Working directly with the sponsor instead of with a buyer’s agent is bound to split opinions. Agents will always insist it’s better to work with them.
However, if you already found a condo you want to buy much of the agent’s job is done. An agent will claim the contrary, that this is where the real work begins. Let’s examine the pros and cons of both options.
Working with the sponsor’s broker
Generally, if you approach a sponsor directly, they will refer you to the brokerage associated with the development. You can inquire what a buyer’s broker commission is — and herein begin your negotiation. Additionally, agents who bring buyers to new developments during the construction or early days may get special incentives that can also be passed on to the buyer.
Remember, though, that a sponsor’s broker and agent represent the sponsor only and negotiations will be skewed in favor of the sponsor.
How an agent can help
Once you have identified a property you wish to buy, a buyer’s agent can help in many ways:
1) They can assist in negotiating a price or but extras such as upgraded finishings, storage space, parking space and even a premium position in the building with great views.
2) If you are buying a condo or co-op they should be experienced in analyzing the pros and cons of the offering plan and steering you in the right direction in conjunction with a good attorney.
Why buy directly from the sponsor
In a buyer’s market, developers are more willing to do deals to move their inventory. By eliminating a sales agent’s commission from the equation (on a million-dollar condo, a 3% commission is $30K) a sponsor may be able to pass on the savings to the buyer through sales price, closing costs (transfer taxes, attorney’s fee etc), upgraded finishes, prime location, square footage.
If you are not using an agent you’ll need a great attorney
It’s vitally important to have a good attorney representing you, especially if you are not using an agent. You’ll need someone who is experienced in closing on condos, understands the loopholes of a condo offering plan and is a savvy negotiator.
Some attorneys may only want to handle the paperwork and not get involved in negotiating the deal. If you’re not using an agent, you’ll want an attorney who is prepared to roll up their sleeves and go to battle for you in all areas of the transaction.
