My daughter wants to buy a preconstruction condo. Can a real estate salesperson assist her?
While your daughter may decide to deal directly with the builder of her eventual home (she should remember that the salespeople in the sales centre are employees of the builder and are there to represent the builder’s interests), she would be well-advised to discuss her purchase with a real estate salesperson or broker if she is inexperienced in purchasing preconstruction properties. In fact, there are some good reasons for her to work with a registered real estate salesperson.
If your daughter doesn’t have a specific building in mind, a salesperson could start by helping her find one; salespeople and brokers are often invited to builder-hosted “VIP” events where preconstruction units are offered for the first time. A salesperson also has full access to the Multiple Listing Service (MLS®) and has likely handled similar transactions in your area, so they can evaluate the builder’s price.
An experienced real estate salesperson should also be able to read and explain the building plans, offer insight into the neighbourhood, estimate the various closing costs (it’s a new property, so they could be substantial), and possibly assist in negotiating the agreement. Buying a preconstruction condo can be an exciting experience, and that’s especially true when the builder creates it to your specifications. The down side is that you have to wait for your new home to be built, and sometimes there are unexpected construction delays. We were a few months late moving into our first condo, but I must say, it was very nice to know we had picked what was important to us.
Your daughter may experience second thoughts, or her life plans could change dramatically while it is being built, so she will want to know her options for exiting the agreement ahead of time, if possible. That means showing the agreement to a real estate lawyer who can determine if the agreement provides the buyer with an opportunity to terminate the agreement beyond the legally-required ten day cooling-off period, during which a buyer may back out of an agreement, or to assign the unit to someone else.
Even after a building is ready for occupancy, it can take a few months for the condo corporation to be registered with the province, and most preconstruction agreements contain clauses that prohibit the buyer from assigning (selling) the original contract to another buyer before the building is completed and registered. If the sale agreement prohibits the buyer’s right to assign, the builder may be entitled to cancel the deal and keep the buyer’s initial deposit(s) if the buyer attempts to sell, assign, or list the property during this pre-registration period.
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Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.