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CONDO CHICKS
Buzzer
reply 48 vote 3
 

Why use a Realtor for a pre construction condo purchase?

These are our thoughts!
It is in our opinion that using your own realtor is to your benefit. The sales representatives within the new home sales office works for the builder, which is where their true loyalty lies. By having your own representative, you will receive honest and non-biased advice as your realtor is looking out solely for your best interest. There are many benefits to using your own realtor such as the following:
1) As mentioned above, your realtor works for you not the builder therefore your best interest is at heart.
2) Your realtor will be invited to VIP events which gives them access to the best floor plans and prices per square foot before being released to the general public.
3) If your realtor has experience in pre-construction he/she will ask the right questions regarding construction financing status, assignments, occupancy and so forth.
4) Your realtor will be able to negotiate the agreement in your best interest. As price is usually not negotiable, certain fees (education, park levies) can be taken out or capped within your agreement.
5) Your realtor has access to the MLS system which can provide you with prices and useful information of comparable properties in the area.
6) Your realtor can keep you updated on the project. Questions concerning construction and occupancy can be easily answered.
7) If you are looking to assign your unit, your realtor can help you find a buyer as certain types of advertising is not permissible by the project builder.

The most important benefit of using your own Realtor is that they have your best interest at heart. Your Realtor will represent you honestly and ethically and will assist you in making the best decision for your needs.

27
Canada / New Home Q&A
 
 
 
BRIAN PERSAUD
BabbleBee
reply 280 vote 17
 
 
1 BEST REPLY
Symmetry said:
Moo said:
Really interesting information Condo. Thank you!
Here is a quick question, which I have always wanted to know the answer to: If I do NOT use a Realtor, will the builder be more likely to "play ball" with pricing, because they are saving the commission?

Most developers are extremely reliant on agents to achieve their pre-construction sales numbers. Providing discounts to purchasers who aren't represented by an agent would alienate agents and their clients.
As a developer, I am often approached by buyers who assume price flexibility in the absence of an agent.
Although I'm in a position to save the co-operating agent's commission, I'm also mindful of the purchasers
who have bought through an agent and how unfair it would be to them.
Then again, I can only speak for myself and my company. There are many in-house sales agents who stand to
make a greater chunk of the commission from direct purchasers and are willing to provide incentives to them.
My advice to pre-construction purchasers would be to purchase directly if they were confident in their ability
to look past the distractions of sales centers and promotions to the bare facts and make the correct decision.
If not, then working with an experienced, savvy and honest Realtor is the way to go.

I'm pissed off and in a ranting mood today..... So you got me at a good time to give my opinion.
I'm not a realtor, our industry is rife with bad agents that can barely use a calculator to find price per square foot. From my experience this has caused buyers to be poorly equipped to deal with the realities of buying a pre-construction condo. How are clients going to ensure their realtor is good?
To me a good agent does the following things:
- Actually has reads an offer to purchase by a developer is able to cut through the legalize. Developer lawyers are cheap, they use the same clauses over and over again. So if you've closed more than one deal you can see how they are loaded in the developers favour.
Simple things like ensuring that their clients finishes, parking spot location are protected in the contract, where bulkheads should be placed (I've seen people whose bedroom is suddenly your bedroom and living room is 6' tall because a developer changed the bulkhead. The clause that allows builders to do this at their whim must be taken out)
.
- Understands how to read plans to see where garbage chutes are, where party rooms will be, where underground garages will be and how they will impact your unit
- How some understanding in the neighborhood to see if their clients view will change because a future development
- Understands how to do a friggin assignment, I don't even bother having the agent to write my agreements. I use my own schedule A's. I just ask them to send me their webforms to do it myself. I've had an agent advise their client to get me to sign an IOU so I don't have to write a big cheque before registration. Like that won't be a nightmare to close.
- Understands what adjustments are legit. Looks at their clients closing adjustments to see if they're not being overcharged (ie making sure "Community Improvement Charges" that the city never asked for are not included). For that matter, knows how to get a damn GST rebate done.
Make sure your agent is not a glorified order taker that pays some internet market to score high in google
 
 
 
MOO STASH
BabbleBee
reply 301 vote 21
 
 
Really interesting information Condo. Thank you!
Here is a quick question, which I have always wanted to know the answer to: If I do NOT use a Realtor, will the builder be more likely to "play ball" with pricing, because they are saving the commission?
 
 
SUNNY BATRA
Buzzer
reply 18 vote 2
 
 
Builder will not do anything with the pricing regardless of whether you are represented with a Realtor or not. I know some people who have tried the same in the past without any luck. Not only did they loose the incentives that the VIP Realtor could have gotten them but also they were not not able to negotiate the agreement to their best interest. My advice: leave it in the hands of professionals/experts (doctors, lawyers, accountants, and Realtors)
 
 
BRENT WILKER
Buzzer
reply 126 vote 4
 
 
Sunny said:
Builder will not do anything with the pricing regardless of whether you are represented with a Realtor or not. I know some people who have tried the same in the past without any luck. Not only did they loose the incentives that the VIP Realtor could have gotten them but also they were not not able to negotiate the agreement to their best interest. My advice: leave it in the hands of professionals/experts (doctors, lawyers, accountants, and Realtors)


This is very accurate from what I have experienced.
 
 
SYMMETRY DEVELOPMENTS
Buzzer
reply 83 vote 5
 
 
Moo said:
Really interesting information Condo. Thank you!
Here is a quick question, which I have always wanted to know the answer to: If I do NOT use a Realtor, will the builder be more likely to "play ball" with pricing, because they are saving the commission?

Most developers are extremely reliant on agents to achieve their pre-construction sales numbers. Providing discounts to purchasers who aren't represented by an agent would alienate agents and their clients.
As a developer, I am often approached by buyers who assume price flexibility in the absence of an agent.
Although I'm in a position to save the co-operating agent's commission, I'm also mindful of the purchasers
who have bought through an agent and how unfair it would be to them.
Then again, I can only speak for myself and my company. There are many in-house sales agents who stand to
make a greater chunk of the commission from direct purchasers and are willing to provide incentives to them.
My advice to pre-construction purchasers would be to purchase directly if they were confident in their ability
to look past the distractions of sales centers and promotions to the bare facts and make the correct decision.
If not, then working with an experienced, savvy and honest Realtor is the way to go.
 
 
SUNNY BATRA
Buzzer
reply 18 vote 2
 
 
Symmetry said:
Moo said:

As a developer, I am often approached by buyers who assume price flexibility in the absence of an agent.
Although I'm in a position to save the co-operating agent's commission, I'm also mindful of the purchasers
who have bought through an agent and how unfair it would be to them.
My advice to pre-construction purchasers would be to purchase directly if they were confident in their ability
to look past the distractions of sales centers and promotions to the bare facts and make the correct decision.
If not, then working with an experienced, savvy and honest Realtor is the way to go.

Let me share a true account. I recently know someone who bought a pre-construction condo (1 + Den for $350,000) about 4 years back at Neptune (Lakeshore and Bathurst). Someone from the sales center knew the parents and recommended them for their son to invest in this condo project. He was not represented by any agent and hence did not know the comparables for resale and pre-construction condos in the area (very first way of getting screwed). He went with the advice of the developer agent at the presentation center who knew his parents. He did not review his contract nor did he had any expert go through his contract (second way of getting screwed). Hence education and other levies, and other fees are not caped. He over payed for his unit by a lot.
Quick facts: Three to four years ago studios at concord city place were going for about 100k. In 2009 my clients got 1+Den over 700 sq.ft including locker at Charlie Condos in the entertainment district for $337,900.
Today he is not in a situation to close. He has two options which is to either to loose his deposit of about $53K or sell it in assignment at a current value of about $315k-$320k. He has only a week left to sell his unit in assignment before developer takes over his unit. He tried to get the extension but got turned down by the developer. We are trying our level best to help this gentleman find a purchaser before next week.
This is a true story which highlights the importance of having a "experienced, savvy and honest Realtor" by your side.

My advice: Make an educated and smart decision. As you would trust your doctor/surgeon; similarly choose a Realtor that you can trust and someone who could be a part of your team.
www.SunnyBatra.com
 
 
TONY AZZOPARDI
Buzzer
reply 21
 
 
The pissed off ranting dude in the reply above...needs to calm down, as, not all Realtors are like this... so to generalize or deem the whole industry as incompetent, is a little unfair in my opinion...but whatever..I would never want to represent him as a client. It's time for a long vacation dude!
 
 
BRENT WILKER
Buzzer
reply 126 vote 4
 
 
All of the above once again stresses the importance of potential homeowners doing their diligence. The builder and their entire process should be reviewed; from pre-construction through occupancy and the warranty period.

That is exactly why forums such as this one are so valuable. I would like to see a "Developer Review" so people can share their experiences and give referrals to the quality builders.
 
 
CAROL AUSTIN
Buzzer
reply 12 vote 1
 
 
Tony said:
The pissed off ranting dude in the reply above...needs to calm down, as, not all Realtors are like this... so to generalize or deem the whole industry as incompetent, is a little unfair in my opinion...but whatever..I would never want to represent him as a client. It's time for a long vacation dude!


I think Brian pretty accurately described what a "good agent" can do for a Buyer so he's clearly not painting all agents with the same brush. And it is indeed true that there are lots of agents be they well-meaning, money-hungry or incompetent, who sell primarily freehold and then try to enter the very different world of pre-construction. Personally I think if you want an agent to represent you on a pre-construction purchase, you should hire an agent that specializes in condo sales like REMAX Condos Plus (my brokerage) and others in Toronto that are specialists in this area.

Brian, I would love to see a sample of your Schedule A if you are willing to share. I recently had a lawyer compliment me on how good mine was compared to others she has seen.
 
 
MARK SAVEL
Buzzer
reply 143 vote 26
 
 
Tony said:
The pissed off ranting dude in the reply above...needs to calm down, as, not all Realtors are like this... so to generalize or deem the whole industry as incompetent, is a little unfair in my opinion...but whatever..I would never want to represent him as a client. It's time for a long vacation dude!

Actually the "pissed off dude" is right on the money...in my opinion!
I too am a Realtor and don't feel as if he was generalizing the industry, it sounds like he's speaking from experience. The Preconstruction market is over saturated with Realtors. Plain and simple...the preconstruction game is TOTALLY different than resale. I think the high paying commissions, the easy sales, and the limited travelling are adding to the increase in Realtors getting in to it.
I'm not knocking preconstuction at all, as i'm still a firm believer that it an excellent investment vechile if done right. It's so easy to walk in and be taken the beautifully designed show rooms and free lunches but at the end of the day "the devil in in the details"!
I'm still surprised at how few people understand how the interim occupancy fees work (what their made up of and how they can be reduced). I had a meeting with a client this past weekend, and not even his lawyer could explain it!
Our job isn't to just "represent" our clients at the sales centre...our job is to structure the contract (with the help of an preconstruction lawyer) so what their buying today is exactly what they get in 4 years. If the developer doesn't play ball with the clauses one should add, then the client needs to know about the potential for things to change! Costs can be staggering...one condo got hit with a $12,000 adjustments (per buyer) at closing. It's soooo important to make sure the clients expectations are in line with the realties of preconstruction!!
and a quick work on assignments...even if you have permission to go forward with one, are you aware that a certain amount of the building must be sold before assignments are granted? And even still, the developer has final say! If your client has plans to sell before closing, this small clause can cancel any hopes of it happening and potentially ruin their investment strategy!
After all we're selling pieces of paper here...the first 10 days are pivotal to ensure our clients are protected. Brain sounds like an educated buyer who's gone through the sometimes bumpy path of preconstruction. It's our job to make it as smooth as possible!
Happy Buying,
Mark
 
 
BRIAN PERSAUD
BabbleBee
reply 280 vote 17
 
 
We should really be able to edit., I'm glad you folks were able to understand my rant.. Feel better today
 
 
CECILE BASSELS
NewBee
reply 1
 
 
Agree mark. I heard of one buyer who got hit with $70,000 in charges at closing. In the cooling off period-10 days after you sign, the documents must go to an experienced pre-construction lawyer who will protect the buyer so there are no surprises at the end of the transaction.
 
 
MATTHEW SLUTSKY
Senior Buzzer
reply 2299 vote 171
 
 
Cecile said:
I heard of one buyer who got hit with $70,000 in charges at closing.

Holy cow!!! What project?? What were all those charges??
 
 
ANDREW LAFLEUR
Buzzer
reply 119 vote 39
 
 
Hiring an experienced pre-construction buyer's agent is a no-brainer. Why would you NOT hire a professional agent when their services are free to you as a buyer?
Many of the usual reasons for hiring an agent have already been mentioned including getting special discounts, special buying opportunities, and special INSIGHT into the market. As well as expert knowledge and information pertaining to the developer, the neighbourhood, trends, contract negotiations, assignments, etc.
Finally, one great reason to hire an agent is if something goes wrong, you have someone to sue. Your agent is legally obligated to protect your best interests as a buyer. This is real estate, things can definitely go wrong!
 
 
CONDO CHICKS
Buzzer
reply 48 vote 3
 
 
Another note.... Buyers, make sure to always register your agent as your representative the first time you visit the sales office. If you don't, the builder will not necessarily recognize the agent's role in the transaction! Agents, always register your clients with the front desk upon your initial visit to the sales office!
 
 
ROY BHANDARI
Senior Buzzer
reply 512 vote 60
 
 
Yeesh...I leave for a day and look what happens!
Again, excellent topic here and some of the quality of the content here is excellent - really goes to show the quality of the reader that BuzzBuzzHome attracts.
Brian - I agree with MOST of your points as to what a buyer agent should do. Your tweet earlier today of "I am not anti-realtor, I am just pro good realtor" hit the nail on the head. A Real Estate Professional should be able to equip you with all information that pertains to the real estate side of the purchase such as: what can effect value (views, future views, garbage chute, elevator, more recently the superstitious numbers etc.etc.), we should be able to give you an idea of how well priced a development is, we should understand your NEEDS for the purchase (investment? end user? do you need to be close to transportation etc.etc.) and then use our expertise to suggest the right developments for the clients.
The more and more I get into pre-construction, the less and less time I have for resale because it takes time to understand the entire picture for pre-construction developments. It's easy for resale agents to look at just one development and recommend/not recommend it, but few agents can have a full blown discussion about many different pre-construction projects in depth. I do believe that pre-construction requires specialization in order to achieve success.
Where I do not agree with Brian is when it comes to the agent understanding the legalize of documents. Yes, I have a very good grasp of the documents, but I cannot substitute a good lawyer. If there is something in there that I *think* understand, that isn't enough for the client. If I tell my client I *believe* this is what that means, that's not acceptable. During the 10 day cooling off period, myself, the client and the lawyer have excellent back and forth collaboration (either by e-mail, phone or in person) regarding what they need to be aware of. I know what fees are acceptable and what are not, however, I am not always the first to know about these changes. My lawyer is, and I rely on him for that information. It is important to have a good team around you.
Many of my clients do purchase for investments and ask me for tax advice. Should I be giving that advice to my clients? 100% not. I am not a tax advisor, it is not part of my job description. If you really want, I can tell you stories about the taxes from my experiences but I make no representations or warranties that it will be the same for you. I do not know the changes in tax laws and there is not enough hours in the day for me to keep on top of that. However, I have an excellent tax consultant on my team that is happy to help.
Ultimately, I think what Brian is getting at is that there is a skill involved with what we do. I do not consider myself an "order taker", and build excellent relationships with my clients - I can point to my high percentage of repeat and referral business as an indicator of the work I do. I work extremely hard at my craft, and there are a number of agents on this very forum that are excellent at what they do. Mark Savel knows I am a huge fan of his work and dedication, Andrew LaFleur, Erica & Joy (Condo Chicks) have bucket loads of amazing knowledge that separates us from the agents who aren't willing to put in the time.
Sorry for the ramble...it's been a long day and my head hurts!!!
 
 
BRIAN PERSAUD
BabbleBee
reply 280 vote 17
 
 
Roy said:
Yeesh...I leave for a day and look what happens!
Again, excellent topic here and some of the quality of the content here is excellent - really goes to show the quality of the reader that BuzzBuzzHome attracts.
Brian - I agree with MOST of your points as to what a buyer agent should do. Your tweet earlier today of "I am not anti-realtor, I am just pro good realtor" hit the nail on the head. A Real Estate Professional should be able to equip you with all information that pertains to the real estate side of the purchase such as: what can effect value (views, future views, garbage chute, elevator, more recently the superstitious numbers etc.etc.), we should be able to give you an idea of how well priced a development is, we should understand your NEEDS for the purchase (investment? end user? do you need to be close to transportation etc.etc.) and then use our expertise to suggest the right developments for the clients.
The more and more I get into pre-construction, the less and less time I have for resale because it takes time to understand the entire picture for pre-construction developments. It's easy for resale agents to look at just one development and recommend/not recommend it, but few agents can have a full blown discussion about many different pre-construction projects in depth. I do believe that pre-construction requires specialization in order to achieve success.
Where I do not agree with Brian is when it comes to the agent understanding the legalize of documents. Yes, I have a very good grasp of the documents, but I cannot substitute a good lawyer. If there is something in there that I *think* understand, that isn't enough for the client. If I tell my client I *believe* this is what that means, that's not acceptable. During the 10 day cooling off period, myself, the client and the lawyer have excellent back and forth collaboration (either by e-mail, phone or in person) regarding what they need to be aware of. I know what fees are acceptable and what are not, however, I am not always the first to know about these changes. My lawyer is, and I rely on him for that information. It is important to have a good team around you.
Many of my clients do purchase for investments and ask me for tax advice. Should I be giving that advice to my clients? 100% not. I am not a tax advisor, it is not part of my job description. If you really want, I can tell you stories about the taxes from my experiences but I make no representations or warranties that it will be the same for you. I do not know the changes in tax laws and there is not enough hours in the day for me to keep on top of that. However, I have an excellent tax consultant on my team that is happy to help.
Ultimately, I think what Brian is getting at is that there is a skill involved with what we do. I do not consider myself an "order taker", and build excellent relationships with my clients - I can point to my high percentage of repeat and referral business as an indicator of the work I do. I work extremely hard at my craft, and there are a number of agents on this very forum that are excellent at what they do. Mark Savel knows I am a huge fan of his work and dedication, Andrew LaFleur, Erica & Joy (Condo Chicks) have bucket loads of amazing knowledge that separates us from the agents who aren't willing to put in the time.
Sorry for the ramble...it's been a long day and my head hurts!!!


With the launch of my upcoming book on to buy pre-construction condos, I'm in discussions with two large institutions about creating an accreditation program for agents who want to become experts in the field.
Watch for it.
 
 
ROY BHANDARI
Senior Buzzer
reply 512 vote 60
 
 
Brian said:
With the launch of my upcoming book on to buy pre-construction condos, I'm in discussions with two large institutions about creating an accreditation program for agents who want to become experts in the field.

Just tell me where to sign!!!
 
 
BRENT WILKER
Buzzer
reply 126 vote 4
 
 
http://intracorp.ca/vancouver/book-signup.php

Intracorp Canada launched "Show and Tell: New Home Buying Secrets" which they give away to anyone and everyone from their website. This is an incredible resource that discusses everything from "New vs Resale" to "What you should expect after occupancy." Chapter 7, "Making an offer and signing a deal: Your rights and responsibilities" deals specifically with the issues being discussed here.
 
 
MARK SAVEL
Buzzer
reply 143 vote 26
 
 
Brent said:
http://intracorp.ca/vancouver/book-signup.php
Intracorp Canada launched "Show and Tell: New Home Buying Secrets" which they give away to anyone and everyone from their website. This is an incredible resource that discusses everything from "New vs Resale" to "What you should expect after occupancy." Chapter 7, "Making an offer and signing a deal: Your rights and responsibilities" deals specifically with the issues being discussed here.

registered and now waiting :) thanks for the link!
 
 
BUZZBUZZHOME
Buzzer
reply 55 vote 2
 
 
Hey Mark,
The BuzzBuzzHomies have a copy. If you want to swing by for an espresso and a reading-session.... come on by!
Bzzzzzz
 
 
ANONYMOUS
Buzzer
reply 21 vote 2
 
 
IMHO the Realtor needs to go over the logistics of what happens when buying a pre-construction condo.
- What's a VIP event; Why is there a VIP event? Why not just open to the public (and save the commission?)
- What do you need to do before the VIP event starts (shop for a lawyer, get a pre-approval)
- How to shop for a lawyer; how much will the lawyer charge me if I get the docs reviewed and cancel before the 10 day cooling period.
- What's the role of a lawyer, an accountant and a mortgage specialist? And insist in using proper services from these professionals.
- What happens at signing; paperwork to bring, what to expect at the builder's office,
- What's a 10 day cooling period (what options do you have, what you should be doing during this time)
- When is your first deposit getting cashed; what happens to your deposit while the building is being built
- When do you pick your colors? how about a parking spot? what's a PDI?
- When do you get your keys? What's Occupancy fees? What are my options to rent/sell at occupancy?
- When does your lawyer re-appear? Can I shop for a better mortgage rate before closing?
- Come talk to me for the rest ;)
Reviewing the legal document for the client or giving tax advise is a big no no in my books. There's no need to stack up liability issues. Life's complicated as it is! If and when I can do both things, I'll make sure to change my business card and have Lawyer and CA behind Realtor after my name.
As far as good Realtors, shop around. Real estate is one of the more expensive things most of us will buy. I'm sure most people take the time to interview a handful of Realtors before deciding on who to trust and work with. A good Realtor should be acting as your consultant for the real estate transaction. Guild you through the entire process, anticipating problems on the client's behalf and have their interest in mind. This is how we get 'specialties' in Real estate or any profession for that matter. A Realtor selling plazas might not know anything about pre-construction condo VIP events or someone who sells Farms or Cottages. Invest some time in interviewing the right Help. It'll save you a lot of headaches in the future.
Richie
 
 
ROY BHANDARI
Senior Buzzer
reply 512 vote 60
 
 
Brent said:
http://intracorp.ca/vancouver/book-signup.php
Intracorp Canada launched "Show and Tell: New Home Buying Secrets" which they give away to anyone and everyone from their website. This is an incredible resource that discusses everything from "New vs Resale" to "What you should expect after occupancy." Chapter 7, "Making an offer and signing a deal: Your rights and responsibilities" deals specifically with the issues being discussed here.

Ha! I just received my book in the mail... I didn't realise it was an ACTUAL BOOK with real pages and stuff...I didn't even know they still made them like this! :)
 
 
MATTHEW SLUTSKY
Senior Buzzer
reply 2299 vote 171
 
 
Roy said:
Ha! I just received my book in the mail... I didn't realise it was an ACTUAL BOOK with real pages and stuff...I didn't even know they still made them like this! :)

Yes. It is an actual book, with paper! I am dying to read it, however I am a Kindle addict. I am not sure that I can move back from eBooks to paper-books.
If you get a chance, please let us know your thoughts.
 
 
NHINCOMPOOP
Buzzer
reply 28 vote 3
 
 
In this day and age, it's almost silly not to use an agent for a pre-construction purchase, especially since agents have access to suite releases and prime units before the general public during VIP launch events, etc. With no cost to the purchaser, why not leverage this privilege?
However, there is still some caveat emptor to be exercised by the buyer. While your agent works for you, he/she is paid by the builder, and a bad agent may be motivated to sell you a less than ideal unit. All purchasers should be aware of which units are less than ideal (poor layout, poor location in the building - near elevators, near garbage chutes) and if any units like this are recommended by a buyer's agent, beware. In addition, buyers should do as much research as possible using publicly available sources about development plans for adjacent lots. An agent may not be proactive about disclosing that the parking lot next door will be redeveloped into an undesirable neighbour, but a buyer can research this.
An agent is the best source of information on more privileged information, like comparable sales, and as mentioned in the original post, for dealing with builders on issues a buyer may not be comfortable with or knowledgeable about. All that being said, while I did not use an agent when purchasing my first condo, I did use one for my last one.
 
 
MAZIAR MOINI
NewBee
reply 1
 
 

Helping the buyers to Locate right location for right person at right time & Save $1000's $$$$ , End of the story.

 
 
JAMES WONG
NewBee
reply 6
 
 
Vancouver presale new condo cash rebate for buyers. Find new condos for sale using ABLHomelist.com
 
 
 
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