Pre-Sale Condo Scam
For over 20 years, contract condo marketers like Rennie, Anson, MAC, Domicile, Platinum ProjectMarketing amongst othershave been brainwashing & scamming inexperienced real estate buyers -- mostly first-timers. This also includes in-house marketersat Concord Pacific, BOSA, Anthem, Magellen 20/20to name a few. Neither the federal, provincial, nor municipal governments have implemented any laws to protect consumers who buy on pre-sale -- only the 7 day right of recission and general contract laws apply.
As far as we are concerned, it's still a wild west mentality out there with developers and marketers taking full advantage of the lack of legal protection for consumers. Even the new 5 year warranty requirement against leakage is worthless since most condos leak after 5 years at which point its every owner for themselves.
The pre-sale contract speaks for itself in various ways. First, the developer will not allow for any changes whatsoever. It should come as no surprise that the contract is written by the developer's own lawyers in their favour with a variety of safeguards to protect their interests in case of delay, changes, etc. With so many people lined-up to sign, what incentive is there for the developer to accommodate sophisticated, educated, and experienced condo buyers who simply want a fair shake -- absolutely none!
Here are two examples of unfairness that seem to be prevalent in most contracts:
(1) Developer keeps the interest on purchaser's deposit funds. Comment: Despite the fact that interest rates are at record lows and the amount of interest accumulated would simply be a few hundred dollars per suite, developers choose to be greedy and nickel-and-dime the purchaser. Even though the buyer has (in most cases) trusted the developer with their life savings & is willing to go into debt for 20+ years, the developer is still greedy & heartless & chooses to suck every nickel from the naive buyer.
(2) The suite can be up to 3% smaller with no reduction in price. Comment: If you buy a 1000 square foot unit for $500,000 on pre-sale, it can be 970 square foot on completion and you will still be paying the full $500,000. There will be no reduction in price. You have just paid $15,000 ($500 x 30) for nothing!
(3) Nothing is the marketing material is legally binding. Comment: The marketing material can promise you the world. The sales staff can promise all sorts of things. And guess what? The contract clearly states that nothing in the marketing material (including models) or verbal statements by staff is legally binding.
Condo marketers are highly paid to achieve the following objectives:
(1) Sell as many units on pre-sale based on glossy brochures containing exaggerated, legally unenforceable promises. Since the purchaser cannot have a look at the finished condo and since the contract clearly states that nothing in the marketing material is legally binding, the developer gets off scott-free.
(2) Charge as much as you can for each condo. Did you know that prices for condos are not included with the sales brochures handed out. If you are lucky, you get a price range sheet. The reason is because prices keep getting increased based on the number of people buying. If you bought suite 1701 for $500,000 at 11:00 am (when the sales centre first opened), it is entirely possible that someone may pay $600,000 for suite 1601 at 4:00 pm the same day. The price may also fluctuate depending on who you are (how you are dressed, your occupation, etc.). Condo buyers are routinely sized-up by trained sales agents who try to find out how much they can squeeze out of you.
(3) Give you as little as possible. Marketers use all sorts of pressure tactics to get you to buy now. They claim that all of their previous projects were "sold out" within the first few days/weeks when in fact a large number of units have simply been set aside under the developer's secondary numbered holding company. Marketers also use terms like "last", "final phase", etc. to train and brainwash you into thinking that there will be no more in a particular area when in fact they will build another project a few months later in the next block. Marketers are not on the side of the buyer. They are on the side of the developer. Marketers result in an increased price for the buyers. And since there is no "No Name" developer (as in the food business), condo buyers are forced to pay higher and higherprices to get less and less.
After reading the above, do you really want to buy pre-sale?
We suggest you leaveyour cheque book at home, go to the pre-sale event, chat with others while there, enjoy refreshments, take a brochure home with you and use it to wrap your banana peels.
We believe there were will be lots of condos available when the project is finished either from the developer's own leftover stock (there is no such thing as 100% sold out -- they're lying) or from purchasers who have had a major life changing event during the 2 years it typically takes to build a condo (bankruptcy, divorce, job location change, etc.)
NYC had it's Madoff. Vancouver has many Madoffs. They are known as condo developers & marketers.
British Columbia / New Developments