You DO Need a Realtor When Buying Pre-Construction Condos & Homes !
Monday Dec 02nd, 2019
Not having your own Real Estate Agent to perform due diligence could land you in a horrible situation and losing thousands of dollars.
You may have heard about two recent condo projects in downtown Toronto having been converted into ‘rentals’ with 181 innocent buyers of a complex on King St. West, near Liberty Village, out as much as $40,000 each. Another condo project, “The Selby”, at Sherbourne and Bloor, abandoned their plans, as well.
As your Realtor, I look to discover information not disclosed or made available when you walk into a developer’s Open House Site Office promoting their brand new spectacular, out of this world, absolutely astounding new construction condo. If, unfortunately, you don’t know the questions to ask, they’re not obliged to say anything. And more often than not, the sales people hired by the developer, to ‘sell’ have no clue either.
I’ve represented many of my clients who are either buying new construction to live in or invest & lease out or flip out. With my indepth knowledge, and many years of experience ,I delve into the deep corners of what’s really going on behind the scenes. I don’t want you to have the kind of experience these unsuspecting purchasers have had.
As one recent example, I accompanied my Clients to an exclusive luxury townhouse project they were interested in. As I always do, I asked the on-site Representative many questions. The answers I got, or rather didn't get, were concerning. The Developer's Representative could not give me definitive responses on anything. While my Buyers were excited about the prospect of what the house was going to 'look like', my professional intution told me to advise them to very wary. The deposit structure was out of proportion to what a fully funded project would require and, for 4 years, would tie up more of my Buyer's money than what should have been necessary. After we left, I explained my concerns, and I was grateful that they heeded my advice. Within 5 months, the project went under and was abandoned. The deposits of other unsuspecting Buyers, to date, have not been returned.
Pre-construction or 'infill' homes are something different altogether. Whereas Developers must acquire the Government's Tarion Warranty (covering 7 years of structural, mechanical and electrical components of the condo building) to provide to the Buyer, home builders/contractors don't. They're supposed to, by legislation, but they want to avoid the cost and the accountability. So how do you have any Warranty on the newly constructed home you're buying? One way for a Builder to get around this is to buy the property in someone else's name, tear down the existing house, build the new one and then say it's a 're-sale' property because it was built 'for' the owner of the teardown. Another way is for the Builder to offer a propsective Purchaser a 1 (or 2 sometimes) year Warranty. But how do we know that the Builder will still be around or even honour that personal guarantee. And what is the Warranty covering.
The way I construct Agreements of Purchase and Sale, in the above situations, you, as the Buyer, are covered - and in detail.
If you’re thinking of taking a stroll down ‘new construction aisle - whether condo or freehold", please call and let me help you - so you don't end up taking a negative & losing walk on the wild side.