“Put. That coffee. Down. Coffee’s for closers only.” –Blake, in David Mamet’s Glengarry Glen Ross
If coffee’s for closers only, specuvestors better get used to tea. Across Metro Vancouver, condo flippers are flipping builders the bird by refusing to complete on their pre-sales. At least seven would-be buyers have pulled the chute at Surrey’s Morgan Heights, forcing the developer to sue.
In the boom years, condo assignments were the golden ticket. Rising prices and high demand made reselling pre-sales a breeze. All it took to buy pre-sale was a small deposit. Often times buyers would take on pre-sales with no intention of buying the place. By the time the condo was ready for move-in, their pre-sale contract would’ve been sold, at a profit, to someone else.
The game-changer for flipping is when prices decline. This scenario requires the flipper to do the unthinkable — they actually have to buy their condo. In a choice between closing the deal and walking away, many buyers are hitting the bricks.
Morgan Heights is just the beginning. Expect 2009 to be the Year of the Pre-Sale Deadbeat. And the best will come last: Woodwards is scheduled to complete in December. Lawyers, be ready.