# Buying a pre-construction condo!?



## SkyFall (Jun 19, 2012)

Hey guys,

I was wondering when you are buying a pre-construction directly from the promoter, is there any benefits for me as a buyer to have a broker? or there's absolutely no need for a broker when buying from the promoter...

Thanks guys


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## gardner (Feb 13, 2014)

My bet would be no monetary benefit either way. The broker technically works for the seller anyway, and the builder probably has an exclusivity contract with a brokerage so that the broker gets paid whether the buyer uses brokerage services or not, so there's likely no price savings. It is possible the brokerage could add something useful to you, like having errors and omissions insurance that could cover some arcane situation, or some useful service, but I doubt it.


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## SkyFall (Jun 19, 2012)

Thank you for your input gardner. I'm sure the promoter has its team of broker, but my question was more in the sense if i come up with MY broker ( that works for me) can my broker negociate the price for me? And the commission is split between the seller's broker and my broker.

Also, I know it depends on the situation but with pre-constructiom is there a margin for negociation? Especially for options...


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## heyjude (May 16, 2009)

Why not negotiate for yourself?


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## Mortgage u/w (Feb 6, 2014)

SkyFall said:


> Thank you for your input gardner. I'm sure the promoter has its team of broker, but my question was more in the sense if i come up with MY broker ( that works for me) can my broker negociate the price for me? And the commission is split between the seller's broker and my broker.
> 
> Also, I know it depends on the situation but with pre-constructiom is there a margin for negociation? Especially for options...


If the builder has an exclusive contract with an RE agent who has the property listed on MLS, then yes, they are open to collaborating agents. Although your agent will be grateful since he will be receiving a commission, I don't think you'll get that much of a better deal than if you represented yourself. The margin of negotiation is very minimal when it comes to new construction. 

If you are uneasy with the process, then by all means have a trusted agent represent you. But if the builder is self-promoting, I think they will not accept an agent to negotiate for you. If they do, no commission will be paid so your agent will definitely ask you for it instead.


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## SkyFall (Jun 19, 2012)

Thanks for the reply. I was going to negotiate myself, but I though if a broker could have done it for me (getting the commission from the promoter) than why not.

I was looking for a condo in a 16 units building, I would be on the 3 floor out of 4 (the unit I want is not available at all on the last floor). It's really a condo to live in and not something i'll try to sell back in 5 years. Due to some circumstances, I have to move out in a few months out of the place where I currently live and I was like might as well get some equity on a property.

Condo is selling for $211k with the taxes (and tax return) it will be $230k, for 1180sqft, 2 bdrs and 2 parkings. I want to put 20% down so no CMHC and I can amortize the mortgage on 30 years (with the might set to pay it back within 25 years). So mortgage on $184k would be around $760/month, and that's the same amount rent is going around here for a 2bdrs. I know there's another expenses that comes with home ownership.

At $230k, I'll try to get them to throw in the A/c, bedrooms come with carpets which I want to remove that and have some nice floating floors and maybe a few things here and there.

Thanks guys!


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## Spudd (Oct 11, 2011)

You have a couple of risks with pre-construction condos, I'll just throw them out there in case you hadn't thought about them.

1. It might not be ready by the date they promise you. I have heard of them going over schedule by years. 
2. The condo fees they advertise are sometimes artificially low. Once the condo board takes over after the first year, they see how much the maintenance/etc really costs, and the condo fees often spike up.


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## Mortgage u/w (Feb 6, 2014)

Once you add your taxes and condo fees, you'll be closer to $1000. Not to mention closing costs and solicitor fees.

If I were you, I'd rent for $760 and put the extra $240 (or more) you'd be paying aside in investments. I think you'll gain more this way than in equity for a condo. Once you have a bigger DP saved, aim for a single dwelling such as a semi-detached cottage or small bungalow. Better yet, go for a plex where you'll get rental income to offset you mortgage payments!


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## dougboswell (Oct 25, 2010)

What city is this where you can get a 2 BR condo for $211k? Why are you also saying it will be $230K?


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## tygrus (Mar 13, 2012)

Sounds like the promoter did a job on you already.

Look these 4 storey wood clap traps are total garbage. They used to sell for about $75k in most cities cause thats all they are really worth. Still over priced at $200k. You are dreaming about the AC and the square footage but I can tell you from personal experience you will regret buying that thing. They are made out of particle board including the floor so you will hear every sound and every smell imaginable in that place. On top of that, you will learn to hate the strata board over time.

My advice, if you have to own a condo make damn sure the thing is concrete and you are on the highest floor you can afford and on the end. 

My real advice is never buy a property without land. period. Save you headaches it will. These are tips from a reformed condo specuvestor.


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## SkyFall (Jun 19, 2012)

First, I'd like to thank you guys for the inputs.

@Spudd: I have the schedule cover, if it's not done in time, I have a place to stay for a few months. However, it's not the first building in the project, and other were on schedule (I know cannot take taht for granted). I am actually expecting to pay more than the condo fees advertised, when doing the calculation I doubled the condo fees.

@Mortgage: I already have all the legal costs covered, with the welcome tax and a emergency fund that should cover unexpected expenses. The reason why I want a condo is really because I don't have the time or the willingness to do some yard work or even house maintenance (if duplex dealing with tenants). I just want my unit and have to do the least work possible on the property so I can have time for other things. It`s kinda hard for me to explain, I just hate to do some work around the house. Like I said, it's more a place to stay, a home, than an investment... the equity part doesn't bother me that much... I just prefer to put the $760 on a property. And I am not by no mean the type of ''buying is better than renting'', I actually was on the other side (renting) for a long time. However, circumstances changed and I think now it's better to buy. Once again, I don't plan to sell it after 5 years. 

@dougboswell: It's actually just across a bridge from downtown Montreal. I can get dowtown in 5 (without traffic). The sector is a 10mins walking distance from some shopping outlets (including grocery, walmart, cinemas, restaurants, etc...). The reason why I said it's $230... the condo is selling for $211k, here in Quebec, we have something call the APCHQ that gives you a tax credit if you buy a property (theres conditions) so instead of paying 15% on $211 which would be approx. $242k I will only pay $230k.


@tygrus: My father in law went to see the unit, he is in construction, and he told me you need concrete floor, which is the case. And he told me from what he is seeing and the plans it's actually a good building. What do you mean I am dreaming about the AC and square footage?

Also, I looked downtown Montreal and I cannot find anything with 2bdrs for less than $250k. They are around $250+ for a 1brd (bottom floors) with parking and parking spot is around $30-60k/each.

Thanks again guys for the inputs.


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## tygrus (Mar 13, 2012)

SkyFall said:


> @tygrus: My father in law went to see the unit, he is in construction, and he told me you need concrete floor, which is the case. And he told me from what he is seeing and the plans it's actually a good building. What do you mean I am dreaming about the AC and square footage?


I mean basically all these builders cheap out on the underlying construction, then cover it with shiny materials or add in amenities so you don't notice. Find out what the wall and frame construction is made out of. If it isn't all 2x6 with 3/4" to 1" plywood (not particle board) and high quality spray in insulation its garbage. Particle board is acceptable for a single family home because you have 10 ft of separation and to your neighbor, but in multifamily the floors on every level and outer walls of every unit have got to be concrete. 

Another tip, if you do buy it, get them to insulate all your interior walls in your unit. The extra sound proofing is well worth it.

Again, I will point out that without land, you do not have a sound investment. You do not really control the unit, you cant renovate it or modify it as you want and the strata board will keep raising fees for little return.


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## Just a Guy (Mar 27, 2012)

The really bad thing about a "middle" unit is you have neighbours on all sides. Usually sound travels downwards more than any other. If the units have hardwoods instead of carpets, and no bylaw preventing hardwoods, the sound can be incredible (and it's not because the people above are being loud, just normal living noises). 

The best units in one of these places is the top floor on a corner (only people on one side and below), though your neighbours are going to complain about you.

I'm on many condo boards and noise is the #1 complaint...second is pets, third is the fees (and considering how much people hate fees, that should tell you something).


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## SkyFall (Jun 19, 2012)

But being on the second highest floor means I only have ONE family on top of me, and my unit would be a corner unit (only 4 units per floor). The problem with top units they represent less than 1% of the supply and top floor means more money...


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## Just a Guy (Mar 27, 2012)

You don't hear the neighbours two floors up...you hear the walking, kids playing, kids running, chairs moving, people being "romantic"...

They are worth the extra dollars.


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## Spudd (Oct 11, 2011)

Just a Guy said:


> I'm on many condo boards and noise is the #1 complaint...second is pets, third is the fees (and considering how much people hate fees, that should tell you something).


Are the pet complaints mostly noise related too? Or are people just grumpy that other people are breaking pet bylaws?


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## Just a Guy (Mar 27, 2012)

Sometimes it's noise, mostly it's people not cleaning up after them. Noise it secondary.


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## SkyFall (Jun 19, 2012)

Just a Guy said:


> You don't hear the neighbours two floors up...you hear the walking, kids playing, kids running, chairs moving, people being "romantic"...
> 
> They are worth the extra dollars.


no offense here, you know how much I respect you when it comes to real estate... I just want to get some clarifications... base on what you are saying is NEVER buy a condo unit if it's not the top floor? boy that makes a lot of condo not worth it no?


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## Just a Guy (Mar 27, 2012)

I'd never buy one to live in. As a rental, I don't care, as I don't live there. 

As I said, there's a difference between an investment and a home.


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## tygrus (Mar 13, 2012)

SkyFall said:


> no offense here, you know how much I respect you when it comes to real estate... I just want to get some clarifications... base on what you are saying is NEVER buy a condo unit if it's not the top floor? boy that makes a lot of condo not worth it no?


Thats right. If I ever owned such a thing again, it would be top floor, end unit away from the stairs, elevator, parking lot and she would be all walls concrete.

In the unit I owned I could hear my neighbor taking a piss at night and flushing and then the laundry room going all night long or people idling in the parking lot with their light on bright or yelling into the intercom. On weekends my one neighbors girlfiend howled like a wolf so he must have been talented at something. The other guy like to bounce basketballs indoors. 

In the other unit I owned it was the strata board who kept adding useless amenities to the complex and raising fees every year. Like a boffo smoking gazebo or walk park for the shitzus.


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## sags (May 15, 2010)

Just a Guy said:


> The really bad thing about a "middle" unit is you have neighbours on all sides. Usually sound travels downwards more than any other. If the units have hardwoods instead of carpets, and no bylaw preventing hardwoods, the sound can be incredible (and it's not because the people above are being loud, just normal living noises).
> 
> The best units in one of these places is the top floor on a corner (only people on one side and below), though your neighbours are going to complain about you.
> 
> I'm on many condo boards and noise is the #1 complaint...second is pets, third is the fees (and considering how much people hate fees, that should tell you something).


You got that right about hardwood.

We have a 2 story townhome that had maple hardwood upstairs and carpet on the main floor. The carpet was old and I discovered solid maple strip flooring under it, so I tore out the carpet.

Beautiful "like new" floors, but when I am in the basement office and anyone moves above me, it sounds like they are dragging furniture around. Even when the cat walks around it is "thump, thump, thump"

I love the floors and got used to the noise, but I now understand why the landlord covered the floors with underlay and carpet to stop all the creaks and groans.

It is bad enough in a townhouse. I couldn't imagine the sound carry through in a condo building.


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## SkyFall (Jun 19, 2012)

Thank you very much guys! I really appreciate every single inputs. I will really do my homework here.


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## tygrus (Mar 13, 2012)

SkyFall said:


> Thank you very much guys! I really appreciate every single inputs. I will really do my homework here.


Couple other tips. 

In wood construction I think the stairwell has to be concrete. Sometimes getting a unit abutting those is a cheapo way to get at least a concrete wall or two against your unit.

End units usually have an extra window on them. Little more sunlight is always good for resale.

Try and get a unique unit. Most designs 90% of the units will be exactly the same layout or a reverse layout but there are usually a few units that have to be a little different to accommodate the design. Anything try distinguish yourself from the rest of the building is great for resale. If you have a choice of the finishings make sure you don't do what everyone else does. Make it different within reason.

Lastly try to get an extra parking spot or storage locker thrown in. These are usually separately titled and can be sold apart from your unit or they can be rented out for a few extra bucks. Always someone looking for parking.

Find out the rental regulations too. Never know you might want to airbnb the place some day.

Oh and for a preconstruction, find out the rules around assignment or not taking possession. You never know what life brings while you are waiting for your place to be finished. Hold them to their dates too.


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## SkyFall (Jun 19, 2012)

Thanks tygrus


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## AlMansur (Jan 25, 2016)

Most of the builders in detached homes do not pay commission to a cooperating Agent, or very minimal ($1k - $2k). Recently, I helped a friend to add some clauses in their contract, which they did not know about.

However, with high rise condos, the builder wants to sell the units ASAP, so that they can move onto other constructions, esp. as they have taken out a loan too and want to pay back their loans.
It's a good idea to get a Realtor to assist you, who can negotiate the price AND ensure the right clauses are included in the pre-construction contract to protect you.
Normally, the buyer does not have to pay the Realtor, as the builder will pay his commission too.


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