Hello,

I have had a few meetings over the past few weeks with condominium owners who bought brand new condos directly from the developers and those meetings reminded me that I should post a blog about Buyer Agency Representation.

Many Buyers assume that if they are buying new product, whether it be a house or a condo, that they do not require or that they are not able to have a Realtor represent them.

It is important for Buyers to know that the Builder’s or Developer’s in house salespeople do not represent the Buyer’s interests and are not legally obligated to tell you certain things unless you ask.  They are employed and paid by the Builder or Developer. In addition most in house salespeople have not or are not involved in the purchase and sale or re-sale homes and can therefore be ill equipped to provide sound advice about which features or locations represent the best re-sale value in the future. Also most Builders and Developers have created their own Purchase Contracts with terms that reflect the Builder’s or Developer’s best interests and may contain terms that the Buyer may not know are not in the Buyer’s best interests. For a closer look at some actual clauses check out the CBC Marketplace report on condos at http://www.cbc.ca/marketplace/condo_crunch/ .

Representation by an experienced, professional Realtor can save the Buyer from many potentially expensive future issues when buying new product or indeed any home.

A good Realtor can assist in choosing locations and finishings that will be desirable to future Buyers. When choosing a location a good Realtor will assist the Buyer in determining what future development around the subject property could be. In terms of finishings and floor plan a good Realtor will be able to advise the Buyer about what is popular and what will probably have value to a future Buyer. Realtors can also provide the Buyer with recent sales of similar properties, not only to determine current market value but also to show the different values of new and resale properties. A good Realtor will also negotiate on behalf of the Buyer. Many Buyers assume or are told that they are not able to negotiate the Builder’s or Developer’s price but sometimes negotiation is possible.

I’m sure that there are many home owners who have had great experiences in buying and/or building new properties and many Builders and Developers who do the right thing. Unfortunately, I often meet home owners that have bought properties that have less square footage than quoted by the developer, are in a poor location in a neighborhood or a building or have finishings that are unpopular or that were too expensive for the home owner to receive a return on their investment. One homeowner I know who bought a 2 bedroom and den apartment condo ended up with only a 2 bedroom with no den AND the developer ran out of money and – well within the rights accorded to them in the purchase contract they composed – leased the elevators to the new owners so that their condo fee was more than double the most common condo fee in the marketplace. Another homeowner I know paid $7,000.00 for an extra parking stall that they would not have title to because it was common property and therefore only assigned and could eventually be assigned to another owner or resident!

Our personal residences are often our largest asset. At the very least when buying new product the prudent
Buyer should get their purchase contract reviewed by a lawyer who specializes in Real Estate. The lawyer review should be a condition in their contract. Should one choose to have representation it is important to interview Realtors and to choose a Realtor that has experience in both new and resale properties. When buying a condo there are many additional considerations. Therefore it is extremely important to choose a Realtor who has a lot of experience and additional education regarding condominium ownership.

It is easy to get caught up in the excitement of “new” but a prudent Buyer will always look before they leap!

Hope this helps…

Susanita de Diego