the builder if you want your agent to represent you and be a part of the transaction. Having certainty that an agent is with you to represent you is crucial when it comes to figuring out everything, especially on the legal side of the contract or the escalation clauses.

Sales individuals at the showhome work for the builder, so make sure you have representation to walk you through the process. However, some builders are strict about partnering with other agents, so proper coordination must be in place to avoid inconvenience.

Buying a New Home on MLS

When you check MLS and come across brand new, fully finished homes that have never been lived in, you first need to find out who the seller is. Is it the homeowner, or is it the builder?

Sometimes builders put their properties on the MLS and sell spec homes that have never been lived in. If a homeowner is selling a recently built property, you can negotiate with the seller. But, if it's a builder, it could be harder to negotiate.

If you want to negotiate with a builder on a spec home, sometimes asking for inclusions, like things they can add to the property that will not break the bank for them, will be a good bargain. When it comes to buying from a seller, it is like buying a resale property where you can negotiate about the price and possession.

Anything you see online on the MLS must have GST included in the price if the builder is still the owner of the home and selling it. These listings can be comparable to properties with the same value listed by a homeowner.

The last thing to note is warranties. You should at least have an Alberta new home warranty, which can cover five or ten years. Sometimes there are home warranties from builders. Typically the builder will come back to the house around a one-year mark and fix any issues that are allowed to be fixed.

Ensure the warranty that the builder or the new home association is offering on this home can be transferred to your name and is part of your contract. This will give you the security that your home will be fixed if anything happens.

How to Sell your Pre-construction Home

Whether you intentionally bought a property with the intention of selling, or you purchased a home, and you cannot move into it, or maybe you moved in and it's not the right fit for you, selling your pre-construction home can be tricky.

You will have multiple competitors when it comes to positioning your pre-construction property. You will be going against builders' listings and resale homes.

Keep in mind that buyers choose based on emotions. You will miss out on potential buyers if you skip staging or any effort that can pull the heartstrings of a buyer.

Selling Assignments in Calgary

We reached out to several builders in the city and asked them how assignments work in Calgary. An assignment is a sales transaction where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer’s rights and obligations of the Agreement of Purchase and Sale before the original buyer closes on the property. The assignee is the one who ultimately completes the deal with the seller. In other words, an assignment clause allows the buyer of a home to sell the place before they take possession of it.

Pretty much every builder said it's no good. Interestingly, one of the builders said their company recently added a clause stating that assignments could be allowed only if the builder approves it into contracts. But when we asked about the chances they would allow assignments, she said the management told her never!

Many buyers from out of town intentionally bought a new build in hopes of assigning the contract to someone else and never actually wanting to take possession, but assignments are not a thing in Calgary. It is much more prevalent in Toronto and Vancouver with their condo markets.

With assignments off the table, you will need to take possession of your property. That means getting a mortgage, paying cash, and having the title transferred to you to make a sale happen.

Once you have secured the ownership of the property, the first thing you need to sell it is a pre-marketing strategy. A solid and strong “coming soon” type marketing plan is vital for the right buyers to see your property before it hits the MLS system.

Once your home is on the MLS system, pricing is very important because you are competing against builders and other resale properties, so buyers expect some incredible opportunities when they come to your property.

Buyers are looking at new builds and are emotionally driven by the beautiful show homes they saw. And then, on the other side, they are looking at resale properties where they can negotiate better. There might only be a little negotiation room that buyers can have right now because of the supply-demand problems that Calgary currently has.

But that doesn't negate that you must be prepared and have your property set up with staging, incredible photos and videos. You have to do all the right things to be able to get the most amount of money that the market is going to give you. And the most significant thing with that is having an extensive reach to the right amount of buyers willing to write on your property.

Working on building and selling new homes is exciting. There is a huge opportunity in it, but the reality is you still have to be able to know your numbers.

Download the latest market report produced by our team to learn more about the market and what is happening right now so you can make informed decisions. Or email us at info@chamberlaingroup.ca if you have any questions or need help selling your home.