Purchasing Pre-Construction Real Estate Directly from the Developer? – Know the Risks!
A developer’s sales team is representing the developer. They owe a duty of loyalty to their client and must work in their best interests. They cannot represent you or work in your best interests in the transaction. The BC Real Financial Services Authority (BCFSA) is the real estate regulator in BC. They explain the risk of working with a developer’s sales team, who are already representing a client in the same transaction. BCFSA recommends that you seek independent representation in the transaction through a licensed, professional REALTOR®.
The developer’s sales agent can only provide you with very limited services because they must be loyal to their client and work in their client’s (the developer’s) interests. They can only give you limited assistance:
Before you disclose confidential information to anyone regarding a real estate transaction, you should understand what type of business relationship you have with them. By working directly with a developer’s sales agent you are a ‘non-client’. A sales agent who is not representing you as a client does NOT owe you special legal duties:
- No Loyalty: they are representing their client who has competing interests to yours in the transaction. They must be loyal to their client, not you.
- No Duty of Full Disclosure: they do not have a duty to give you all the relevant information.
- No Duty to Avoid Conflicts: they are not acting in your interests.
- No Confidentiality. They must share any information you tell them with their client in the transaction.
Our REALTORS® and Property Managers at Mountain Town Properties are the local experts in the Rossland and RED Mountain real estate. We will show you comparable properties on the market. We are Property Managers offering both long and short term property management services, we have the rental statistics to help you make informed decisions.
We act as your representative. You are our client. We have legal and ethical duties to you as our client, such as:
- Loyalty: We will act only in your best interests.
- Full Disclosure: We must tell you everything they know that might influence your decision in a transaction.
- Avoid Conflicts of Interest: We must avoid any situation that would affect our duty to act in your best interests.
- Confidentiality: We must not reveal your private information without your permission, even after your relationship ends. That includes:
- your reasons for buying, selling or leasing.
- your minimum/maximum price.
- any preferred terms and conditions you may want to include in a contract.
Payment for Services:
A Buyer’s REALTOR® in BC is paid by Sellers. The developer’s salesperson is paid the same whether your REALTOR® is involved or not.
It’s Not Too Late!
Even if you have already registered your interest in a developer’s project, you can still have a REALTOR® represent you.
More Information:
See the link below to “Understanding Pre-Sale Purchases”