When purchasing a new construction home, most feel they can do the transaction themselves, and doing it this way will likely save on the cost. However, this could be a very risky decision both financially and mentally! As someone who not only has experience in real estate, but also with purchasing a new construction home myself, I can assure you that there are no benefits to going at it alone. Here are just a few of the reasons why using an agent will more likely save you money, time, stress, and frustration.
The most important reason is….Why not? A real estate agent’s commission is almost always paid by the builder! Most buyers are unaware that they not only can use an agent, but that it’s customary for the builder to pay the agent’s fees. And if you think you may save on the cost of the home if you do not use an agent, think again. The agent’s commission cannot typically be taken out of the final price of the home, so if you choose not to use an agent the only real winner is the builder! And some builders are not agent friendly and if you initially register without an agent, you cannot bring one in at a later time. Or if they do let you, make sure to check the contract, there may be a clause stating the agent’s fee is now your responsibility!
Then there are the contracts which can be hundreds of pages long! Most builders will use their own sales contracts that even real estate agents may be new to seeing. And more often than not, these contracts will contain verbiage that favors the builder. You will want to have an experienced agent on your side who can effectively inform you of all of your rights and responsibilities contained within these contracts. Your agent will also know the right time to bring in an attorney if one is needed. Without an agent or attorney representation, you could inadvertently agree to some terrible terms!
When purchasing new construction you will often deal with the builder’s own sales agent. As this is usually a significant investment, you will also want someone representing you and your best interests. You need your own agent who will look after your best interests. Without one, you may be exposing yourself to a lot of risk. Agents are there to ensure that buyers know vital details that can be easily overlooked or forgotten. It is also the real estate agent’s job to ensure that custom features and upgrades are installed as agreed upon.
Real estate agents also will review with you the builder’s inclusions, financing options, and incentive programs. Real estate agents also will work closely with your lender during this time as financing new construction can be tricky. Most homes take 10 months or longer to complete and mortgage lenders typically cannot lock in interest rates for longer than 90 days. So you would want to take the advice from your lender and agent regarding your financial situation and budget so you do not run the risk of not qualifying for a mortgage when the time comes.
Their knowledge of the process, the local area, the materials, and comparable builders in the area can be a huge asset when making decisions and negotiating. Your agent will help you analyze and go over information shown in soil surveys, blueprints, and floor plans to assist you with making an informed decision. Your real estate agent should also be very knowledgeable of the area and what other builders are offering. They should be able to tell you such things as if those granite countertops are overpriced or if other builders in the area are offering better financial incentives. They may not be able to lower the base price of the home, but your agent may be able to help negotiate free upgrades or better incentives. They have the experience to know when and what they can and cannot ask for. They also know the timeline of the home construction and how to keep the building on track so the project doesn’t go months beyond what was agreed upon. Language in contracts can allow the builder to continuously push back the completion date!
That being said, I cannot think of a reason to not have a local real estate agent represent you in the purchase of a new construction home. I can be a valuable resource and guide along this process as an agent who also went through the experience prior to becoming an agent. I know the questions and concerns you will most likely have, as I had them myself! So please feel free to reach out to me anytime with questions, concerns, or if you would just like me to walk you through the process. I’d be more than happy to help!