A reader of mine recently suggested that I tackle this topic, so I’m more than happy to oblige.

There is obvious potential for bias here, so I’ll try to draw from my own experiences as a consumer as well as an experienced Realtor.

Allow me to get up on my soap-box for just a few minutes.  After all, isn’t that why I have my own blog?

I have come to the realization that I am, in fact, a salesperson, but I will NEVER become a stereotypical, cliche, shark of a money-grubbing, unethical salesperson that many people associate with industries such as used cars, real estate, or vacuums being sold door-to-door.

I got into this business because I love market dynamics but I didn’t want to go into finance, because I like dealing with and meeting new people, and because real estate is a common thread that binds us all: we all have to live somewhere.

I do handle myself differently than many Realtors selling resale residential real estate, but I think as a whole, us Realtors differ from the people selling pre-construction condominiums and working at sales centres for the developer.

Let’s start off with a statistic: 60% of all agreements to purchase pre-construction condominiums in Toronto fall through within the ten-day rescission period.

Suffice it to say that for a salesperson, it must be pretty disappointing to have 60% of all your sales and all your potential commissions go “bye-bye” ten days after you thought you locked up a deal.

This is the basis for why I think these salespeople are naturally inclined to be shady dealers.

As I mentioned in my post the other day about Delayed Closings, many developers take a backwards approach with their projects in that they sell condominium units before they ever have the financing in place!  You would think that getting money for the project would be job-one, no?  But many projects use their sales statistics to attract financiers, and essentially sell something which there is no guarantee will ever be built!

For example, plans are in place for a 38-storey, 328 unit condominium in downtown Toronto, and the project features a “Launch Party” with food, drinks, and the whole dog-and-pony show.  All kinds of “incentives” and “discounts” are offered, and the salespeople sell 260 of the 328 units in four days after the project is launched.  The developer can then take these statistics to the lending institutions and prove that their project is a no-brainer, since the building is well underway to selling out.  What’s the worry about financing a project when all that’s left to do is actually build it?

This is reason number two why I think pre-construction salespeople are shady dealers.  The project isn’t going to get off the ground if they don’t sell, sell, sell!

It works a little differently with resale properties, since you aren’t dealing with any time restrictions.  I have no problem showing a client houses from January through June if that’s what is best for the client.  But with pre-construction condo salespeople, their goal is to get your signature on the dotted line the very day you walk into the sales centre.  Because if they don’t, they may very well never see you again.

This next story I may have told before, but after 300+ blog posts in the last year, I can’t keep track.  A few years ago I had a client who was working with me to purchase a small house in East York.  One day he called me up and said that he had found the perfect “project” down around Dundas & Broadview, and that he was eager to buy.

The “project” was a sub-division of townhouses which was being built upon a flood plain by a first-time developer, but that’s besides the point.  I visited the sales centre and told the lead salesperson that I had a client that was interested in purchasing a townhouse, but before I could get any further, she told me, “We don’t cooperate with other agents.”

Uh-huh…

This set off alarm bells in my head, but I had to explain to my client why this was a bad thing.

Here you have a developer that is refusing to cooperate with other agents, whether this agents from Bosley Real Estate, Re/Max, Royal Lepage, or XYZ Realty.  The developer is essentially cutting out all of the experienced, knowledgeable salespeople so they can deal with the buyer on their own!

Doesn’t this seem a little suspicious?  It could be argued that they simply want all the commissions to themselves, but I think there’s more to it than that.  I think that since most developments cooperate with other agents, you have to wonder why a particular development isn’t.

So what if a developer iscooperating with other agents; why should you use one of these other agents?  Well, a buyer agent from Bosley, Re/Max, or Royal Lepage is independent of that developer and will look out for your interests!

If you were tried in a court of law, would it be fair for the crown attorney whose job it is to convict you to also argue in your defence?

So why should consumers be lead to believe that by walking into a sales centre and dealing with the on-duty agent whose job it is to sell units for the developer that they are going to get a fair shake?

When I purchased my unit at Rezen, I dealt with two salespeople. 

Brad kept telling me about what a great investment this property would be and how much money I could lease it for.  But when I read over the section of the contract about leasing,  I determined that the developer would not allow anybody to lease out their units during the initial occupancy phase.  “Brad the salesman” either didn’t know what he was talking about, or lied through his teeth.

Sarahhad a very good knowledge of the business and had been involved with many projects before.  When I told her that I wanted to include a clause that would allow me to sell my condo after the initial occupancy date or before the final closing (essentially sell my contract to purchase the property), she agreed that this was a good idea, and included the clause.

But what she neglected to tell me was that by including this clause, I would be responsible for collecting my GST rebate from the Ontario government—something that the developer does 99% of the time.  Including this clause put the onus on me, the buyer, and freed the developer from doing so.  What’s even worse is that the developer would charge me the 5% GST in the final closing costs!

Sarah either knew this and didn’t explain it to me (in my defence, I’m not perfect, and I never saw this coming!), or knew and neglected to tell me in order to get the sale.

Thankfully, I have a very sharp real estate lawyer who caught this buried in the back pages of the fine print and we worked out a release from this clause.

There is nothing simple about real estate for investment or for personal residence, so I can’t understand why Joe Q. Public walks in to a sales centre with no representation and negotiates a deal on his behalf!  Joe doesn’t work in the industry, and therefore Joe doesn’t know the in’s and out’s of the extremely complicated world of condominium developments.

Doesn’t it make sense to have somebody looking out for your interests?

And if you answered “yes” to my seemingly rhetorical question above, doesn’t it make sense to have somebody other than the person who works for the developer?