Do I need an agent to buy a new build home?

Do I need a real estate agent when buying a new construction home?

Buying a new construction home can be exciting, whether it’s a new build house, townhouse, or condominium. My first home was a new-build townhouse. If you are in the market to purchase one, it’s a good idea to understand a few things to help you decide whether you would like to hire a real estate agent or move forward independently. In hindsight, I wish I had known I could have had my own agent and had done so.

First of all, it is important to know that many builders hire real estate brokerages to market their developments. Some builders may choose not to hire salespeople to present and sell the properties to prospective buyers. You can expect the salespeople to be knowledgeable about the available properties, the options and upgrades. However, it’s key to understand that their job is to sell the home to you and look after the best interests of the builder, not yours.

In any transaction, it’s vital that you have someone looking out for your interests. That is where engaging your own agent can help level the playing field. They will help you better appreciate the implications of buying a new property from a builder. As well, they will be dedicated to uncovering and documenting your needs, nice-to-haves, and to providing pricing guidance, and strategic advice to help you make informed choices.

For instance, if you don’t have a specific development in mind, an agent can help you find one based on your needs. They are often invited to attend builder-hosted events, have full access to listing services, and may have enhanced knowledge of upcoming projects.

In addition to providing advice on contract negotiations, they also offer a broad range of other services, such as reviewing building plans, sharing their knowledge about housing in specific neighbourhoods, and providing insights on market trends. Some builders offer commission to buyer representatives as well, which might help your budget.

Having said all that, if you still wish to proceed without an agent by your side, here are a few things to be aware of.

Confirm that the new construction builder is licensed by the Home Construction Regulatory Authority (HRCA) by checking their Ontario Builder Directory. This is critical as anyone building or selling a new-build home without being licensed as a new home builder or vendor is operating unlawfully.

As well, make sure the property is registered with Tarion – the regulatory body that administers the Ontario New Home Warranties and Protection Plan. Individuals or companies that sell new homes are obligated to register the property with Tarion and to provide information to buyers, including about deposit protection, delayed closing/occupancy coverage, financial loss coverage for contract homes, and a total of seven years’ coverage against construction defects.

With any new home purchase, I strongly recommend that you get advice from a lawyer who is insured to practice real estate law before making any final decisions. A real estate lawyer can also help you review all the documents and ensure that you understand both your obligations and the builder/seller’s obligations before you finalize the deal.

If you have a question for Joe about the home buying or selling process, please email information@reco.on.ca.


This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.

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.


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