hello urbantoronto!
We are first time homebuyers looking for a new home. We aren’t set on location or type but we liked the Etobicoke area near Humber Bay. We felt that this area was close to the downtown core with a lot of potential for future growth (being near the lake also helps!).
In our search, we’ve primarily considered pre-construction condos. Our dilemma now is whether it would be beneficial in having an agent/broker represent us, specifically for pre-construction? For looking at resale condos, I understand it makes perfect sense, but are we missing anything if we were to look at pre-construction without a realtor?
Your help is greatly appreciated!
Hi jafar,
Congratulations on starting your search for a new home!
Few pros and cons of having a realtor with you for pre-construction.
PROS:
Realtors have access to units released within one of the initial round of sales conducted by most developers. This round, referred to as the Broker VIP (among other fancier labels), is held after an initial release to
"family and friends" of the developer. So the units available aren't necessarily the best units but there is definitely a larger variety to choose from. The prices during this VIP are usually lower than those in
succeeding rounds of releases but not necessarily. The next round is the Public Opening and prices may be increased (depending upon the success of the Broker VIP) and fewer premium units
may be available. So if it's access and potential pricing and incentives you're seeking, having an agent may benefit you.
In addition to this access, experienced, ethical realtors will cut through the marketing fluff, inform you of prevalent pricing/finishes on offer within pre-construction projects in the area you're looking in,
explain payment structures, closing costs, financial risks/rewards, and steer you towards units with good end-user, re-sale, and investment value, based on your criteria, budget and motives for purchase.
CONS:
As a developer, I've lost count of the number of times realtors walk-in to my sales center, head straight for the price sheet and inquire about the co-operating commission.
They completely ignore the finishes/features on offer within the project, relying purely on price/sq.ft and commission pay-outs as the driving factors behind recommending the project
to their clients. Then there are agents who don't even bother reading the Agreement of Purchase and Sale, relying on the Purchaser or the Purchaser's lawyer to comment on
the content within. These agents simply care about the sale; safe-guarding their client's interest is a distant second (or a non-existent concern).
There are pre-construction agents who have no clue about the re-sale potential of a unit. They look at the price/sq.ft and recommend the unit blindly, never taking the time
to examine the location of the unit within the building, the lay-out, the finishes, etc.
Also, should you be interested in a project that is in a more advanced cycle of their pre-construction sales, having a pre-construction agent may actually hinder your ability to
get the best deal. Most builders are loathe to offer incentives in this later cycle of sales while paying out a commission and you may be able to get the best deal
without an agent representing you.
Ultimately, my recommendation is this:
If you're experienced in purchasing pre-construction and have taken the time to research the various projects within the market and read up on real estate trends and market conditions,
then you could definitely purchase without the aid of a realtor. Especially if you're considering purchasing within a project that has already had it's broker and public vip and is
looking for a few more sales to achieve financing.
If you're not confident in your ability to navigate the mountain of information that is out there and differentiate between the truly worthwhile, quality projects and those that hide behind
marketing and sales tactics, then definitely seek the assistance of a realtor. Particularly one that has experience in both pre-construction and re-sale. Research the realtors you are
considering working with and interview them to get a sense of their experience and integrity.
Hope this helps!
Cheers
