Developer offers buyers a refund if they lose their job
February 12, 2009
By Stacey Askew
A Toronto developer is offering skittish homebuyers a deal: If they lose their job before they take occupancy, they can take their deposit back and walk away.
The Brownstone Group of Companies is offering buyers of stacked townhouses at Davenport Village, now under construction at Landsdowne and Davenport avenues near Corso Italia, a “Worry Free Purchase Program.”
“People have said if they were more certain in respect to the job market and economy, they would make the purchase,” said developer Robert Falus of Brownstone. “There’s lots of good product out there, and the prices are good and so is traffic. People are just holding off on their decision.”
New condo sales dropped 36% last year in the GTA. In the final quarter, sales fell to 2,082, less than half the same period in 2007, according to Urbanation, a Canadian condominium market research company.
“We’ve noticed a slowdown in terms of traffic and the traffic that does come in,’’ said Mr. Falus. ‘‘People make a few visits to the sales centre but won’t firm up the deal so to speak.”
“I was watching television one day and saw a commercial for Hyundai. I said to myself, ‘Why is it we cannot take that program and apply it to our industry?’”
More than 50% of the Davenport Village homes have sold. There are about 36 remaining units, each two floors, in upper and lower level models. The lower are 855 sq. feet and start at $245,000 and the larger upper units are 1,109 sq. feet and start at $285,000. Finishes include stainless steel appliances, granite countertops, hardwood floor in living and dining areas and carpeting on upper levels.
Under the program, a buyer is required to bring a record of employment that substantiates an involuntary job loss and file a request to receive their return. The application must be made before the occupancy date, which Mr. Falus said is expected to be between May and April, 2010.
Mr. Falus said he was inspired by another troubled industry.
“I was watching television one day and saw a commercial for Hyundai. I said to myself, ‘Why is it we cannot take that program and apply it to our industry?’”
Hyundai’s Assurance Deal was launched on Jan. 6 and is only available in the United States. The deal offers people who buy or lease a vehicle a money back guarantee if they lose their job within a year. The Associated Press reported yesterday two vehicles have been returned so far.
Ben Myers, a senior market analyst at Urbanation, said other recent campaigns from developers have included; a 5% downpayment option, up to $25,000 in upgrades and a one year maintenance-fee holiday.
“Developers are offering additional incentive programs and lower downpayment options,” he said. “But if people aren’t willing to purchase it doesn’t really matter what incentive they put out there.”
Mr. Falus said he hasn’t heard of anyone in the industry offering a similar deal, but hopes other developers will follow suit.
“It’s all about instilling consumer confidence and [looking for] a way we can get our sector of the economy going, if this works it would be great.”