Condo Investment Insights

The other week, I was out for lunch with a new client and she was telling me about a past development that she loved and was ready to invest in, but when she submitted a reservation, she didn’t get the unit (or any other unit).

“I spent so much time and energy looking for the perfect property and when I finally found one, I didn’t get it,” my client lamented. She wanted to know if her previous realtor was to blame. This previous realtor had claimed to be a “platinum agent” but was ultimately unable to deliver.

We hear this experience very often from new and prospective clients – particularly for in-demand and low-unit properties. Developers often launch to their platinum agents with hundreds of people in the room. The fact is that most of these agents will never see a unit.

So what can you do to make sure you get a unit? What separates the best agents from all the rest when it comes to unit allocation? Here’s a behind-the-scenes look at how developers allocate units, how to vet potential agents, and what you can do to secure your top choice and financial future.

Breaking Down a Condo Launch

Let’s take your average 200 unit condo building launch. Those 200 units are be divided into 25 studios, 50 one beds, 25 one bed + dens, 50 two beds, 25 two beds plus dens, and 25 three beds.

The investors, who make up the majority of purchasers, typically focus on the smallest of each unit type. So if the launch goes well, there will be hundreds of reservations focused on a few of the most popular units. How does a developer decide who gets them?

Contrary to what many agents will tell you, it isn’t the first reservation in or anything like that. Developers may allocate a portion based on “time stamping” but the choice units will always go to the top agents in the city that have supported them in their past projects. Developers are always in it for the long haul so they reward long-term relationships, the ability to move volume, and the ability to provide qualified clients that don’t cancel their deals. In other words, the best units go to the best agents.

Making Sure You Get a Unit

Last week, Ryan and I were pleased to be awarded top team with Daniels as well was the highest award from Milborne real estate. Combined, these relationships represent over 25% of all pre-construction sold in Toronto. So believe us when we say we have a close relationship with developers and we get the choice pick of units.

So how do you know if your agent really has the highest level of access? Here are some tips to keep in mind:

1. Do your research on your agent. Don’t be charmed by a nice smile or a solid handshake. What ultimately determines unit distribution will be the agent’s relationship with the developer and their sales record. Be sure to find out how many units your agents has sold with the sales company and the developer.
2. Get your reservation in early and complete it fully. It won’t matter if your agent is best friends with the developer if you submit your reservation too late or incorrectly. Only properly completed worksheets get allocated units. The best agents will typically vet your worksheets before passing it on the developer – but that depends on who you’re working with. (Here at CONNECT, we have a rigorous two-step verification of all worksheets.)
3. Be flexible with your choices. If you are buying as an investor, the returns across the different units may be relatively similar. Units may appreciate to different heights, but they will still appreciate all the same. It’s the investor who didn’t buy because they wanted a specific unit they really loses.
4. Respond quickly when you get notified about your unit. Typically, there is less than 24 hours from the moment we get our units to the allocation and booking of signing times. Agents are also under a deadline – we have to sell the unit or lose it. So it imperative to move quickly and respond to your agent’s emails and calls.
5. Create a relationship with the right broker. CONNECT has an institutional advantage that regular agents and brokers can never overcome. Investors we know and trust get the best deals first. This can easily be the difference between securing the best investment condo unit and missing out completely.

Make a small time investment now – and reap the dividends

Schedule a call or book a meeting now to review your investment strategy and become a priority reservation for future units.