What if your client wants to purchase a townhome under construction? A seasoned realtor will probably tell you there is a big difference between selling new construction and a pre-existing home. Why?
The biggest difference is that there are several pieces of provincial legislation that deal directly with the selling of new construction. Realtors need to familiarize themselves with a myriad of new home construction legislation addressing issues like the Builder’s Lien Act; Property Transfer Tax exemptions that may be available for eligible buyers. Also, The Homeowner Protection Act, which protects homeowners of newly constructed homes from deficiencies, while requiring the licensing of residential builders and mandatory third party insurance.
“The Homeowner Protection Act also deals with deficiency holdbacks and walk through appointments,” says Michael Trites, president of the British Columbia Real Estate Association and a managing broker with more than 40 years of experience.
New realtors are encouraged to join The Canadian Real Estate Association (CREA). Its website, CREA WEBForms, offers realtors a hub chock full of up-to-date real estate forms free with membership. The forms’ clauses will assist a realtor with an understanding of which facts to discover about the new home and what is required for the client to qualify the purchase.
“The best way to achieve consumer confidence and help them understand that their interests are being protected by the realtor is to educate the client,” says Trites. “Give them knowledge about the forms of legislation that affect the new home.”
Here’s a list of other things you need to know in order to assist your clients in getting the most value for their dollar with as little stress as possible.
Negotiating extras: Does your client dream of upgraded counters or engineered hardwood floors rather than the standard laminate floors? Or are they foodies that yearn for the high-end appliance package in a new home? As an agent, you can help negotiate all those extra perks, amenities, and upgrades with the builder.
Recommending financing: A builder typically will offer a prospective buyer with its “preferred” lender, but as a realtor, it is your duty to help make sure that your client secures the mortgage that is the best fit for their situation. A mortgage calculator can be you and your client’s best friend - they can be found on many real estate websites (like REW) and compare current interest rates from big banks and top mortgage brokers all in one place.
GST: New construction is normally subject to GST, although you can inquire whether the offers rebates to qualified buyers.
Read the builder’s contract carefully: In all likelihood, a builder’s contract will contain provisions or restrictions that favour the builder. It is good practice to get a copy of the contract immediately. Reading the contract judiciously will help agents explain its contents in simple terms to the buyers instead of just reading it on the spot. P.S. Pay attention to the buyer’s relevant deadlines and terms.