WHAT YOU SHOULD THINK ABOUT BEFORE SIGNING A PURCHASE AGREEMENT FOR NEW CONSTRUCTION
- Representation by your buyer’s broker is usually paid by the seller or builder. So, why not exploit this advantage?
- Site agents, represent the builder and are expected to get the best deal for the builder!
- You are much more likely to lose money by notusing a buyer’s agent.
- Having representation by a qualified buyer’s agent(ABR – Accredited Buyer’s Representative) is often FREE!
Let me explain…
Why Do You Need A Buyer’s Agent If You Are Planning To Buy A New Construction?
Many people enjoy looking for a new home. It can be an exciting event consisting of seeing many homes, getting ideas, and deciding where your furniture will fit.
Many others, however, find that the thought of purchasing a home, especially one which is older, is potentially fraught with pitfalls. They just can’t bring themselves to buy someone else’s problems.
A perfect solution may be to build a new home of your very own with all the features and amenities you desire. But, wait… How does that become a different buying process?
The first thing to do is find a qualified real estate buyer’s agent to represent you. You might be asking yourself, don’t they already have agents at the showroom who already know all about their paperwork? The models? The upgrades, amenities they offer? All of the pricing that we need?
Well, of course! And guess who they represent? They represent the builder and so will your contract. It is their job to get the best deal they can for that builder. The builder is their client. You are their customer. There is a distinctive difference between being a client vs being a customer.
A dual agency is created if you are represented by the site agent for the builder. The agent is not legally capable of presenting you with options which can benefit you against their client, the builder.
THE BUILDER HAS HIS AGENT ON STAFF…, YOU NEED ONE ON YOUR SIDE.
A buyer’s agent can help you make the right decisions, weigh the options, and help guide you with financing that best meets your financial needs. The site agents, working for the builder, usually enjoy working with a buyer’s agent for many reasons. It makes the paperwork go much more smoothly since they do not need to represent the buyer. Professional buyer’s agents are familiar with the process and are better able to advise the buyer. Which frees up the site agent to go and assist another buyer. The buyer’s agent is also keeping track of timelines. They know how the process works and will want to stay informed to help you avoid any pitfalls. The buyer’s agent is also able to answer many of the questions the buyer has prior to the initial visit so that the buyer is much more informed.
It is a very common practice for the site agent to offer incentives if you agree to use the builder’s financing. Although this may be an advantage, it can also cost you on the back end. So many builders are basically selling a blank shell with very basic finishes. It will cost you more for every upgrade you select from doorknobs to everything else that makes a house a home.
It has even been known to happen, that these back-end fees tacked onto the mortgage, prevent the home from meeting the appraisal value. Whereby, you would be under contract to produce thousands of additional dollars in order to successfully close on your dream home.
Your buyer’s agent can help you make the right decisions, weigh the options and find the financing that best meets your financial needs. The site agents, working for the builder, usually enjoy working with a buyer’s agent for many reasons.
It makes the paperwork go much more smoothly since they do not need to represent the buyer. Professional buyer’s agents are familiar with the process and are better able to advise the buyer. Which frees up the site agent to go and assist another buyer.
The buyer’s agent is also keeping track of timelines. They know when to spring into action to prevent issues before they occur. The buyer’s agent is also able to answer many of the questions the buyer has prior to the initial visit so that the buyer is much more informed.
THE SHOWROOM EXPERIENCE
Building a house for your dream home can be very exciting. It can also be very intimidating. Once you have chosen the lot location, the model, the custom elevation, the exterior colors, and roof, then comes the showroom.
If the thought of picking out a paint color for your current kitchen is daunting, imagine how involved picking out every surface, finish, knob, switch plate, trim-piece, stair-railing. Your buyer’s agent can help you through this process with experience and guidance which can be invaluable. Your buyer’s agent should be able to advise you on latest trends as to what will bring value to the new home or what items are just expensive extras. Why is this very important to you? If financing, you start to go “over-budget” and have to decide where you are willing to cut in favor of a more important feature. Many people involved in the plan to get everything just right for you.
How Will You Deal With An Inflexible Builder, A Non-Responsive Site Agent, Inspections, Paperwork, Documents And Terms? Now post Covid there are still supply chain delays or discontinued materials.
If You Don’t Have A Buyer’s Agent On Your Side, Considering how many people are involved with, ordering of materials, back orders, out of stock, discontinued choices, miscommunication, and human nature issues, this can be just the tip of the iceberg. No matter how well you might plan, things can go sideways, and you will need someone to run interference for you. Unless you are planning to take on the new build as a second career, why would you not have an agent working for you to help keep things going in the right direction, protecting your interests, scheduling professionals for inspections and performing all levels of negotiation and corrections on your behalf.
When you consider the seller pays for your representation and for the services you receive, doesn’t it just make sense? Experienced buyer’s agents are adept at negotiation and how to present a request to other agents and builders.
In closing, you will need someone there even after closing to assist you with the odds and ends that are inevitable to need your Builder’s attention. Let me assist you during this process, I have over 20 years working on both sides of the fence. It is always wise to hire third party inspectors who are experienced in foundation and framing, or HVAC for example. You need someone on your side to understand when to make those calls.
