Do I need the help of a Broker when I’m looking to buy a property?
No, you are welcome to do all the work yourself, negotiate by yourself, and pass on all the experience that one can get with a real estate broker helping you find the right property for you. However, since you can get all of the above for free, it’s difficult to understand why anyone would do so.
It doesn’t matter who you are, unless you’ve studied Real Estate law and have sold at least 10 properties yourself, AND have local real estate knowledge, you will not be better served by working without a broker. Lawyers, doctors, and most professional orders don’t recommend or outright ban people from working their own cases for obvious reasons and the same logic applies to real estate. Last but not least, there is the professional insurance that comes with using a real estate broker. All that to say is that it’s a lot of extra work, a lot of added risk, and in the end, you would be passing on what is a FREE SERVICE!
So why not use a broker? Especially an area specialist.
Do I have to pay the broker/agent if I am a buyer?
Absolutely not! Any Brokerage fees associated with the sale are paid by the seller, not the buyer. Its a FREE SERVICE for buyers.
What are the differences between new build and resale properties?
We all like something new… even if we didn’t choose the colours and fittings, it’s still great to know that we are the first ones to live in a unit. In addition to that, the units are often influenced by the latest trends in terms of layout and appearance. Modern units usually make better use of the available floor space than older units.
But is this really worth it?
In terms of value for money, a resale unit often represents a much smarter purchase. More often than not, a new construction purchased ‘off-plan’ will be around 10% more expensive than its resale equivalent. This has more to do with a sharp increase in the price of commodities over the past decade than anything else.
If you were to purchase a resale unit that is between 5 and 10 years of age, and fully renovate it exactly as you want it to be, chances are you will still be spending less than with an equivalent newbuild. What’s more, newbuild properties have what is referred to as the ‘gross’ square footage whereas resale units are required by law to advertise the ‘net’ square footage. If you purchase a 1000 square feet condo directly from the developer, you may expect a loss of at least 10% of the square footage by the time you get the ‘legal’ square footage. However, this is usually closer to 15% and sometimes more.
Why is this important? Because when you want to sell, you will have to declare the legal square footage. Failure to do so may result in the buyer either withdrawing from the sale or, if they find out after the deed is signed, result in you, the seller, being liable for the difference between the declared ‘gross’ and actual square footage.
This is something that the builder is not under any legal obligation to do. In Quebec, a developer is allowed up to 10% ‘variance’ between the ‘gross’ and the ‘net’ square footage. There is no legal ‘black and white’ as far as this goes, this amount is based on having interviewed a selection of lawyers, disgruntled buyers who have sought legal advice, and notaries. This does not mean that in any specific case the 10% disparity would be used as a baseline, it just makes it unlikely that any worthwhile compensation will be paid should it be any less.
The most important thing you need to know in all of this is that it is NOT legal for you to re-sell on the basis of the ‘gross’ square footage. You MUST declare the net square footage.
What are the differences between the Real Estate system in North America and in most other countries around the world?
The system in North Amercia varies from State to State. In Canada, every Province has its own laws, but they all have laws regulating Real Estate Professionals and the Agencies for which they work.
What’s more, the system in North America is based on collaboration. Every Real Estate Agent/Broker can sell any other Real Estate Agent/Broker’s listing. So Agents/Brokers from Century 21 collaborate with those from Remax for instance…
As a foreigner, all you need to know is that you must choose who you wish to work with as an individual, that is find an agent/broker with whom you can communicate properly and who appears to have the necessary knowledge to help you find a property in the area you are looking at. You don’t need to use several brokers/agents as this could be very confusing, and could result in your seeing the same property twice or even three times as a different broker may not know what you have already seen. This could lead to awkward situations.
Why would I want or need to list with a Real Estate Broker?
A Real Estate Broker is an individual who has received a license following what is now an intensive course allowing him or her to assist a member of the public in the purchase or sale of an immovable (that’s a property in layman’s terms). This Real Estate professional should have a good knowledge of the area and of the value of Real Estate. This professional has access to a lot of data that enables him or her to give an accurate evaluation of the value of the immovable.
If you were to list WITHOUT this kind of advice and knowledge, one of three things can happen.
1. You can be defrauded
2. You can encounter a plethora of legal problems which may result in failed closings, lawsuits, and compensations to the buyer.
3. You sell for less than the property is worth
On a property worth $400,000 you would never know if you could’ve sold for $20,000 more or less. Even if this excess only covers the fees of the Broker, it still means you don’t have to do any work that you otherwise would’ve needed to do. And you can believe it that it takes many hours of work to sell or rent just one unit.
People who try to buy a property without an agent are not looking to give you more money. In fact, they will use the absence of an ‘Agent’s commission’ to justify a lower price. What’s more, people who use Real Estate Brokers to assist them in the purchase of a property are usually too busy to look by themselves because they are busy with their respective careers. They need to purchase using a Real Estate Broker because its faster. They are usually wealthier than those who try to find a property without the help of a professional.
Listing your property with a Real Estate Broker will give you access to a huge part of the market which is not only in the higher income bracket, but that would otherwise be inaccessible.
What is the OACIQ (Formally the ACAIQ)?
The OACIQ or Organisme d’Autoreglementation du Courtage Immobilier du Quebec is a self-funded government body with the authority to regulate the Real Estate Professionals in the Province of Quebec. Their assigned task is to protect the public by providing brokers with the necessary training and know-how to perform their tasks. They ensure compliance with disciplinary actions that can go from a short suspention of the brokers’ license to a lifetime ban.
Members of the public are encouraged to contact this body should they have any reason to believe that their Real Estate Broker/Agent failed in his or her duty to inform you, the client.
Are there any differences between brokers/agents or is it all the same so long as my property is on the MLS?
Real Estate Brokers can have all sorts of skills, they may have superior knowledge in commercial, investment, or residential properties. Legally speaking they can sell anywhere in Quebec, but let’s face it, it wouldn’t be smart for you to use a Gatineau-based Realtor to sell your condo in Quebec City now would it?
Comparisons don’t have to be that obvious. Montreal is a 3.5 million people city… If you are a realtor who lives and works in St Leonard on the east island, it would be a fair assumption that you probably don’t know as much about real estate in the city as a broker who works and lives right there.
That’s where the difference lies. You need to know how much your broker knows about the area, amenities, other Real Estate Brokers in the area, local marketing, online marketing, how many open houses they do, where their office is based, etc…
Most people don’t pay too much attention to these details and allow a family friend or the Realtor they used to buy their property to list without actually evaluating their ability to effectively sell the property for the best possible price.
So in many ways, the answer is yes, you can sell just by listing on the MLS, but will you get the best price if this is the only thing your agent is doing?
What are the costs usually associated with the purchase of a property in Montreal?
There are three:
The first is the property inspector’s fee, which can range from $300-$600 depending on the size of the property.
The second is the fee payable to the Notary which is around $1200-$1500.
The Third is the dreaded and rather unaptly named ‘Welcome Tax’ which is roughly 1.5% of the value of your purchase and is payable within one or two months of the date of the transfer of the deed. This is a tax that is levied by the City of Montreal and is a one-time payment.
What and how much is the ‘Welcome Tax’?
The ‘Welcome Tax’ or Tax de Bienvenu in French is a tax that has to be paid to the city by the buyer on the purchase of any property. Usually, the buyer will receive a bill from the city within 30 to 90 days from the date of the signing of the deed.
The breakdown of this tax is as follows.
- Up to $53,200 – 0.5%
- $53,200 – $266,200 – 1%
- $266,200 – $527,900 – 1.5%
- $527,900 – $1,055,800 – 2%
- $1,055,800 – $2,041,900 – 2.5%
- $2,041,900 and up – 3%
As an example, if you were to purchase a property worth $370,000 the welcome tax would be calculated as follows
1. 0.5% of the first $50,000 = $250
2. 1% of the amount between $50,000 and $250,000 = $2,000
3. 1.5% of the amount between $250,000 and $500,000 so 1.5% of $120,000 = $1,800
The total welcome tax due to the city would be 250+2000+1800= $4,050
RENTING OR BUYING A CONDO FOR STUDENTS
Montreal is a city with many prominent universities and a large student population. In fact, it is second only to Boston for having the most students living in its Downtown core. As a result, the student population represents a significant market share of the rental market in Downtown Montreal but also a large part of the buyers market. In addition to housing the well known English universities of McGill and Concordia, and the prominent French universities of Universite de Quebec a Montreal (UQAM) and l’Universite de Montreal, Montreal also has several Cegeps (which are unique to Quebec and act as a college) and colleges like LaSalle College, Dawson and Vieux Montreal Cegeps – to name but a few. There are all sorts of accommodations near McGill and Concordia Universities in Montreal’s downtown core. The main buildings you would need to look for are Le Roc Fleuri, 1200 De Maisonneuve, Sir Robert Peel, Le Delano, Place Simpson as well as Imperial House and Le Drummond en Haut.
Near McGill, but somewhat further from Concordia, are Altitude, Le Louis Boheme, Le Concorde, Le Lofts St Alexandre, and Les Lofts St James. All these buildings have a gym and security and some of them have a pool, rooftop terrace, and sauna.
For UQAM, buildings such as the Lofts des Arts and the Lo Gothé are much better suited whilst still close to a subway (St Laurent on the Green line) and within a short walk of the underground city and Place des Arts.
In addition to these buildings, a neighbourhood known as the McGill Ghetto located adjacent to the trendy “Le Plateau” neighbourhood is very popular amongst McGill students, due in part to its proximity to campus (it is located just across the road from the Main Campus). This area has also some impressive heritage buildings and some very old properties (sometimes over 100 years old) and is also popular with professionals working in the city due to its proximity to the main business district. It is possible to be less than a 1-minute walking distance from the entrance on University Street and a 5 or 6 minutes walk from the main campus. There are many opportunities to purchase more affordable properties in this area. All these buildings regularly have properties for sale or for rent.
IS IT BETTER TO BUY OR RENT FOR A STUDENT ON A FOUR-YEAR COURSE?
This remains the central question for students looking to stay in Montreal for their studies. Usually, a quality condominium with one bedroom will rent for anything between $1500 and $2000 (this is an average, there are plenty that are priced lower, but also higher). If one assumes a purchase price of $300,000, yearly taxes, condo (strata) fees of $6000, and an average
price increase every year of 3% then your overall ownership cost over four years will be $24,000 offset by
a capital gain of $40,000.
Renting the same property would cost $1,500 per month or $18,000 per year or $72,000 lost over 4 years which is partially offset by an interest on $300,000 at 2% (secure account) of $6,000 a year ($24,000 over 4 years) so 72,000 – 24,000 = 48,000. Rental accommodation would therefore be a net loss of $48,000 over four years or $12,000 a year in contrast with a gain of $16,000 for ownership.
Even if there are many costs associated with ownership and the re-selling of a property, these will never come close to the $64,000 disparity between both case scenarios.
Our recommendation at the Downtown Realty Team would be to rent for six months to a year before buying a condo, and a resale or ‘turn-over’ time of at least 3 years. This would represent the best value for money.
