Joe Richer Opinion
June 30, 2020
I want to buy a pre-construction home. Do I need a real estate salesperson to arrange the purchase?
The choice is yours and I suggest you consider your options.
Many builders hire real estate salespeople to market their developments - much like resale homeowners do - at sales centres. Those representatives may work for a brokerage retained by the builder. And sometimes builders employ their own sales staff to present a development's offerings and amenities. This makes closing a sale on-site, without a real estate salesperson representing you (the buyer), entirely possible.
However, it is important for you to be aware that staff at a builder's sales office work for the builder and represent the builder's interests.
You would be well-advised to discuss your purchase with a real estate salesperson who could represent your interests in a transaction - especially if you don't have much experience in purchasing pre-construction properties.
In hindsight, I wish I had sought the expertise of a professional to help me in my first pre-construction purchase. I am sure I would have felt more reassured during the process, knowing where I might be in a position to negotiate and where I likely wasn't.
There are other good reasons for you to work with a registered real estate salesperson.
If you don't have a specific development in mind, a salesperson could help you find one; salespeople are often invited to attend builder-hosted VIP events where pre-construction units are offered for the first time. A salesperson also has full access to listing services and has likely handled similar transactions, so they can evaluate the builder's price and featured options.
An experienced real estate salesperson should also be able to help retrieve and examine the building plans, offer insight into the neighbourhood, estimate the various closing costs (which can be substantial for some new properties), and assist in negotiating the agreement.
Hiring your own real estate rep can also be beneficial should your personal situation change and you need to re-evaluate your property ownership plans - or if you have second thoughts. For these reasons, you will want to know your options for exiting an agreement, if that is even possible, prior to completion. That means also seeking the advice of a real estate lawyer.
Even if terminating an agreement is possible, you may learn that there are some limitations. Many pre-construction agreements contain clauses that prohibit the buyer from assigning their rights under the agreement to another buyer. If the agreement prohibits the assignment of their rights to another buyer, they would have to cancel it under the terms of the agreement and risk the loss of their deposit or litigation. Alternatively, the buyer would have to wait until after taking possession of the property to sell it.
Best of luck with your purchase. I hope you find the home of your dreams.
Joe Richer is the registrar of the Real Estate Council of Ontario (RECO) and contributor for the Star. Follow him on Twitter: @RECOhelps
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