Why should you hire your own real estate agent before buying a new build construction home? Here are just a few reasons!
BUYING A NEW CONSTRUCTION HOME?
WHY IS IT SO IMPORTANT THAT YOU HAVE YOUR OWN REALTOR WITH YOU THROUGH THE ENTIRE PROCESS?
Are you considering buying a new build construction home? If so, there are a lot of things you need to know before you ever visit a new build sales office. Now you might ask yourself, what do I need to know? Isn’t working with a builder easy? Won’t the builder’s sales staff walk me through everything I need to know?
The short answer is Yes. And No! The long answer is much more complex than you might think.
HOME SHOPPING
When you’re in the market to buy a home, the appeal of new construction is undeniable. The model homes are decked out with all the upgrades. They are decorated by professional interior designers. In short, they are designed to entice you to make an emotional buying decision. And of course, there is the appeal of knowing that you will be the first to live in the home. Pristine! Completely untouched by previous owners, their kids and their pets. Everything will be brand new, including all new appliances and all of the finishes and fixtures hand-picked to your taste. You won’t have to worry about making any upgrades for many years.
Side Note: When you are shopping for a home in a hot seller’s market like we are currently experiencing, and you have flexibility with your move-in timeframe, there may be additional allure in buying new and not having to compete with multiple offer situations on existing homes for sale, despite the fact that builders are backlogged and completion dates may be 12 to 18 months out.
The next thing you know, you find yourself sitting down with the builder’s salesperson talking about models, lot premiums, upgrades and of course, price. And the builder’s salesperson is very pleasant and helpful, right? But STOP right there! The purchase of a home that costs hundreds of thousands of dollars is a BIG DEAL! It’s likely the most important purchase of your life, even if it’s your 2nd, 3rd or 4th home purchase. And there are some very important things to consider LONG BEFORE you walk into that model home for the very FIRST time!
THE BUILDER AND THEIR AGENTS
When you buy new construction, the home builder is the seller. And their salesperson(s) are the Builder’s Agents. That means they will always have the Builder’s best interests in mind over yours. After all, the builder (the Seller) is their employer. And the job of the Builder’s Agent is to get the highest sales price for the homes the Builder is selling.
WHY YOU SHOULD HIRE YOUR OWN REAL ESTATE AGENT
It’s very important that you have your own representation when buying new home construction. Before you begin home shopping, for new or resale homes, you should have your own real estate agent representing you. A licensed real estate professional is knowledgeable on all applicable regulatory requirements that define your rights as a home buyer. They are current and informed on the many communities you may be interested in and have extensive experience in the requirements of a real estate transaction. In short, their job is solely to represent your best interest and rights in the transaction. And they have a lot of experience in negotiating the best price on your behalf.
Having your own real estate professional representing you is also FREE! That’s right, the Buyer’s real estate agent commission is paid by the Seller, in the case of new build construction that would be the Builder. So it’s absolutely critical that you have your real estate agent with you on the VERY FIRST visit to the new build community. This will make it clear to the Builder’s Agent that you have professional representation. In some cases, the builder may refuse to pay your agent’s commission if you don’t have them with you when you register on your first visit.
WHAT IS THE ROLE OF YOUR REAL ESTATE AGENT ON A NEW BUILD CONSTRUCTION HOME PURCHASE?
A good real estate agent representing you as the buyer plays many different roles during the course of the new home construction buying process. Your real estate agent should be present and involved from start to finish. Your agent’s roles will include advising and representing you in the following areas:
- Location and Community Selection
- Lot Selection, Structural Options and Initial Contract Negotiation
- Design Center Appointments
- Mortgage Financing Options
- Construction Manager Meetings, Walk Throughs and Punch List
- Final Walk Through and Closing
- Vendor Recommendations
LOCATION AND COMMUNITY SELECTION
What amenities are you looking for in a neighborhood? Do your have an active lifestyle and desire outdoor amenities like walking and bike paths? Are you a golfer and wish to live near a golf course or in a golf community? A local real estate professional knows which communities may best fit your needs. They often know when new home communities will be opening up or releasing a new phase. Often times, brand new communities that are taking pre-construction reservations will save you money. Also, brand new communities may provide some additional home equity by the time you are moving into your new build home due to price increases by the builder as new lots/phases are released.
LOT SELECTION, STRUCTURAL OPTIONS AND INITIAL CONTRACT NEGOTIATION
The location and orientation of your lot (i.e. home site) is very important in the long-term value of your home and it’s resale value. Does it back to a busy street? Is it under power lines? Does it have a North, South, East or West orientation? In various regions of the U.S., some orientations may be more desirable than others for front yard or back yard exposure. In addition, most builders charge “LOT PREMIUMS” depending on the lot location and orientation. Your agent may be able to negotiate a better price on the lot premium for you. It is common that builders have a separate contract to address various structural options. It is critical that the various selections are properly completed BEFORE this contract is executed. Otherwise, you may end up with a home with some very different structural characteristics than you were expecting (e.g. elevations, ceiling heights, room options, etc.). And overall, your agent will be there to negotiate all the features you want at the best price possible for you, whether that’s a general price reduction, a reduced lot premium, or extra features or options included at no additional cost. Your agent is experienced to negotiate the best deal for YOU!
MORTGAGE FINANCING OPTIONS
Before you ever began your home search you should have been pre-qualified by a reputable LOCAL mortgage lender. And if you don’t already have a trusted lender, your real estate agent will be able to recommend someone they know and trust. However, when it comes to new build construction, most builders have their “preferred lender(s).” These lenders typically have some sort of business relationship with the builder or may even be owned by an affiliate of the builder. Often the builder will offer a monetary incentive to use their preferred lender. You may ask, why is that? And where does that money come from? The reason the builder will do that may be that they are making money off the loan too. Or maybe they just want control over the lending process. In any case, the builder’s preferred lender is looking out for the builder’s best interest, not yours. And often, the builder’s lender is not giving you as good a deal as you can get by going through your own lender. In either case, it is very important that you shop for mortgage financing on your own and choose the best option for you. Your real estate agent may be able to even negotiate the builder’s incentive while you still use your own lender.
DESIGN CENTER APPOINTMENTS
Your appointment(s) at the builder’s design center can be fun and very stressful at the same time. And it is often overwhelming. Having your agent with you on these visits, an agent who is experienced with this process, can ensure the process is managed to avoid you feeling overwhelmed or rushed. Your agent can also help guide you as to what selections may be more cost effective to meet your taste and budget and yet maximize your resale value down the line.
CONTRUCTION MANAGER MEETINGS AND WALK THROUGHS
There will be at least one, if not multiple meetings between you and the builder’s construction manager or Superintendent. You should always have your agent with you to ensure all aspects of your home construction are as negotiated per the contract. And if you are an out-of-State buyer, it is critical that you have an agent who can attend these meetings on your behalf. While the county inspectors will be inspecting the home at various stages of construction to ensure construction meets local building codes, it is a good idea to hire your own inspector to perform at least 1 or more inspections before your final walk through. It can save time and money if something is caught early and the builder is given ample time to get it corrected. Your real estate agent will have someone they can recommend to you to perform these detailed inspections on your behalf.
FINAL WALK THROUGH, PUNCH LISTS AND CLOSING
Prior to closing, the builder agent or construction manager (or both) will walk the home with you. This will be your last opportunity to catch any cosmetic or material defects that the builder needs to correct before closing. In some cases, cosmetic defects may not be covered by the builder’s warranty after closing as it’s hard to prove if the defect occurred before or after closing. Having a real estate professional, someone who has experience doing new build walk-throughs, accompany you on this final walk through will be a valuable asset. The list of items identified during the walk through as needing repair or correction by the builder is called a “punch list.” And prior to the actual close of escrow, your agent will verify with the builder that all of the final punch list items have been corrected. In fact, your agent may do one last walk through just hours before closing on your behalf to ensure all punch list items have been completed. At the closing you will execute the final paperwork transferring ownership of your new home from the builder to you, and if you obtained mortgage financing you will sign all of the lender’s documents accepting the terms of the mortgage. You will likely bring a cashier’s check to the signing or wire the remaining funds for closing to the escrow/title company prior to your signing appointment. Once the note and deed are recorded, the home is yours and your agent will get your new keys for you from the builder’s agent.
CONGRATULATIONS ON YOUR NEW HOME
Whether it’s a new build or an existing home, every buyer wants to walk away from the closing table with peace of mind that everything was done correctly and they got the best deal they could possibly get. Having an experienced real estate professional with you from the very start will go a long way to ensure your home purchase was a success!
