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Buying a condo pre-construction without an agent

Yes, I agree that agent is not needed for pre-const.
One question: Is this correct that if someone has registered at the builder's website, they can not then use a vip agent for the initial release of units?
I don't see the need to using an Agent for pre-construction unless you want to get into VIP pricing, but the builder will pay the Agent on average 4% net of HST. Once the VIP pricing is over then the public has access to it, they increase there prices roughly 4-5% (you should negotiate with no agent) which in fact would be the same pricing minus the commission. The only difference is you won't have the pick of floorplans. Usually what is left are units that are not as desirable, but it really depends how it sells during its launch. Remember to get a good Lawyer, plus you have a 10 day recission period anyways just in case you want to back out. I think the bulder pays the Agent, and I also think this is when an Agent works more for the builder than the client. Agents in this role are kinda like pimps! Just my opinion.
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You might just be the most honest agent out there.
I respect your ability to objectively appraise the system and look beyond your own potential immediate reward.
The old expression as you pointed out is: "He who pays the piper plays the tune". The builder will not "reinvite" VIP brokers who don't bring him clients. So the agent is forced into the unenviable position of either bringing in his client and not truly representing the client or risk running the wrath of the builder and losing his "VIP" access.

That said, I fail to see why agents feel the VIP system is fair. I am sure agents get upset when they hear of insider trading in the stock market...people trading with the benefit of information not available or before the rest of the public has access to the information. It appears to me that by putting VIP pricing is tantamount to the same practice.

Again, I would understand a builder going to his previous clients and offering them first access. However if the agent is being offered VIP access; supposedly acting for his client the buyer, paid by the builder; who does the agent truly represent? In any other fiduciary arrangement, the agent I fear would be viewed as having abrogated his fiduciary duty.

I am sure I will take a lot of heat for this position but instead of being vented against I would like to hear a rational cohesive position as to why my thoughts are incorrect. If that was presented, I would be willing to reconsider my position.
I've purchased a number of personal and investment pre-construction condos both with and without an agent. My experience is that the scenario is what really drives whether or not the agent is of value.

If you're buying a pre-construction condo that's already open to the public the agent really doesn't offer much value. In fact in many instances I've negotiated a reduce rate, usually between 1.5-2% off the purchased price, directly with the builder for not having an agent thus saving them the 3-4% commission they would typically pay. They won’t all agree to this but it's worth asking. The determining factor is usually whether the sales person is directly employed by the builder or if they're an agency contracted out to handle the sales. All but 1 condo own I've been able to get a reduce rate. It takes effect during closing which is nice.

Now, where an agent really earns their pay is on VIP sales. If you know of a project coming up it's well worth getting an agent who has access to the VIP. You can typically save up to 3% on already reduced prices plus get first selection on units. You have to be careful here because *many* agents will tell you they have access to VIP sales when really they don't. The last place I invested in was Yards by Onni Group. I went in with an agent to the first VIP and got a great deal. I later spoke directly with the builder's sales agent and they explained to me they give first access to select agents not brokerages as a whole. Agents who have sold a set number of their past units get invited first. Then it's general VIP for all brokerages followed by the public sale. So make sure you agent has access to the initial VIP. If they don't find one that does.
A very reasonable response. That said, it still does not justify the system. This simply reflects that you need to know the right "VIP" agent. Should it not be open to all rather than a few who know who to go to and have to pay for access. If you saved 3%; the builder built that in his price along with the 3 or 4% on top that he is giving to the agent. Either way, it is adding unnecessarily to the cost the the public who are buying a home.
I have more sympathy for the situation for investment condos because my view is that you are making an investment decision and you factor in the price to determine if it is a proper investment. This is different in my view from someone trying to put a roof over his head who is paying a premium just to get access. It almost becomes a fine line between a service and a bribe to gain access.
I just think it is inherently wrong. I do believe that for some an agent will be of help and for those the agent should be compensated. I just don't think that one should not be able to even enter the game early unless one pays supposedly someone there who is to represent me a fee just for access, as opposed to service.
I guess I am just naive but I just do not feel it is fair or right.
There's VIP sales, then there are VVIP and VVVIP sales.
The whole VIP sales system is very convoluted and misleading.

I agree that if you are highly set on buying in a particular building before it is launched, than a very reputable agent with a strong history of VIP sales connections would be good to have for getting the best choice of units at a reasonable discount. However many lessor agents will say that they could get you access to VIP sales, but in truth these VIP sales (which are infact later VIP sales) are fairly accessible to anyone whether you are an agent or not. I'm not an agent but I managed to get into a VIP sales event a month before other agents.
The first priority VIP sales are often done with overseas investors who usually buy multiple units at a time. This is sometimes done before a sales office is even finished.
Unfortunately these VIP sales leads to most of the choice units being sold before the development hits the public and remaining units sold at a markup due to the hype and to make up for the discounted VIP sales. It's not fair that the purchasers who buy to live in are the ones who are suffering because of this.

Any agent will tell you that an agent is recommended for buy pre-con, but they are the ones making their commission for very little work and effort (compared to resales). So don't take their word too seriously.
This is true, the VIP sales can mean many things, this can be general VIP that any Realtor can go to, we get invites all the time for our Brokerage from certain developers these are okay but after the VVIP and VVVIP.

I have access to two major developers for VVVIP but it only for my investors from China, min 5 to 10 units purchased depends on development. I get great prices and units and offer maximum return (also developer needs money and this is before sales office is built). I make alot of money from these deals but must give back alot of $$$$ to some people on the developer side (lots of kickbacks aka bribes) to get this exclusive access. This is the way the business works.

For regular folks they can find a agent who specialize in new condo sales, most of these agents work and build relations with one to two builders and can give you better deal/options.

Hope this helps!
... I get great prices and units and offer maximum return (also developer needs money and this is before sales office is built). I make alot of money from these deals but must give back alot of $$$$ to some people on the developer side (lots of kickbacks aka bribes) to get this exclusive access. This is the way the business works...
So if you have a client that wants in at the early stage you offer a kickback but who gets the kickbacks the developers or sales staff? That has got to hurt you since you're paying tax on the commission but can't write off the kickback. If a buyer wants to cut the same deal can they?
Yes I agree it might seem to make more sense to just pass along the savings to the buyer but as the previous poster said, it's just the way the system works.

I also asked this same question to the builder's sale's rep. She explained that the industry has changed in the last decade where before the builder spent a lot of money on marketing, a lot of that now is handled directly by agents and brokerages. So the commission is in essence a type of incentive program for brokerages/agents to promote their development and handle much of the marketing. So it works out cheaper for them. I'm sure if it wasn't beneficial developer's wouldn't offer VIP commissions. Again, it's just the way the system works.
If you're buying pre-construction I wouldn't use an agent. The agent will promise things like getting the builder to agree to add a couple of thousand dollars in upgrades, amongst other things, but you'll likely never get a reduction in the purchase price. Would you rather have 10k off the purchase price without an agent, or have 2k of free upgrades with an agent? The numbers are just an example, but the builder has more flexibility to bargain with the purchase price knowing that they won't have to pay your agent a cut.

The bottom line, in my opinion, for re-sale you should absolutely use a real estate agent, you'd be silly not to, but for pre-construction the pros far outweight the cons to not use an agent and purchase it by yourself. Of course an exception is if your agent can get you into a VIP viewing.