Pre-Construction Condos: La Bella Vita (speech prepared for Toastmasters)

Due to the amount of content I have to share, I will be dividing my speech into a two part series. Part one is called “Pre-Construction Condos: La Bella Vita”.

“What does Italian Inspired mean? It means knowing that ciao means hello and good bye. It’s knowing that vino time is never being on time. It’s no matter what you do; you have to look good doing it. It’s la bella vita. Treviso condos starting at 170. Now open, visit the sales centre and find la dolce vita.”

It sounds good! Why wouldn’t people line up outside the sales centre for their chance to own a Treviso condo, and live la bella vita???

Madame Toastmaster, Fellow Toastmasters and Welcomed Guests.

It’s all marketing. Some of Toronto’s best marketers were hired to make a horrible product sound so bella.

This speech isn’t about Treviso condos though; it’s about pre-construction condos in general. The point is pre-construction condos are not all what they seem to be, and I want to help you see past the marketing. At the very least, I want to inspire you to think about perception vs. reality.

Let’s examine the three factors you would consider in the purchase process.

The first factor is price. People buy pre-construction because of the perceived price discount. “Treviso condos start at 170”. Is that a great deal? Maybe it is, if it were true. Well it isn’t true. The highest value units were sold off to the developer’s investor friends long before the sales centre was opened to the public. A developer will never sell you a great deal. Not in 2011. In 2005, when the concept was still new and there wasn’t much demand yet and marketing wasn’t enough, developers had to discount the price to lure people in. Anyone who bought back then saw a nice return on their investment, but now it’s too late. Developers have  created long term hype around pre-construction condos, there’s no more need to discount the price since people keep jumping on the bandwagon. The price of a pre-construction condo now is on par with the price of a resale condo, so why do people still think they’re getting a deal?

The second factor is the condo unit itself. What exactly are people buying? You walk into a sales centre, a sales rep hands you a glass of champagne and you follow her into the model suite. It’s bright, airy spacious, the ceiling must be 14 feet tall, the layout is incredible because it feels like 1,500 square feet! It has granite in the kitchen, marble in the bathroom, a walk in closet large enough to be a den. There’s even a fireplace in the bedroom. The sales rep pulls out the floor plan. This is the Sona suite — 626 square feet. Take a moment. Think about it. Look at the piece of paper in front of you. The drawing is the same layout as the model suite, but notice there are no measurements on the paper?  Should you believe the Sona model suite you’re standing in now is actually 626 square feet? Should you take out a measuring tape? Seems like an embarrassing thing to do. No one does that. You are intelligente. No one will take advantage of you. You take a sip of your champagne and follow the sale rep into the office.

The third factor is the contract. Every developer has their own contract. It’s 50 pages long and ironclad. The sales rep is employed by the developer; her job is to tell you that it’s a standard contract, with standard clauses and not to worry. You’re buying the Sona suite, that’s all you need to know. What she doesn’t point out is that on page 27, there’s a sentence that says the developer has the right to make any material change, at any time, without notifying you and there is nothing you can do about it — that includes removing the walk in closet, and the fireplace, and the granite, the marble, the ceiling height which was never 14 feet to begin with. The developer can do whatever the developer wants. After all, the pre-construction industry is unregulated in Ontario.

All you have to do now is sign on the dotted line and you might live la dolce vita. But for now all you have is a piece of paper. You’ve tied up your deposit for the next three years.  Your new condo doesn’t exist today, it won’t exist until 2014, and it might not ever exist.

If you take anything away from this speech, it’s that you should do your due diligence. You still have a rescission period. Take your 50 page contract to your lawyer immediately. Find out exactly what it says. You still have 10 days to back out.

In my next speech, Pre-Construction Condos: La Horrible Vita, I will show you what can go wrong when you don’t do your due diligence.

Grazie, ciao!

Disclaimer: The preceding commentary is the opinion of Hanna Stecewicz and does not represent the interests or opinions of Right at Home Realty Inc., Brokerage or the Toronto Real Estate Board. Therefore, Right at Home Realty will not be held responsible and/or liable for any of the opinions herein.