FAQ'S (Frequently Asked Questions)

New Construction Versus Resales As in anything, there are a number of advantages to purchasing a new construction rather than a Resale property in Downtown Montreal and vice versa. The advantages of a new construction are obvious. Its never been lived in, its new, its the latest trends, everything will be in working order for several years and condo fees will be low. The advantages of buying a resale are equally obvious. Proven track record, what you see is what you get (WYSIWYG), experienced managment. However, what most people don't know about is that there are a few facts that are little known by the public but are very relevant to deciding on what the best approach is to making a purchase. All these points are to make people aware of hiddent issues with new construction. This is because the legal system and regulatory body in Quebec is for Real Estate brokers selling second hand properties and are in place to protect the public  wherewas new construction is subject to much more relaxed rules and regulations which offer little protection to the public other than the construction warranties. 1. Gross Vs Net square footage: A new construction doesn't show the real square footage of the property you are purchasing so if by any chance you are looking at resales and assuming that 800 square feet is the same either way, think again. New construction are the architects measurements and are subject to great variations that have, in our experience, gone as high as 18% but are usuallly in the vicininty of 10% to 15%. So 800 sqare feet of living space in a resale is a legal guarantee whereas 800 square feet for a new construction is really closer to 700. 2. Value: For now, it is possible to purchase a resale property for between $400 and $600 per square foot. This would be for condos that are bewteen 5 and 20 years old. Anything built more recently will cost around $700 per square foot or more. So on average you may expect to have to pay about 30% more for a new construction than a resale and in many cases you won't see much of a difference in the final product or quality of life. 3. What are the differences between new build and resale properties? We all like something new... even if we didn't chose the colours and fittings, its 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 appearence. Modern units usually make better use of the available floorspace 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 foot condo directly from the developer, you may expect at least a loss of 8% of the square footage by the time you get the 'legal' square footage. 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. Whats 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 indivitual, that is find an agent/broker with whom you can communicate properly and 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 (thats 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 encouter 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. Whats 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 lets face it, it would'nt be smart for you to use a Gatineau based Realtor to sell your condo in Quebec City now would it? Comparaisons 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. Thats 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? 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. 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-$1300. The Third is the dreaded and rather unaptly named 'Welcome Tax' which is roughly 1% 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. How much is the 'Welcome Tax'? The break down of this tax is: - 0.5% of the first $50,000 - 1% of the amount between $50,000 and $250,000 and - 1.5% for any purchase between  $250,000 and $500,000 - 2% between $500,000 and $1,000,000 - 2.5% on anything over $1,000,000. Only on the Island of Montreal. Anywhere else in the Province of Quebec, the welcome tax is capped at 1.5%. 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 It should be noted that the welcome tax is calculated on the purchase price IF it is higher than the city evaluation. If the city evaluation is higher than the purchase price, then the welcome tax is based on the higher of the two values.

Alex Kay  .  Charles La Haye  .  Michael Martin Real Estate Brokers  .  Courtiers Immobilier Downtown Realty Team  -  Équipe Immobilier Centre Ville REMAX Action inc. Westmount Bur: (514) 364.3222   Fax : (514) 364.0743 8280 Boul. Champlain, LaSalle, H8P1B5