THE ABSOLUTE WORST Units To Purchase When Buying PRE-CONSTRUCTION

One of my most successful and helpful services as a realtor is representing buyers when they are purchasing a pre-construction condo from a developer.

"I will accompany you to the developer or Builder's office or sales center and act as your representative when you are negotiating with the developer’s real estate professional. I will handle the paperwork – keeping it simple and clean all at no cost to you."

JUST REMEMBER: I am always paid by the seller or even builder directly, but I have a duty to act in your best interest. The builder will always be on their side, not on yours. My duty is to SAVE you MONEY while I represent you; as opposed to you walking in off the street to the builder directly without a realtor. Most of the time, buyers OVERPAY when they don't work with a knowledgeable realtor. Did you know you can get additional perks with a realtor who knows how to negotiate? AND, you can actually prevent yourself from falling into some of the traps below that I will discuss.

But even with all of my personal pre-construction experience, I can't predict with accuracy which unit will be the unfortunate one to get the "worst unit" in the entire project.

So WHAT is the worst unit?

Now let's be clear: I'm not talking about getting sold the worst floor plan or the worst view by the real estate professionals that work for the developer. Being represented by an experienced professional will allow you to avoid those pitfalls.

The worst unit you can get is the one used as the "LIFT UNIT"

This is the unit that, during the construction of the project, is used as a go between in the building before the internal elevators are set up (pictured above on the heading of this article), it would be the corner unit on the right with the elevator, or "lift").

• These units are NOTORIOUSLY bad in terms of deficiencies and defects.
• They are usually the ABSOLUTE LAST units that are finished (which can be a good or bad thing depending on your goals).
• They are often used as hang out spots for the construction workers working on the building.
• They see the brunt of spills, accidents, and mistakes.
• They are often hurriedly finished towards the end of the project.

What should I do if I get stuck with that unit?

You may be stuck with the unit, but we have to make sure you don't get stuck with the problems.

Know this: the builder is legally obligated to provide you a unit that is completed in good workmanlike fashion (whether you got the lift unit or any other unit in the building or any new home or town house). There is a system set up to protect your rights and ensure you get what you paid for.

What You Need To Know

Each newly constructed condo/town-home/detached home purchase is controlled by both the contract you sign AND the applicable laws. This means each unit must be examined on a case-by-case basis.

Let's jump right into it:

What can the builder get away with when building your unit?

1. They can modify the plans: They are NOT forced to stick to the site plan or even your floor plans exactly.

Under most contracts, builders give themselves the right to change the plans they originally showed you when you bought the unit. This happens (usually) when a builder starts selling the units before they get approvals from the city.

Know this: builders don't actually want to do this because it costs them money. It is usually done because there are problems in the construction phase that they didn't foresee in the planning phase.

2. They can substitute the materials: they are NOT forced to stick with the exact same finishes they promised you. This disappoints a lot of buyers.

Most new home agreements allow the builder to substitute materials of equal value from what they promised you before you bought the unit.

If you were given a chance to choose your colours/finishes, the rules say that the builder can't change the finishes without providing your with written forewarning.

3. They can make "minor" changes from what you originally bought without having to compensate you. They can change things like:

• The colour of the paint;
• The colour of the roof (for new town-homes/detached homes).
• The colour and type of kitchen and bathroom faucets and other fixtures;
• The colour and design of the cabinets and countertops;
• The style of interior trim;
• The colour and type of floor; and
• The colour and type of windows.

When can a builder force you to take possession of your unit?

• The buyer only HAS to take possession and close the deal when the unit is substantially completed. The home must be constructed in a workmanlike manner, free from defects in material, and be fit to live in.
• There are requirements for the builder to have competently completed the structural, mechanical, plumbing and electrical systems.
• The law doesn't concern itself with the bathtub, kitchen countertop, backsplash, or other cosmetic parts of your home being installed properly, but rather that the basic necessities for living (heat, bathroom, running water, etc.) are available.

What does this mean?

It means that, legally, the builder can give you possession and force you to close even though the bathtub isn't installed, the kitchen countertop is loose, and the backsplash is crooked.

Now, there are non-legal reasons why a builder wouldn't want to do this (things like reputation, future sales, common decency); but you can't be absolutely sure.

What Can You Do To Mitigate Risk and Protect Yourself?

Here's where educating yourself helps: Subsection 13(1) of the Home Warranties Act gives a warranty to every buyer of a new home in Ontario

For the warranty to be enforced, the buyer must formally report the deficiencies, in writing, using the proper forms, submitted before the HARD DEADLINES. I can explain to you what this means when I represent you more in detail.

First, when you sign a pre-construction contract, always make sure you have the right to sell or assign it before closing. If you work with the right realtor, I can negotiate the assignment fee in your best interest AND sometimes at a MUCH LOWER cost if you decide to assign it at a later date before occupancy date.

Second, buyers should consider negotiating a clause with the builder that states that if there is a change of life circumstance before closing, such as death, serious injury or loss of employment, they can cancel the contract upon the payment of a set amount or penalty.

Third, always get legal advice from a pre-construction legal expert. Contact me if you need an excellent lawyer. I've used so many in the past; that there are only a handful that are competent, intelligent, saavy and really a pleasure to deal with professionally.

By the time a new condo project goes on sale to the public, most of the BEST units are already sold. Actually, the condos, homes or lofts that you see are already 50% sold by the time of the public opening. How can that be? The ONLY WAY to get the best units (high floors, best layouts, good views) is by partnering with someone who has VIP access to the condos BEFORE they go on sale to the public. That means if you’re working with the right VIP Realtor, you should get special VIP pricing and upgrades too. Email me if you're eyeing a certain building or need some advice on the most re-construction pre-construction projects for 2017!

READY TO INVEST IN THE PRE-CONSTRUCTION REAL ESTATE MARKET?

As an investor in the Greater Toronto pre-construction real estate market, there’s a lot to consider. If you want to partner with a great REALTOR that knows how to evaluate the best options for you whether it's pre-construction (new builds or resale), selling your home, business or even something specific (commercial investment properties) or rentals, Text 416-988-00042, call or send an email to: [email protected].