How to buy a pre-sale house? Advantages and disadvantages, regulatory disputes, builders' choice, see it once!

預售屋優缺點cover
Share on facebook
Share on twitter
Share on email
Want to buy a pre-sale home but don't know where to start? What should be paid attention to when appreciating sample houses, signing contracts and making payments? This article will compare the advantages and disadvantages of pre-sale houses, new existing houses and second-hand houses, and analyze common regulatory pitfalls and how to deal with pre-sale house sales disputes.

1. What is a pre-sale house?

Pre-sale house According to the definition of the "Real Estate Brokerage Management Regulations", pre-sale house refers to "a building that has a construction license and has not been completed and the transaction object is a building that will be completed in the future." Pre-sale, the house cannot be handed over until the construction project is completed, and the buyer can obtain the ownership of the house.

Further reading:What is mediation money? Can I go back and return it? Breaking through the traps of 5 mediation money and letter of offer


2. Analysis of the advantages and disadvantages of pre-sale housing sales

Compared with newly established houses and second-hand houses, pre-sale houses are the most flexible in terms of room type selection and planning, and the economic pressure is relatively light, but at the same time, some buyers worry that pre-sale houses cannot check the physical layout and housing conditions, and cannot move in in time and other shortcomings.

(one)Advantages of buying a pre-sale home

  • Self-prepared funds can be paid in installments
  • high loan ratio
  • The house is brand new and there are many room types to choose from
  • Kekebian interior decoration

1.Self-prepared funds can be paid in installments

The self-prepared payment for the pre-sale house is about 20% of the total transaction price, but it does not have to be paid in one lump sum, and most of them will be paid in two installments, which is relatively easy for buyers with little funds on hand.

The payment stage of self-provided funds for pre-sale houses

  • From the signing to the start of work: the total price of the deposit, signing fee and start-up payment is about 10%.
  • From start to finish: the total payment for the project is about 5%.
  • House handover: After the house handover inspection, pay the house handover retention fee 5%.

2.high loan ratio

The pre-sale house loan is often negotiated by the builder with the cooperating bank with the whole construction project. In addition, the value-added property of the pre-sale house itself is good, so the bank’s willingness to lend is usually high, and the loan ratio can usually be 7.5- 80%.

3. The age of the house is brand new, and there are many room types to choose from

Pre-sale houses can give buyers more opportunities to choose floors, room types, and orientations, and it is easier to find ideal houses. The houses with the best conditions in the same construction project are usually purchased during the pre-sale stage.

4.Customer change interior decoration

Because the pre-sale house has not yet been completed, there is still room for customers to change the interior design, which is commonly known as "customer change", which can help the buyer save a lot of decoration costs.

The range of customer changes for pre-sale houses may include

  • Partition pattern: such as increasing or reducing partition walls.
  • Water and electricity configuration: such as adding sockets or weak current systems.
  • Building materials and equipment, etc.: such as changing the floor material, not installing room doors, etc.

However, such as shared pipelines, load-bearing wall columns and other projects that may affect the safety of the overall building structure are not allowed to be changed by customers. Therefore, it is usually impossible to move kitchens, toilets, balconies, or increase or decrease external doors and windows through customer changes.

(two)Disadvantages of buying a pre-sale home

  • Can't check in immediately
  • Unable to survey the actual housing conditions

1.Can't check in immediately

Pre-construction houses usually need to wait for 2 to 3 years before they can be handed over. The higher the floor and the more complicated the details, the longer the construction period will be. It is not suitable for buyers who have urgent occupancy needs.

The following risks may be hidden during the construction period

  • Unstable quality
    If there is a shortage of labor, material shortages or price increases during construction, a small number of builders will choose to replace low-quality materials in order to balance costs, or deliberately rush to finish the work hastily.

  • accident presale
    If an industrial safety accident occurs during the construction period, it is likely to cause the house to become an "accident house", which will make buyers who would care about it reluctant to move in, and will also cause a sharp drop in the value and resale of the house.

2.Unable to survey the actual housing conditions

The pre-sale house can only understand the house condition from the floor plan, schematic diagram, street view model, and at most can only view the sample house, but after all, it is impossible to personally inspect the actual house to be purchased, and it may not be discovered until the time of delivery.

Look at the sample house and pay attention to these things

  • Walls and Interior Space
    The thickness of the partition wall will affect the size of the interior space. The sample house has been decorated, and the wall thickness may not be the same as that of the existing house, and some partition walls may be knocked down to expand the space, so special attention should be paid when viewing the house.

  • embedded device
    Many sample houses have been equipped with cabinet walls, dry and wet separation partitions, gas stoves and range hoods. Once these devices are embedded, they are not easy to remove. Whether they will also appear in existing houses depends on the purchaser and the builder or consignment The industry shall confirm item by item.

  • furniture
    Some construction projects will include furniture such as lamps, air conditioners, electronic locks, and monitoring systems. It is also recommended to inquire about whether the brand, style, and quantity of these furniture are the same as those shown in the pre-sale house.
  • House-elevator ratio and vehicle flow line
    How many people in a building share an elevator? How many people share a parking lot entrance and exit? These two issues will affect the waiting time of residents when they commute, but because pre-sale houses cannot actually feel the congestion of people and vehicles, it can only be estimated from the distribution of numbers.

3. What should be paid attention to when signing a pre-sale house contract?

Pre-sale house disputes may cause huge losses to both buyers and sellers. Even if they are resolved in the end, it is difficult to guarantee that the damages will be fully compensated, so be sure to sign contracts carefully. The following refers to "Materials that should not be recorded in the finalized pre-sale house sales contract" to sort out the 10 must-see points for your reference before signing a pre-sale house contract.

  1. It is necessary to confirm that the construction project has applied for a construction license.
  2. There is no need to pay a deposit to review the contract.
  3. It shall not be stipulated that the buyer shall return the original copy of the sales contract.
  4. The seller is obliged to ensure the authenticity of the advertisement. The list of building materials and equipment, the floor plan and location diagram of the house and parking space recorded in the advertisement publicity materials constitute a part of the contract.Advertisements must not be agreed to be for informational purposes only.
  5. The retention payment for the delivery of the house is fixed at 5%, and it will be delivered after the buyer passes the house inspection.It is not possible to negotiate to reduce the retention payment for the house by itself.
  6. If there is an error in the total registered area of land and buildings, the builder should make up for the deficiency.If the error of the total area exceeds 3%, the buyer shall terminate the contract.
  7. The warranty period of the house is calculated from the delivery date, and the structural part is guaranteed for 15 years; the fixed building materials and equipment are guaranteed for 1 year.
  8. The relevant expenses of running water, electric power pipeline and gas internal pipeline shall be borne by the seller.
  9. Except for balconies, other ancillary buildings such as terraces, flower beds, and rain shelters cannot be priced in terms of ping according to the current law.
  10. The mezzanine area must obtain a building license to be included in the property rights, and terms such as "usable area", "beneficiary area" and "sales area" that are not clearly defined cannot be used.

If the buyer has doubts about the pre-sale house advertisements and the content of the contract, or suspects that the consignment agent is trying to evade regulations with words, he can entrust a lawyer to assist in reviewing the contract. As a builder, the lawyer can also directly customize the contract content and review the advertising materials, so that the construction project can create good sales results on the basis of compliance with regulations!


4. What are the common disputes in the sale of pre-sale houses?

When buying and selling a pre-sale house, in addition to assessing whether the house itself is satisfactory, you must also understand the laws and regulations, the content of the contract, and the evaluation of the builder, so as to reduce the risk of disputes. Even if you encounter disputes unfortunately, you can make adequate preparations to resolve them effectively in the first place .

(one)How to deal with unfinished buildings?

A small number of construction projects were forced to stop midway during the construction period due to various factors such as poor capital flow and non-compliance with laws and regulations, and even the builders went bankrupt. In the end, the construction could not be completed and became "unfinished buildings", causing great losses to both buyers and sellers.

1.Claiming overdue delivery of the house to terminate the contract

If the seller violates the deadline for starting construction and obtaining a license, the buyer may request termination of the contract. After the contract is terminated, the seller must return the buyer's investment in the real estate price, delay interest, and may be required to pay liquidated damages (the total price is 15% or the paid price is the upper limit).

2. Start the performance guarantee mechanism

Pre-sale houses must have a performance guarantee mechanism. If the "price return guarantee" is adopted, the buyer can recover all the invested price. Those who adopt other insurance performance systems have the opportunity to have other construction companies take over the unfinished construction project. If it is estimated that the construction cannot be continued, the buyer's loss must be compensated as much as possible through the debt collection process.

(two)Can I ask the buyer to increase the price before handing over the house?

A very small number of builders ask the buyer to increase the price after the completion of the project under various pretexts under the pretext of lack of work or rising material prices. Otherwise, they would rather terminate the contract and pay liquidated damages than hand over the house. However, this practice is actually controversial.

1.Check the termination clause

When rescinding the contract, you need to have the "right to terminate the contract", and this right to terminate the contract can come from the law or from the agreement of the parties. At present, the law does not give the construction company the statutory right to terminate the contract, but whether it has the "agreed right to terminate the contract", it is necessary to carefully check the various terms in the contract.

2.Consumer Protection Law Complaint

According to the Ministry of the Interior, when the builder breaches the contract and forces the buyer to increase the price to hand over the house, the county and city governments can investigate and order them to improve in accordance with Articles 33, 36, and 58 of the Consumer Protection Law. If the builder still does not improve, May be fined up to 1.5 million yuan, and punished on a case-by-case basis.

(three)What should I do if the project is not constructed as agreed?

If after the house is completed, it is found that the public facilities and building materials do not conform to the instructions of the seller when the house was purchased, or if the house is found to have defects, water leakage and other problems, it will cause considerable disputes.

1.Prevention

  • Advertisement audio and video, literature and publicity materials, and floor plans are properly preserved.
  • The content of the introduction of the recording consignment business, to avoid false and technical misleading.
  • The brands and specifications of public facilities, building materials and equipment are clearly recorded in the contract.
  • When checking in, entrust a professional house inspection agency to inspect the house for defects.

2.Remedy after the fact

  • Using the retention money for the delivery of the house as a bargaining chip, it is required to repair the defects before paying.
  • Through negotiation or litigation, request to terminate the contract or reduce the price according to the degree of defect.

In addition to being liable for breach of contract, false pre-sale advertisements may also be punished by the fair. The upper limit of the first fine is as high as 25 million yuan, and the penalty can be repeated. Therefore, when the builder entrusts the construction project to the consignment company, it also needs to accurately communicate the advertising materials and sales methods, so as to avoid the risk of false advertising.

(4) Contract renewal is prohibited for pre-sale houses! How to avoid becoming a guillotine?

Although the self-provided funds for the pre-sale house can be paid in installments, the total price is still not low. If the buyer’s cash flow is not good enough and the arrears reach more than 3 installments, it is likely to face termination of the contract, becoming a broken account, and may have to pay liquidated damages ( The total price is 15% or the paid price is the upper limit).

In order to curb the hype in the housing market, the Ministry of the Interior plans to promulgate the "Regulations on the Equalization of Land Rights" to prohibit pre-sale houses from changing contracts. The draft has been passed in the third reading on January 10, 2023. If the "Average of Land Titles Act" is formally launched, although it can reduce the hype of short-term buying and selling pre-sale houses for investment, it will also enable buyers for self-use to have more adequate financial preparations when purchasing pre-sale houses, and reserve tax sources and movable funds. Only by using funds can we avoid the crisis of decapitation.

  • List the balance sheet and try to keep the mortgage below 1/3 of the monthly income.
  • Before buying a house, ask the bank about your own loan capacity, and evaluate whether you can really meet the loan conditions proposed by the consignment agent.


5. How to choose a high-quality builder?

If you want to avoid disputes in the sale of pre-sale houses, the most important thing is to choose the right builder from the beginning. When choosing a builder, be sure to keep the following in mind:

  • Capital amount and establishment time
  • person in charge, manager
  • Fair Meetings and Litigation Records
  • Evaluation of past works

(one)Capital amount and establishment time

As far as housing builders are concerned, it is generally recommended to choose a builder that has been established for more than 5 years and has a capital of at least RMB 10 million. But here is a myth that needs to be clarified first, that is, the longer the establishment time and the higher the capital amount, it does not mean that the construction quality is better. However, too short tenure and too low capital amount may indeed bring risks to the buyer.

It usually takes three to five years for a construction project from construction to completion, so the short establishment time means that the construction company has not accumulated enough works and evaluations for the buyer's reference. The low capital amount means that when the buyer suffers losses, the builder's ability to make up for the damage is very limited, especially when the valuation of the construction project is obviously not equivalent to the builder's capital amount, special caution is required.

(two)person in charge, manager

After a small number of bad builders went bankrupt, new companies were established with the original team to achieve the effect of changing skins. The buyer can use the name of the person in charge and manager of the builder to inquire whether he has ever been or is currently the main operator of another company, and further understand whether there has been any negative information about the company.

(three)Fair Meetings and Litigation Records

Litigation records cannot fully represent the reputation of a builder, because commercial disputes inevitably need to be resolved through litigation. In addition, as long as the name of the builder is mentioned in the system of the Fair Council and the Judiciary, the record will be displayed , regardless of whether the builder is the plaintiff, defendant or even a witness in the case, they will all be included in the list. It is also very embarrassing to miss a high-quality builder if you do not carefully check the reasons for the judgment.

However, if after carefully understanding the reasons for the referee, it is found that the builder has been reported for the same reason many times, the buyer should reconsider whether to trade with the builder. Common reasons to be aware of are the following:

  • breach of consumer protection laws
  • False advertising breaches the Fair Trading Act
  • Non-fulfillment of liability for defects

(Four)Evaluation of past works

A major disadvantage of pre-sale houses is that it is difficult to survey the specific building quality. To solve this problem, the buyer may wish to actually visit the builder's past construction works, experience the builder's design style, and ask the residents, administrators, and neighbors about the construction quality. I believe it will have more reference value than the comments obtained from Internet searches to understand other people's living experience and whether they have encountered any problems.


Have you encountered any disputes over the sale of pre-sale houses? If you have any relevant legal issues, or need a lawyer to assist you in reviewing and negotiating, welcome to join the official LINE of First Law to discuss with us!

加入好友
contact now

Don't worry about legal problems, welcome to discuss with us online through the official LINE, we are happy to listen to your ideas and provide you with the fastest and most effective assistance when you need it.

加入好友

Please rest assured that online inquiry is completely free, and all conversations and transmitted materials will be strictly confidential.

popular articles
Scroll to Top