What Are Presales?

Presales provide the opportunity to purchase a product or service before it is available for use. Real estate and automobiles are examples of products offered for presale. Though purchasing through a presale offers the ability to secure the sale, risks are involved. Buying a home or automobile through a presale that falls through or gets delayed can be costly. The customer's money is tied up, without having use of the product or service that was promised.

New home construction is often marketed through presales. Customers tour a model condominium or home that represents what the finished product will look like. If satisfied, the customer places an order for construction.

Presale real estate contracts are drawn up with the terms of sale and final purchase price. Many pre-sold homes come with many appliance, flooring, and paint options for the customer to choose from. The customer waits until the home is complete before moving in.

Risks include construction delays, code problems, and the mortgage coming due before the house is ready for move-in. This causes the customer to pay a double monthly payment — the mortgage, and a rent for a temporary residence. In addition, local municipalities might hold up construction due to codes or permit issues. The customer's money is already tied up in the presale purchase, which can prohibit him from walking away and buying elsewhere. It is important for the customer to be sure a problem clause is included in the contract that details remedies for delays.

Automobiles may also be offered through presales, especially new models or very popular or expensive vehicles. Customers visit a showroom and examine a demonstration vehicle, then place their order. They are typically given color, interior, and option choices. Once the order is complete, a down payment is collected. Orders for automobiles can take as little as a week to as much as a year to fulfill, depending on availability. Estimated delivery dates are usually included in the presale contract.

New books by popular authors and celebrities also may be offered through presales. Online sites as well as bookstores advertise the coming book and offer customers the chance to place a presale order. Most book presales must be paid in full at the time of the order. When the book arrives, customers are notified to come and pick up their paid-for copy.