Preconstruction Properties: Helping Your Buyers
| October 02, 2014
The lure of a brand new condo can be extremely exciting for consumers. Sometimes, this is the case even when the ground isn’t broken on the new property. When a consumer is working with their own buyer’s representative in the purchase of a new property, their buyer representative can help them ensure the i’s are dotted and the t’s are crossed before putting a deposit down on a house or condo that hasn’t broken ground.
A recent case before the Ontario courts illustrates this perfectly. A Toronto lawyer faces 75 charges of for failing to return deposits to purchasers of a condo/hotel project. In total, $14.9 million disappeared from almost 160 people.
This case is especially relevant in Alberta with the explosion of new condo developments.
So what does this mean for real estate professionals? It means buyer representatives should do some homework on pre-construction properties. This goes hand-in-hand with providing competent service to clients.
Who is the builder?
What is their track record? What projects have they previously completed?
Do they take part in the New Home Warranty Program?
Do they have deposit protection?
Providing competent service for your client means helping them get answers to these questions and reviewing the documents related to the project. If you’re not comfortable reviewing the documents, recommend your client seek other advice (lawyer, engineer, etc.)
If you see any red flags during your due diligence, tell your clients any risks you see in purchasing the condo in question.
You would think a high-rise condominium construction project would only be done by a professional, reputable developer and builder, but not all companies are created equal. Knowing about the developers and builders in your local market can help you provide even better service to your clients.
Providing competent service also means trading only in the areas in which you have and maintain expertise. If you have no experience with new-build condominium purchases, you should talk to your broker, or maybe even suggest the buyer retains the services of a different industry professional with new-build condominium experience.
Your client may jump at the opportunity to put money on the table for an exciting project they can’t see or touch, but buyer’s representatives have a role to play in helping to protect that buyer’s interests.
