Metro heats up with new projects
Streamlining the pre-sale process
When it comes to buying a home in a development offered through pre-sales, picking up a unit might seem fairly straightforward. But industry experts say there are some things buyers should do that will really pay off in the long run.
The first tip is to work with a realtor to represent your interests.
“It costs you nothing, because a commission for your realtor is already built in to the developer’s budget,” explains Dustan Woodhouse, mortgage broker at Dominion Lending Centres. “You don’t get a credit for that amount for not working with a realtor — that money stays in the developer’s pocket. I have no personal interest or gain in this recommendation, it’s just the prudent thing to do.”
Woodhouse says realtors may be aware of incentives that aren’t presented right away to interested buyers, especially if the agents have already helped someone else purchase a unit in the same project. The additional benefits could include extra storage space, appliance upgrade packages, decorating allowances, or being first in line for any additional parking spaces that become available.
“I’ve seen it happen in three or four contracts — from the same building — where the people working with their own realtors got a little extra, and those buying on their own missed out on something.”
Chris Boyd, a realtor with Rennie Marketing Systems, has worked both on behalf of project developers and individual clients. He says agents can help provide access — that may be access to the first pick of available homes, or to information about layouts, pricing and finishes, even before a formal marketing campaign begins.
“When you work with an experienced realtor, you’re getting access to their relationships. Maybe they’ve worked with this particular company before, and the company is interested in their repeat business,” he points out. “There is an aspect of ‘first come first serve’ when it comes to certain layouts, for instance.”
He does point out that others don’t need to worry unduly about missing out; there is often a long preview process to allow buyers to get more information about a project, and that developers will often hold back some inventory. Boyd echoes Woodhouse in emphasizing the negotiating power of established agents for certain incentives.
Woodhouse says potential buyers can also do a little groundwork when it comes to financing preapproval, to save themselves some stress later on.
“Start a conversation with your mortgage provider or broker, to talk about what you’re thinking of purchasing,” he says. “Certain lenders won’t touch properties that are leasehold, that include a hotel strata or commercial component, or are a unique construction type because those lenders don’t want to be exposed to some kinds of risk.” If that’s the case, buyers may want to look at other developments, or find alternate lenders.
Woodhouse says it’s also quite rare for supporting documents — like proof of income, or Notices of Assessment from the Canada Revenue Agency — to be asked for during the pre-approval process, but putting in some time to gather them early can prevent scrambling later on. There is a seven-day rescission period where buyers can back out of purchase contracts for any reason, but if they can’t obtain relevant documents within that time frame, it can force them into hasty decisions.
Finally, he adds people interested in buying a home have to think about their overall debt to create the most attractive mortgage financing scenarios for lenders. It all comes down to the balance of debt versus income; relatively small numbers can have a big impact.
He also cautions people about taking on a great deal of new consumer debt between buying a pre-sale contract, and closing on a property; it can complicate the financial picture, and potentially even derail a purchase.
When you work with an experienced realtor, you’re getting access to their relationships. Maybe they’ve worked with this particular company before, and the company is interested in their repeat business. CHRIS BOYD