I’m often asked, “Should I use a Realtor if I’m buying new construction from a builder”. The short answer is yes and here are the main reasons why.
When you’re house hunting, the allure of new construction is undeniable. You get to be the first to live in a new, pristine home, full of brand-new appliances and the finishes and treatments that you picked to fit your aesthetic. And you won’t have to worry about making any cosmetic or structural upgrades for years.
When buying a new construction, the builder’s sales representative will be ready to help you with the process. But make no mistake, the sales rep in the builder’s model represents the builder’s interest, not yours.
Representation – The sales representative in the builder’s sales office works for the builder, and represents the builder’s best interest not yours. The job of the builder’s sales representative is to get the highest price and best contract terms for the homes the builder is selling. An independent real estate agent represents your interests and advocates on your behalf. Additionally, a real estate agent will help you get the most value for the least amount of money, education your through every step of your transaction to ensure you make the best decisions. Your agent will also work to make your real estate transaction as easy and hassle free as possible.
What You See is NOT What You Get – You tour the model and it looks great. The problem is the model isn’t the $400,000 price advertised, it’s $500,000 because of all the upgrades. Top tier granite countertops, crown molding, upgraded appliances, a fireplace, built-in bookshelves and trey ceilings are usually upgrades and they add up. A realtor representing your interests will help make sure you’re aware of what’s included in the base price, what’s extra, what upgrades are worth paying for and which you could save on by waiting and hiring a contractor to complete post closing. Your agent will also work with you, providing guidance to ensure you don’t over do it with options, and price yourself out of the community. While you shouldn’t make every decision based solely on resale value (you will likely be living in the home for years) it’s wise to not completely ignore it.
Buyers Don’t Pay Agent Fees, Sellers Do – Buyers DO NOT pay the real estate agent fees, the seller or builder does. Builders view commissions to real estate agents as part of their cost of doing business. In fact, they rely on outside agents to bring clients to them. Builders will not credit buyers the commission they would otherwise pay to a Realtor. If they were to do so, realtors would no longer bring clients through the builder’s doors and ultimately it would severely impact their future sales. Therefore, there is no cost, or downside on your end to have an outside agent represent you. For more on this read Who Pays the Real Estate Agent When Buying a Home.
Negotiations – While you may be a great negotiator, even great negotiators are more effective when they negotiate for other people than they are when they negotiate for themselves. An agent will look at the transaction from a dollars and sense perspective without being swayed by emotions. A good Realtor will also know what is and what is not negotiable and as you can imagine it varies by builder. For example, did you know many builders will cover some closing costs? Include a warranty? Include free upgrades? Consider home sale contingent offers? Builders are far more likely to negotiate on fees or upgrades than they are on price. An experienced agent will help guide you through negotiations and ensure you are getting the most for your money.
Financing – A builder typically will have a “preferred” lender whom it will try to steer you to. In most instances the builder will have an affiliate relationship with this lender and receive a kick back if work with the lender, or the builder may even have an ownership interest in the lending bank. Your real estate agent can help ensure that you get the mortgage that works best for you and your situation. Even a small increase in the interest rate could have a significant impact on your monthly payment or the total amount you pay for the home. Shopping around is always wise, and you don’t want the builder’s agent pressuring you into using their suggested professional unless it’s right for you.
Get Everything in Writing – Any concessions or guarantees provided by the builder should be confirmed in writing. Do not sign any paperwork or contracts without ensuring everything you’ve agreed upon including upgrades, fees, timelines, etc. are incorporated into the contract. If you skip this step, the builder does not have to deliver what they agreed upon and you will have no recourse. An agent will ensure all the terms agreed upon are included in the contract. Also, confirm for yourself any information the builder representative provides about the surrounding area, including ongoing and future development, what school district the community feeds into, the tax district and local rates, etc.
Inspections – Tempted to forgo a home inspection in new construction? Don’t do it. New homes aren’t guaranteed to be free from defects. Often times, homeowners think a new home warranty will cover any issues that arise but in most instances, it does not. A good real estate agent will have relationships with multiple independent inspectors who will look out for your best interest. An excellent realtor will even help the buyer set the appointment with the inspector and review the inspector’s report to identify potential areas of negotiation, corrections, repairs or replacements with the builder.
Contract – Builders require the use of their own contracts, that is contracts which are written to protect the builder and their interest. How familiar are you with real estate contracts and their related clauses? Do you know what to look for to make sure you are protected, and contractually obligated to receive all the benefits discussed? Are you aware of any hidden fees or community fees? What about the tax prorations, how will these be calculated and who will be responsible for paying them? A real estate agent is an expert in the industry who is there to provide guidance throughout a real estate transaction. They prepare and review real estate contracts daily and know what to look for to ensure everything is correct. An independent and licensed real estate agent knows the nuances of the different builder contracts and will help review and answer questions pertaining to the contract. We strongly recommend you do not sign any paperwork or contract without your agent being present to review and advise.
Quality of Construction – How familiar are you with the builder? What’s their reputation? What is the quality of their construction? There are hundreds of builders in Columbus and Central Ohio. An experienced agent will be familiar with all the major production builders and their quality of work. They’ll also be able to provide recommendations and references for custom home builders to ensure you are connecting with not only a reputable builder, but the right builder to match your tastes and style, as well as your situation.
REGISTER – If you want to ensure you have a real estate agent looking out for your best interest, tell the builder on your very first visit that you are already working with an agent and provide their name. If you do not communicate this information upfront and when you first meet with the builder rep. Why? Because the builder (aka the seller) will be responsible for paying the commission, and needs to know if you’ll have a real estate agent representing you.
Are you thinking of buying new construction? Don’t go it alone, let me be your guide! Give me a call at 614.332.6984 to discuss your needs and how I can be of assistance!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickeringto, 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235