Many times as a real estate agent I’ve been told by prospective buyers “we’re going to build.” This is a desire I completely understand, however I’ve often had mixed emotions about this. In certain cases I’ve been convinced that is the best alternative for my clients due to their needs and their ability to pay and understand the building process. In many cases though – especially with young couples building their first home – I’ve had some reservations. Take for example that they really don’t have a good reference point for what they want and how that will work for them over time, especially when it comes to materials and layout. When I bring forward this reservation most young couples look blankly at me and then hurt and then that’s about the last time I hear from them until they go to sell. This is where most of them realize they need a professional to assist them with all the intracasies involved, the least of which is colour choices ect.
The reality is the very helpful sales person in the showhome is the employee of the builder and for that reason they owe you no fiduciary duties. This means they owe you no loyalty, full disclosure or confidentiality (among others). In the greater Edmonton area there are approximately 32 builders who will pay your agent’s fee so that you are represented. Many buyers however feel that this means they would pay more. This is incorrect. The agreement outlines that the buyer will pay the same price even if they didn’t use an agent (in fact I believe the buyer receives so much beneift that even if they agent’s fee was added to the price they would still receive benefits outweighing those fees).
The following story in the Edmonton Sun outlines one of the dangers of self representation. Using an agent may not have prevented this problem but a knowledgeable agent could have precautioned their buyers about the contract they were signing as well as given options of other builders ect. As a buyer you certainly want to be aware of your limited rights when dealing with the builders lawyer and agent as well. Nothing beats being represented by somebody who is trained and has your best interests in mind.
Sun, August 27, 2006
Couple lose chance at dream home
Developer returns deposit after project stalled over permits
By FRANK LANDRY, EDMONTON SUN
Alana and Brian Halliwell worry they may never get to live in their dream home.
The Edmonton couple signed an “affordable” purchase agreement with Reid-Built Homes Ltd. in January to have the house built on Blackmoor Close in Stony Plain.
They also put down a $4,000 deposit.
Six months later, the developer cancelled the $287,000 agreement and returned the downpayment.
Now the Halliwells, along with 12 other families, are preparing to launch a lawsuit against Reid-Built Homes over the mess.
“We’re in our 40s. This was our one kick at the can,” Alana, 42, said. “This was going to be our dream home.
“To be honest, we don’t think we can afford to build now.”
Shane Parker, lawyer for Reid-Built Homes, said his client did nothing illegal.
That’s because under the Alberta New Home Warranty Program, a developer is able to opt out of an agreement if certain criteria cannot be met within 60 days.
In this case, the company was unable to obtain the necessary building permits. Stony Plain would not issue the documents until the lots were serviced, and that work is still ongoing, Parker said.
“Other municipalities are more flexible, but there’s certainly nothing improper about what the town of Stony Plain has done,” Parker said.
“It’s the municipality that sets the rules; builders have to follow those rules.”
According to Edmonton’s Real Estate Weekly, the average single family home in this city now costs $303,304.
Since January, the average new home price has increased by an average of 10%, said Re/Max realtor Terry Paranych.
Alana, who speaks for everyone involved in the lawsuit, said all 13 properties were purchased between November 2005 and May of this year.
She said a short letter was sent later citing the cancellation clause, and deposit cheques were returned.
However, Alana said she’s received no written explanation why Reid-Built backed out of the deal.
Alana said two members of her group tried purchasing their properties twice, only to have the deals fall through on both occasions.
“How many times does the agreement need to be signed for it to be valid?” she said. “How many times are we expected to purchase the same lots and homes?”
Alana said she and Brian will continue to live in their west-end home, at least for the time being.
Parker declined to say whether Reid-Built Homes sold the properties too early.
“Hindsight is 20-20,” he said. “It’s a matter of builder acting in good faith with an understanding of when lots would be available. That didn’t happen.”
