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Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →A real-estate pre-sale is a sale agreed before a home is complete, sometimes before construction has started. The buyer and developer agree terms in advance, while completion, settlement, or transfer occurs later. “Booking” is less precise: it can mean an expression of interest, a temporary reservation, an option, or—depending on the market—a signed contract. The label alone does not prove that a binding sale exists.
To understand a developer update or a proposed purchase, identify the event being counted: interest, reservation, signed contract, completion, or closing. Those events can produce very different numbers and legal obligations.
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What a pre-sale is
In the academic definition used by L. Li and K. W. Chau, “Presale refers to a developer selling a residential unit in a development prior to its completion or even before its construction.” The essential feature is timing. The sale is agreed while the property is unfinished, and the buyer receives the completed unit later.
A pre-sale is therefore broader than a sale made strictly from architectural drawings. In London market language, a sale agreed before construction starts is often called an off-plan sale because the buyer is purchasing from plans. Some London participants use “pre-sales” and “off-plan sales” interchangeably. That usage describes local market language, not a universal legal definition. In other markets, a pre-sale may include a unit that is already under construction but not yet complete.
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The parties normally settle the price and the principal contractual terms before completion. The contract may require a deposit, set milestones, describe the expected completion date, and specify what happens if construction is delayed or the buyer does not complete. Those details are controlled by the contract and the governing law; “pre-sale” by itself does not answer them.
How a booking differs from a pre-sale
Booking is a commercial label, not a standardized legal stage. A developer may use it for an expression of interest, a short reservation, an option to purchase, or a signed sale agreement. The practical question is not what the sales team calls the payment. It is whether the parties have signed a binding contract and what each side can enforce.
A useful distinction is:
- Booking or expression of interest: the buyer signals interest or asks to enter the sales process. It may involve little or no commitment.
- Reservation: a particular unit is held for a stated period while the buyer completes checks or prepares a contract. It can be binding, but it can also be expressly non-binding.
- Contracted pre-sale: the buyer and seller have executed a sale contract before completion. The contract, not the marketing label, determines obligations.
- Completion and closing: construction is finished, conditions are satisfied, and legal title or possession transfers under the applicable system.
A U.S. builder example shows why the distinction matters. In its fiscal 2025 Form 10-K, Toll Brothers described an initial reservation agreement as non-binding, held for a short period, and excluded from signed contracts and backlog. A later agreement of sale is binding and requires a cash down payment that is generally non-refundable under that company’s stated process. It reports net signed contracts after cancellations. That is an issuer-specific process, not a rule for every country or developer.
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The stages from interest to ownership
| Stage or measure | What it tells a buyer | What to verify |
|---|---|---|
| Expression of interest or booking | The buyer wants a unit or a place in the sales process. | Whether anything is signed, how long the hold lasts, and whether money is refundable. |
| Reservation | A unit may be held temporarily for the buyer. | Whether the reservation binds either party and whether it is counted in the developer’s sales figures. |
| Contracted pre-sale | A sale contract was agreed before completion. | Deposit terms, conditions, completion estimate, delay rights, plan changes, cancellation, and transfer provisions. |
| Post-completion or spot sale | The unit is sold after the home is complete. | Whether the price, inventory status, and settlement timetable differ from pre-sale units. |
| Developer sales or bookings metric | An operational count for a company or regulator. | The event counted, the reporting period, cancellations, and whether the figure is units, contract value, or cash received. |
The same project can therefore have many legitimate numbers at once: people who expressed interest, reservations held, contracts signed, units completed, settlements completed, and cash collected. They should not be treated as interchangeable.
What happens to deposits and cancellation rights?
There is no universal pre-sale deposit rule. One contract may make a reservation fee fully refundable; another may credit it toward the purchase price; a third may allow the seller to retain it if the buyer withdraws. The governing document should state when the seller becomes committed, when the buyer becomes committed, and what conditions allow either party to exit.
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The pre-sale example in a U.S. securities filing illustrates the range of issues without establishing a global standard. Buyers contract before condominium completion and close after construction. A deposit is typically required, and the filing describes exceptions under which a buyer may avoid forfeiture if the buyer does not close. Those exceptions, the amount of the deposit, and the remedy for delay are specific to the documented transaction.
Before paying, read the exact document rather than relying on a brochure or a salesperson’s use of “booking.” Ask for the version that will be signed and check whether the seller has signed it too. A document titled “reservation” can be binding in one jurisdiction and expressly non-binding in another.
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Why developers use pre-sales
Pre-sales can change a project’s financial and market risk, but the reason for using them varies by developer, financing structure, and location.
Reducing exposure to unsold inventory
Agreeing sales before completion gives a developer visibility into demand and can reduce the number of finished homes that must be sold later. This matters especially for large projects that deliver many units at once. A block of completed apartments creates a concentrated risk if market conditions weaken just as construction ends.
Supporting finance
In interviews cited by a 2017 London School of Economics report, developers reliant on debt finance said banks required 40% to 60% pre-sales for some projects. That is historical London interview evidence, not a current global lending standard. A lender may set a different threshold, require presales only for certain developments, or use other tests such as borrower equity, valuation, and construction progress.
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The same London report estimated that about 60% of units under construction were pre-sold in the evidence it reviewed. It also cited Molior data showing completed-but-unsold stock at 13% of completions in that period, with much of that stock associated with developer types less reliant on pre-sales. These figures describe the report’s historical London evidence and should not be presented as today’s market-wide ratios.
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Li and Chau’s Hong Kong study describes pre-sales as a way to discover market value, manage project-pipeline risk, and hedge exposure to volatile conditions. It also discusses possible reductions in financing and inventory costs. The study cautions against assuming that financing is always the main explanation: in its sample of listed Hong Kong developers, pre-sales were not an important financing source.
Meeting a lender’s pre-sale condition
A government program can sometimes make a conditional commitment to purchase eligible off-plan dwellings so a developer can satisfy a lender’s pre-sale requirement and obtain finance approval. New South Wales’ Pre-sale Finance Guarantee is an example of that institutional mechanism. The program states that a commitment is not government backing or a partnership in the development and cannot be promoted as an endorsement or warranty of quality, delivery, or financial outcome.
How developers and regulators count “sales”
Before comparing two reports, identify the event each one measures. A booking count may include reservations; a contract count may exclude them; a regulator may count options issued; and an accounting report may discuss a different point in the transaction cycle.
Singapore’s Urban Redevelopment Authority gives a precise example. Its developer-sales information covers completed and uncompleted residential units, and its monthly unit count is based on Options to Purchase issued by developers to purchasers. The authority states: “The prices and number of units sold in the month are based on Options to Purchase issued by developers to purchasers.” That defined basis does not mean another market’s “bookings” use the same event.
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Toll Brothers’ fiscal 2025 filing provides a contrasting company-level definition. It says non-binding reservations are not recorded as signed contracts or backlog, and it reports net contracts after cancellations. For the year ended October 31, 2025, the builder reported $9.85 billion in net contracts covering 9,943 homes. That is one company’s net contract figure, not a measure of the entire housing market.
When evaluating a developer update, ask four questions:
- What triggers the count: reservation, option, signed contract, settlement, or cash receipt?
- Are cancellations deducted, and when are they deducted?
- Is the figure a unit count, a contract value, or both?
- What reporting period and geography does it cover?
Do not assume a pre-sale is revenue. Revenue recognition is governed by the applicable accounting framework and the contract’s transfer-of-control and performance conditions. A booking, signed contract, settlement, and recognized revenue can occur at different times. The source material does not establish one accounting treatment that applies in every jurisdiction or contract.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What buyers should check before booking a unit
Use this sequence before transferring money or signing a document:
- Name the document. Confirm whether it is an expression of interest, reservation, option to purchase, or binding sale agreement.
- Identify the parties’ commitment. Ask when the seller is bound, when the buyer is bound, and whether the developer can sell the unit to someone else during the hold period.
- Trace every payment. Record the amount, recipient, due date, trust or escrow arrangement if applicable, whether it is refundable, and whether it is credited to the price.
- Read completion provisions. Check the estimated date, permitted extensions, notice requirements, and your rights if the project is late.
- Check specification changes. Look for clauses covering floor area, finishes, shared facilities, parking, plans, and substitutions.
- Review failure scenarios. Determine what happens if finance is unavailable, construction stops, the developer defaults, or you cannot complete.
- Confirm the governing law. Identify the jurisdiction, dispute process, registration requirements, and any independent legal review available locally.
- Reconcile the sales claim. Ask what the developer means by “booked” or “pre-sold,” whether cancellations are netted, and how many units are actually under binding contract.
These checks are particularly important for cross-border purchases, where a familiar word can have a different legal effect. An independent solicitor, conveyancer, or other locally qualified property lawyer can explain the contract and local rules; the appropriate professional depends on the jurisdiction.
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Common mistakes and how to avoid them
“A booking is automatically a sale.”
It is not. A booking may be non-binding or conditional. Check the document and signatures.
“A booking is never binding.”
That is also too broad. Some markets use booking documents that create enforceable obligations. The contract and local law control.
“Every pre-sale is off-plan.”
Some pre-sales are agreed before construction, but the broader definition covers any sale before completion. A unit under construction can be pre-sold even when detailed construction is already visible.
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“The developer’s booking number is its revenue.”
Operational sales metrics, signed contracts, settlements, and accounting revenue are different measures. Find the definition and timing before drawing a financial conclusion.
“A historical lender threshold applies everywhere.”
The 40%–60% London figure came from historical interviews about debt-financed projects. It is not a universal requirement for a current project in another market.
“A government purchase commitment guarantees the project.”
The New South Wales program expressly says its pre-sale commitment is not an endorsement, partnership, or warranty. A financing mechanism does not remove construction, market, or counterparty risk.
A practical interpretation
If a developer says a project has “100 bookings,” treat that as a question, not a conclusion. Ask whether the 100 are expressions of interest, temporary reservations, options, or signed contracts. If the developer says it has “100 pre-sales,” ask when the units are expected to complete, whether contracts can be cancelled, and whether the reported figure is gross or net of cancellations. If a regulator reports “units sold,” read its measurement note; Singapore’s use of Options to Purchase shows how a formal definition can differ from casual sales language.
For a buyer, the decisive evidence is the signed document, the payment terms, the completion and cancellation clauses, and the law that governs the transaction. For an investor or reader of company results, the decisive evidence is the reporting definition and reconciliation between reservations, contracts, cancellations, settlements, and revenue.
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