Platinum VIP - New Construction
A stock image to make you think you are special
You have finally found it. That elusive, exclusive, Super Duper Platinum VIP Goldfinger Special Access real estate agent. Only they can apparently get you that foot in the door with a new builder before the rest of the crowd. You will have your pick of good units, unlike the rest of the plebs who can fight over the poorly laid out scraps the builder might have left. You made it in this world, and your dream of home ownership is about to become a reality all thanks to that special connection a friend made for you with that real estate agent.
Except that is all a lie. All too often a real estate will tell you about the exclusive access they have to some new development, and their Platinum VIP status. At ZVR we wanted to understand just what is going on here. Are developers truly forcing buyers to grease the palms of some third-party salespeople just to be able to buy a home? After all, it makes no sense to reduce the number of bids on homes, especially for the most desirable ones.
In our investigation we called several brokers who claimed to have such access, and then called the developer which they claim to have the access to confirm. The developers did state they have something called the Platinum VIP list. They also stated there is another name for that list: their mailing list. That is right, anyone can sign up to receive emails from most developers and now say they have Platinum VIP access, no matter how absurd the name sounds. We called a number of developers, many of whom are well known names: Tridel, Daniels, CentreCourt and Vandyk. All confirmed that if a customer wanted to buy a home, they can have access to a development round all they need to do is sign up for the mailing list.
There is more to this story though. First, when signing up for a developer’s mailing list some will ask whether you have an agent or not. If you say you don’t, then they will not pay your agent if you happen to bring one later on. Otherwise, most will pay the prevailing commission in Ontario, which is 2.5% + HST. We asked these developers if instead of coming in with an agent they can just give us 2.5% off. Every single one said “no”. That the price will be the same whether you use an agent or you don’t. That doesn’t make too much sense to us, especially given the size of some of these gorillas. Wouldn’t they at least try to save money by splitting the difference with a customer? Our conjecture is that these developers are just like every other seller, and are afraid of the collective steering they will suffer if they refuse to pay the cartel. At the same time they realize that if an interested customer found their way to them all without a salesperson, then they can get away without paying one. After all, what customer will go out of their way to hire an agent if they can have access to the home all on their own? The price is the same. No amount of negotiation would have the developer budge.
A buyer agent’s role is even more obsolete when it comes to new construction. There is no home at the time a buyer commits to a purchase, so physical inspection cannot happen. The contract is not the OREA purchase and sale, so a lawyer will need to review it. The developer is unlikely to negotiate the price in a hot market, and if they were willing to do so then there is nothing special a salesperson can do that a lawyer or a clever customer cannot do. It is a completely contrived role that is no more than being a parasitic middleperson. The price will stay the same.
The price might have been the same that is until ZVR came into existence. By happenstance, we can proudly say that new home builders have created an opportunity especially tailored to our business model: we are now the only service that can get you 2.5% off a newly built home.
