Wednesday, October 7, 2020 / by Bridget Bass
There are some amazing perks to buying a new construction home: the opportunity for full personal customization, brand new appliances, amenities, and state-of-the-art home technology.
If you're in the market for a brand-new home and didn't think about hiring your own agent: YOU SHOULD! You could always go straight to the developer's agent, but you're definitely going to want an expert on your team who will represent your side of the deal. The keyword here is "expert". Purchasing new is an altogether different landscape to navigate than purchasing resales. Make sure your agent is equipped with the skills to protect your interests every step of the way.
The Builder's Agent vs Your Real Estate Agent
It is important to identify who is on what side and the role each person will play in the transaction. In a new construction deal, the builder plays a dual role also functioning as the "seller". That being said, the builder's agent's primary goal is to generate sales for the builder. Therefore the agent's attention will be focused on the builder's best interest, rather than yours. They can, however, provide you with a wealth of information on the background details of community construction and housing development as it relates to your newly built home.
Your Realtor will be your personal advocate. They will ensure you are always aware of your rights at the table and that you secure the most value within your budget. These benefits and your agent's capability to handle the negotiations will all come together to make for a relatively hands-free, painless purchasing process.
Should you decide to move forward on a new home purchase working with an agent, make sure to disclose this detail to the selling party on your initial visit to the model home. It is ideal to clarify upfront that you will have a representative, and that the builder agrees to this. This is good to remember because most builders require a serious buyer to be accompanied by a real estate agent on their first visit.
Here are some of the biggest reasons why you should hire a real estate agent to represent you:
A real estate agent will expand your knowledge of the builder, the home, and its construction quality.
While the builder is unquestionably knowledgable there is a risk in relying solely on their word. You may likely be getting a narrow, potentially biased perspective of a fuller picture. It isn't for lack of insight, but more-so about what can sometimes get lost in a property breakdown. An experienced real estate agent will be well familiar with every major area builder and their work quality, cluing you in on things that may have been omitted from the seller agent. If you're at all unsure of where to buy, a qualified realtor can recommend the right builder and neighborhood for you.
They will help you make the right choices according to your budget.
Especially if you're a first-time homebuyer, purchasing new construction can not only be overwhelming, but expensive to boot. Considering the endless array of upfront upgrades and modifications to choose from your agent can help guide you through the personalization process, delivering the best options for your budget. From floor plans to the latest amenities, you can think of your realtor as your personal shopper here. They can make informed considerations on items better to install at present, versus items that are easier to improve upon in the future. A bonus: if you’re thinking about selling your property a couple of years down the line, your realtor can appraise you on the features and amenities likely to attract future buyers in the long-term.
They're your negotiator.
An experienced agent will come into talks knowing before what “is” and “isn't” on the table for discussion. In this approach, your realtor can better broker on things such as paint color, style of utilities and even closing costs. This is especially valuable since builders are far more likely to negotiate on fees or upgrades than they are on the purchase price of the home. It’s important to note, varying builder by builder, whether or not one is even willing to negotiate. Your agent will act as your guide through all of this, additionally making you aware of any “builder promotions” available to take advantage of.
No realtor fees on your end.
That's right. Hiring a realtor to buy new construction comes at no cost to you since the builder will be the one paying your agent’s commission. Builders rely on outside agents to bring clients to them. As such, they view commissions as part of their cost of doing business, usually adding it into the marketing budgets of the homes. However, this doesn’t mean the builder would credit you the commission should you forego a realtor; they would much rather dole it out to an agent on your behalf. Builders are also unlikely to reduce the price of the home because it sets the comparison price for future home sales in that neighborhood.
Your realtor will help you set and oversee a home inspection.
You may be thinking, “Why do I need a home inspection if it's a newly built home?” Well, even with the best construction, using only the best materials, contractors, etc., new homes can still have their fair share of defects just the same as resale homes. The builder’s agent is unlikely to push for or offer up an inspection, likely because the builder doesn’t necessarily want to inspect it themselves. You may be thinking you can depend on a new home warranty to cover unaccounted for issues despite this, but let’s just say we wouldn’t hold our breath on that.
It’s up to you and your real estate agent to set up a home inspection. An excellent realtor has connections to multiple independent inspectors who will work in your best interest. Your agent will help you set up an appointment then review the inspection report to identify potential areas of negotiation with the builder. Also, it’s best to attend the walkthrough with your agent so they can help spot errors in the new home.
What you see is NOT what you get.
You might be amazed when you tour the model home and see top tier granite countertops, upgraded appliances, crown molding, rough-in plumbing—you name it. However, it's prudent to remember that the model you visited is not necessarily the home you’ll end up purchasing. That model is worth more than the base price being advertised precisely because of all those amenities. In this case, keep that old adage in mind. Like buying a new car, your home could feel distinctly different from what you see on the showroom floor.
With the help of your realtor, you can differentiate between the base price and whatever comes at the cost of an upgrade. With this, you can accurately price compare between a model brimming with every possible bell and whistle, and a more sensible option, possibly with a little less flash, but a healthy amount, nonetheless.
Your realtor is also your contract and paperwork guru.
Be honest, how familiar are you with real estate contracts? Unfortunately, every real estate purchase involves some level of exhaustive paperwork that can not only be confusing but also very intimidating. When buying new construction, you will have to sign a builder's standard contract, which covers all the pertinent details of a new-home purchase. Your agent, being an expert in the industry, will review any contracts you sign to ensure everything is in order, and most importantly, that you are protected. They will guarantee your comfort and understanding pertaining to every aspect of the agreement. Whatever has been agreed upon by you and the builder (fees, timelines, upgrades) a realtor is going to ensure it is incorporated into the contract. Moreover, they will make sure that all other paperwork is reviewed and filed correctly for a smooth transaction.
They can recommend financing.
A builder will typically have a preferred lender and will even offer incentives to ensure a buyer works with that lender. This reassures them that the buyer is a good credit risk. However, the smartest thing you can do is to shop around and find the best loan that works for you and your situation. Your agent can help you with your search by exercising their Rolodex of connections, partnering you with only the most reputable of lenders, and letting you compare rates. At the end of the day, you will need to find the best loan for you and not for the builder—an agent is a great resource to rely on.