Investing in a new condo? Make sure you have this unfair advantage
When you are investing in a new condo you want to make sure that you have this one unfair advantage working for you. If you don’t then you could end up costing you thousands of dollars.
3:05 What is a platinum agent and how do you find one?
9:28 Investigation in the Globe and Mail article.
12:36 Premise of the article,notion that somehow this is an unfair process.
15:30 Platinum access is a real thing.
16:40 No agent has platinum access/status with every developer.
Andrew la Fleur: If you’re investing in a condo, you need to make you have this one, unfair advantage. Find out what that is and how you can get it on today’s episode.
Announcer: Welcome to the True Condo’s Podcast with Andrew Le Fleur. The place to get the truth on the Toronto condo market and condo investing in Toronto.
Andrew la Fleur: Hi and welcome back to the show. Once again Andrew Le Fleur here. Thanks for listening, thanks for your support of the show. Special shout out to any of you who have left reviews for the show online. I’ll just read a few reviews that I’ve had recently. Haven’t done this in a while, and I really appreciate this support. I get so many comments and emails and text messages and things from people. Here’s a few from iTunes Reviews, this one is from FFM555 they say, “Simply the best. A lot of in depth opinions on condo market and overall Toronto real estate market, thank you.” BHAG0103 says, “Great podcast. Probably the most informative real estate investment podcast.” Well thank you. Oats091211, I don’t know what’s up with these usernames but, “Fantastic resource. This podcast is an awesome resource for anyone interested in Toronto or Canadian real estate, or generally.”
That’s great to hear. Adrockboy says, “A great resource for investing in Toronto. Andrew really understands the Toronto market and does an excellent job at highlight areas and investment opportunities. As well as interviewing relevant industry experts. I learn something new and valuable from each episode, thanks Andrew.” Well you’re welcome Adrockboy, happy to … Happy to serve. So there’s a few reviews there, you get the idea. Again if you want to leave a review for the show, that’d be much appreciated. If you do that on iTunes on your Apple device, or just go to iTunes on your computer, leave a review. That’d be much appreciated. Really helps to get the word out about the show. The more reviews that come in the more that iTunes sort of promotes this show within iTunes itself. So if you want to do that, that’d be great. To help me out and just to show your support for this show. But if you don’t want to do that, I still love you. I still appreciate you, thank you for listening and let’s get on with the show today.
So today’s topic as I said in the intro is this idea of an unfair advantage, and what you want … What that is and how to get it when you’re buying pre construction condos. What that advantage is specifically is you want to make sure that you’re always working with a platinum real estate agent. A platinum buyers agent when you’re buying a pre construction condo. What is a platinum agent and how to do you find one? Who are they? Will get into that a bit here. But fundamentally this goes back to one of the very first principles that I always tell everyone when investing in real estate. If you’ve signed up and subscribed to truecondos.com. One of the very first videos you will receive from me is about hiring an agent. Making sure you have an agent working for you. Whether it’s me, whether it’s someone else. Make sure you have an agent working for you, it’s so, so, so important.
One of the biggest mistakes that I made, in my journey when I bought my first condo back in 2006. Was I did not have my own buyers agent representing me. That one mistake cost me thousands of dollars way back in 2006 when I bought my first condo. I thought like many people out there, I don’t need an agent. I’m a smart guy I can do this on my own. This isn’t rocket science, you know these kind of things … This is what I thought. And I went into this transaction and purchased a condo without an agent. I was happy at the time, I enjoyed the condo, the condo made me money. But it wasn’t until later when I understood how the real estate industry works and how this business of condo investing works. That I realized and that I figured out that if I did have my own agent, I most likely could have saved thousands of dollars on that first purchase.
And of course over the years of working with hundreds and hundreds of condo buyers. I know for a fact that I have saved those hundreds and hundreds of condo buyers, thousands and thousands of dollars each. Millions of dollars cumulatively, that I have saved and made for my investor clients over the years. Working with me as opposed to working certainly with no one and trying to do things on their own. So that’s the number one thing, you want to always have your own buyers agent. You want to be represented in transaction, it’s one of the biggest transactions of your life for most people. It just makes sense to have your own agent, it doesn’t cost you anything to have your own agent. There’s no fee for having an agent, you pay the same price whether you … So to speak if you have an agent or not. Therefore it just makes sense to have your own agent. In many cases as I said you’re actually paying a much lower price if you’re hiring the right agent.
The right agent, you want to hire is an agent who specializes in the thing that you’re trying to do. Which in this case, we’re talking about buying a pre construction condo, investing in a pre construction condo. So, hire an agent who specializes therefore in pre construction condos. Don’t hire your mom’s agent. Don’t hire the agent from the billboard. Don’t hire the neighborhood agent who, you know was always at the coffee shop or whatever. Don’t hire the guy at your office who’s a part-time real estate agent on the side and he’s really nice. No. Hire a professional full-time expert pre construction agent. Somebody who specializing in doing the thing that you’re trying to do, it just makes sense. Go for expertise, look for the expert in the thing that you’re trying to do and latch on to their expertise. Latch on to their years of experience and this tiniest thing. The tiniest little nuances can sometimes amount to thousands of dollars in profits to you as an investor.
Thousands of dollars in savings as a purchaser. Final point on this first sort of idea, is to hire somebody who is also an investor. Hire … Make sure that the real estate agent you’re working with is also … Also has skin in the game so to speak. It’s amazing how many people I hear from and talk to and observe purchasing condos and purchasing real estate assets. From agents who don’t invest in real estate themselves, or who have never done it themselves. Again, once you’ve gone through it yourself and hopefully you’ve gone through it many, many times. As an agent, it gives you a whole new perspective when you’ve got your own skin in the game. You have your own dollars on the line, everything becomes much more real and tangible. And you’re level of thinking and your mastery of the subject becomes much, much higher when you’ve actually done it yourself.
So many agents are just pushing product and pushing condo and properties on their clients I see, and they’re never actually purchased anything themselves. They’re selling stuff that they would never buy themselves. Is you know, is really disgusting to see. But that is happening all the time and so again, you as a buyer, that’s mu number one advice. Is make sure you have an agent, make sure that agent is specializing and an expert in the thing you’re trying to do. And finally make sure that agent is actually doing the thing that you’re doing also. That’s purchasing real estate and investing in condos and also and of course, those of you who know me. Those of you who don’t know me, if you listen to this podcast for any amount of time. You know that I am a pre construction specialist, this is what I do. This is the only thing that I do. Personally I do have a team and we … A partner agents who manage all the other aspects of real estate for our clients.
But me personally, what do I do? What do I spend my time on? Exclusively pre construction condos, working with investors. What do I invest in myself? I’ve done many, many, times over the past 11 years is purchasing condos and pre construction condos. I am an active buyer, I just bought my last one just a couple months ago. I’m buying pretty much every year, buying and selling. But for the most part, obviously mostly buying. It’s rarely when I ever sell, but I’ve done it all in the condo game. So there you go. So that is … That is sort of the introduction here to our discussion. The reason why this discussion came up was a recent Globe and Mail article. In investigation … Investigation in the Globe and Mail into the practices of selling pre construction condos. They did a very long and detailed article, it’s actually very well written for the most part. I felt it was very fair and … Well I wouldn’t say, maybe not fair.
I’m trying to say accurate, it’s very accurate in terms of describe the process. The headline of the article is, “Inside job. How a murky system of preferential access, skews new condo sales.” It’s basically diving into the M city condo launch in Mississauga a few months back. Which was one of the hottest launches of the year. In the GTA and talking about how there were interviewing and talking to many people who are disappointed that they weren’t able to get units in the projects. And the investigation so to speak is uncovering this … The process of the platinum sales and how certain agents get preferential treatment. And other agents get squat and therefore certain buyers get units and certain buyers get nothing. Again, it’s going back to this idea that absolutely you want to have this unfair advantage of having a pre construction expert on your side, when you’re trying to purchase pre construction real estate.
So one of the quotes from the articles, one of the piece of the article, here I’ll read it to you which is fairly accurate description. Of how the condominium sales process works. For those of you who are new to this, this maybe very relevant or interesting to you. If you’ve been in the game for awhile , if you’ve purchased condos you know exactly how this works. But for those of you who are new, let’s see what it says, it’s fairly accurate. “Sales and new condominium developments typically follow a pattern of tired releases with prices increasing at each juncture, and sometimes more frequently as selection dwindles. Developers first offer suites to friends and family, then builders and their sales representatives privately grant so called platinum real estate agents allocations of units to sell to their clients. Next up are VIP agents, followed by the wider realtor population. This is why some developments are virtually sold out before the last stage. When the sales are open to members of the public, who aren’t working with realtors.”
So again, this is a fairly accurate description of exactly how it works in new condos. So you can quickly see that if you’re looking to invest in a new condo at the launch state. Which is generally a great time to invest in a new project, then you want to make sure that you’re working with a platinum realtor. A platinum realtor who’s gonna get you access at the earliest stage. If you’re not working with a platinum realtor, you’re probably getting into a later stage, and you’re probably paying higher prices. So the article is one of the thing I disagree with the whole premise of the article, is this notion that somehow this is an unfair process. And somehow this unfairness is a bad thing. I would argue that it is completely irrelevant whether it’s fair or not fair. Certainly you can make a strong case that’s it’s not fair and I would say again, as a buyer you want to make sure that you are in the unfair side of things. And not one the fair side of things so to speak.
When things are open up to anyone, you can just walk in and buy. Generally you’ve missed out, not in all cases. But generally you’ve missed out on the first opportunity there. So you want to make sure as a buyer that you have this unfair advantage. That you are working with a platinum realtor. And that is how you make money and that is how the game is played. I would argue that again, that the condo sales are not a fair process. If you think it’s a fair process, or you think it should be a fair process or something like this. Then you’ve sort of already missed out, you’ve missed the boat already. It’s nothing to do with legality either, this is a completely legal process. The sellers of real estate can sell to whoever they want, however they want. At whatever price they want, this si a free county. This is a capitalist society, we are not communists last time I checked.
I would also argue that this is actually 100% ethical too. There’s nothing unethical about the process and the way that this real estate is sold. It’s completely, again up to the seller to decide how and where and at what price they wish to see their real estate at. It’s completely ethical to do so. There’s nothing unethical about selling it to who they want, when they want, at what price they want. Now of course an argument could be made that if they’re making promises in writing to. Or otherwise to certain people that they will receive something and they don’t. Then okay, you could certainly make a case that, that is not an ethical process. But if you understand that it’s basic supply and demand here and you’ve got a limited number of properties available. When the market is hot as it is now, there’s far more buyers than there are properties available to purchase. Then again, its simple … It’s a simple numbers game.
Not everyone is going to be able to buy. Therefore some people will be left out, and you gotta decide if you want to be somebody’s who’s left out. Or you want to be somebody’s who’s in. Then once you understand how the game is played, then you can be on the right side of that equation. The other point I want to make is that platinum access is a real thing. As it describes in this article, it is really. It’s not just a silly word that is thrown around in the industry. There’s not a firm and hard, fast definition of what a platinum real estate agents is for a project. But it’s like the article says, platinum agents are generally the people who come in after the friends and family, sort of level of sales. They’re allocated specific suites to sell in a project before anyone else. That is where you want to be as a buyer. You want to get in on that, in most cases. Again, not in every single case. There are times where it still makes sense to purchase outside of that.
There are certainly cases where projects are well beyond the initial launch stage and there’s still great value there to be had. But generally speaking, if you’re looking to get into a new project at the start. You want to understand how that works, this is what I’m telling you here. So platinum access is a really thing. The other final point to make is that, and an important point to make is that, no agent has platinum access or platinum status with every developer in the city. THere’s no such thing as a platinum across the board agent. Every builder has different platinum agents that they work with on different projects. Every marketing and sales company that works for the builders has different platinum agents that they work with on their different projects. So if any agent is out there telling you or guaranteeing you that they are a platinum agent with every builder in town. And no matter where you want to buy at, they’ll get you the platinum … They’re a platinum agent there, that’s simply not true.
So definitely call BS on that if you see agents claiming that they are platinum agents with every single developer. Every developer they’re a platinum agent across the board, it’s just not true. Every builder and every developer’s different, but I can say from many years experience in this industry. That there are probably … There’s probably about 50 to … 50 to 75 I would say top tier sort of platinum agents, who have platinum access with most or the majority of builders in the city. I certainly would be one of those agents and I certainly know most of the other agents who would be on that list in the greater Toronto area. Out of almost 50,000 agents, again there’s about 50 agents out of 50,000 who are platinum status with the vast majority of new builders … Of condo builders out there. But there’s nobody who has access to all of them, regardless of what some agents may like you to believe. So that’s something to keep in mind and something to be aware of and to ask your agent.
That being said, many of us platinum agents in the top 50 crowd, we work together. We support each other, we know who has access where. So if you’re working with somebody like myself and I might have access to say, eight out of ten. Or nine out of the ten new projects. For the one or two out of ten that I don’t have access to, I certainly know who does have access to. And I can certainly work together with my colleagues, other platinum agents to get my clients the units that they need. 95 to 98 percent of any new condo project that is out there in the GTA. Okay, so there you go. That’s the episode for today. Again the message here is make sure you have that unfair advantage of working with a platinum real estate agent when you are purchasing pre construction. The condo sales process, whether it’s fair or not fair, it’s really … It doesn’t matter. It is what it is and it’s completely legal and you as a buyer want to make sure that you are … That you do have that unfair advantage so to speak, of working with somebody who’s gonna get you the unit.
That you want, in the building that you want. At the price point that’s going to, in the long run make you … Make you the most money. Okay there you have it, I hope you enjoyed today’s episode. If you did find this useful, go ahead and share this with somebody that could benefit from listening to it too. Until next time, hope you have a great week and we’ll talk to you soon.
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