Buying an unbuilt condo? Think twice, agent says

Being exceedingly careful in one’s condo purchase is never a bad thing, especially in light of the $3-million class action by over a hundred condo owners in Ottawa.

Toronto-based real estate agent David Fleming, who says that he has never been involved in a pre-construction condo transaction in his 13 years as a professional, advocates one simple bit of advice: “Never buy new.”

"I liken it to buying a pair of jeans. If you walked in [to a store] and you couldn’t try them on and didn’t know how long they would be, and what the waist was … that’s a hundred-dollar pair of jeans. So why would someone buy a million-dollar condo the same way?"

The most important aspect that buyers should remember is the fact that they can back out with no penalty, as Ontario provides a 10-day “cooling off” period that can serve as an out for hesitant consumers. The countdown for the 10-day duration starts once the would-be buyer receives a copy of either the disclosure statement or the fully signed purchase and sale agreement, whichever comes later.

Another wise step would be to always hire a lawyer, who should be tasked to review all of the documentation involved in the transaction. If the lawyer suggests amendments to areas of concern, these proposals should be forwarded to the developer.

“If the developer says no, then don’t go ahead with the transaction.”

Fleming also noted that it would be helpful to remember that the people in the showroom are still salespeople who work for the developer, no matter how warm and accommodating they might seem. Working with one’s own real estate agent should help a consumer avoid an ill-advised purchase.



Related stories:
Ottawa condo owners file class action against builder
Red-hot Toronto a source not just of profits but also of dismay for agents

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COMMENTS

  • by Todor Yordanov 2017-04-03 11:44:08 AM

    Seriously!!!! Did anyone at the magazine read what you just published?
    An agent who never transacted on pre-construction offers an advice on how to do it. And compares a real estate purchase to buying jeans.
    Are you trying to become irrelevant with such stories?

  • by NewHomeExpert 2017-04-03 12:04:58 PM

    This agent is clearly biased against new condos and the article neglects to mention the many benefits of buying new a few of which I will list here:

    1. Buying a new condo is generally less expensive and increases in value faster than a resale condo.
    2. Buying new means you get your choice of floors and views (if you get in early enough!)
    3. New condos come with a warranty against defects.
    4. New condos are fresh and clean with no hidden secrets.

    To use the agents' analogy: If I am going to buy a pair of jeans, I would rather have a brand new pair that I at least know are not worn, smelly and with a hole in the knee:)

  • by Omer Quenneville 2017-04-03 12:13:16 PM

    Given the market there are some great opportunities with pre-construction but some smart rules applies. Never walk into a pre-constructions site without your own agent and don't sign or register without your agent. Most people don't realize that these sales people are sales people and not agents and work exclusively for the developer. It is buyer beware. A realtor should be with you while signing and walk you cautiously through the cooling off period and making sure that with the help of a lawyer, all i's are dotted and t's crossed. Agents should consider with their client any restrictions that may be part of the assignment clause. Many developers are now putting a lot of restrictions on the assignment clause making the privilege to assign almost impossible. Your situation can change between the time you buy and the time many years later when you take possession. You need to know if you need to bail what the restrictions are and no one will tell you unless you ask.

    Occupancy is another issue that can vary greatly from each developer. Keeping in mind that your situation can change, you may have bought a studio and now you have a spouse and kids, the occupancy clause may not allow you to lease out our unit during the occupancy period at all or a possible fee my be requires.

    I can go on... like levies and caps that are not really capping much.

    Recently I dealt with an agent that specialized in new-built and I felt like I walked my client into a shark tank and everyone is going to take a piece. I don't have a problem with this if everything is fully disclosed but that wasn't the case. I felt they want you to drop the ball and will do anything to get past the 10 day cooling off period. There exact words to my client sign and think later and now lets get past the cooling off period and let the client can learn as he gets closer to the possession date.

    I don't have a problem with all the hoops that one must be prepared for, I have a problem with them not being properly disclosed.

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