BCBusiness

17 B C B U S I N E S S . C A M AY 2 0 24 doesn't involve lowering the actual selling price. "There's some sort of discount, but they need to maintain a premium product, so they're never go ing to break their numbers," says Navid Hakimi, a realtor with Re/Max Masters whose website promotes him as the "TOP 1% OF ALL REALTORS." Hakimi has seen every incentive in the book, from the builder offering to cover three years of maintenance fees or the GST to, as I noted earlier, beer and trips to Japan. But, in the end, most will come down to a monetary credit on what's called the "statement of completion." Someone who is offering to finance part of the mortgage at a rate that's half of the going bank rate is likely not providing the actual mortgage itself or promising that every buyer will qualify. Instead, the company will provide a monetary credit on the origi nal sales price that covers the difference between a mortgage at 7 percent and one at 3 per cent, usually for only a limited number of years. It's not totally clear what's going on with one of the more interesting propositions of the season, which is Oakridge Park's offer to provide a 3.88percent mortgage for 65 percent of the property value for three years. A media rep for owner QuadReal (B.C.'s pension fund investment arm) explained the process this way: "We have collabo rated with a new partner—True North Mortgage ( TNM). TNM is offering qualified purchasers the opportunity to enter into a mortgage at Oakridge Park with an annual interest rate of 3.88 percent (threeyear term). Home buyers make their fi nancing arrangements directly with TNM while the Oakridge Park team remains involved through the purchase/sale as pects of the transaction." Okay. It's key, says Hakimi, to have someone do the math and figure out if the deal is really worth it. For example, paying the propertyman agement fees on an investor condo for three years—"that's $7,000—peanuts on a million dollar purchase." It's also key to know whether the discount/incen tive is on an inflated cost per square foot. "Is it selling at a realistic price or is it hype?" he asks. And, he warns: "At the end of the day, a discount is most attractive to a non savvy purchaser or someone who is emotional." But, like others, he doesn't say that all the incentives are scams. New product is always more expensive than already completed, thanks to the magic of rising costs over time, but that doesn't mean it's all overpriced. And there can be genuine examples of good discounts if a developer is only selling off a few units to meet a financial target by a deadline. There are some rare cases, as well, where there is an unusual arrangement going on behind the scenes that means a real and rare price reduction. Rick Ilich, the CEO of Vancou verbased Townline Develop ments, had a project like that six years ago. He was working with a Royal Canadian Legion site in Port Moody and the company worked out a deal with Canada Mortgage and Housing Corporation that al lowed them to sell homes with only $2,500 down (try not to cry, people) and Townline also priced the units at 10 percent below market. That meant, say, $306,000 for a onebed room on a lower floor (again, no crying). People had to be incometested to be eligible for the program—back then, that meant a household income of no more than $66,000 to buy a onebedroom, $92,000 for a two—and legally commit to live there for two years without renting it out or reselling. Pop ular? More than 2,000 people applied and 400 qualified for the 84 available apartments in the fivestorey building. "All 84 of those got a generational wealth moment," he says now with satisfaction, pleased with how he helped people who did not have a Bank of Mom and Dad to back stop them. He acknowledges, though, that this kind of proj ect only helps the first person in. (That $306,000 apartment is now assessed at $548,000 only five years later.) He hasn't had another project like that since, but his company has been offering some breaks recently, as have so many others. Townline has 1,100 units under construction and 975 sold so they're offering to let people buy with less than the 20 percent usual deposit. It can do that because it has already met its bankfinancing target: "In a market where you're trying to kickstart sales, maybe you go to 10." It's a far cry from a few years ago when the buyer pool was deep and wide. Now, he says, there are discounts everywhere. "We're now see ing more incentives. And the incentives are, more often than not, real. Affordability is taking its toll." ADDED VALUE Developers are trying to incentivize buyers to make condo purchases with some added perks

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