Use a Realtor® when buying from a Builder or Not?
The number of new homes being built every year (In 2007 there were 1,620,000 housing starts as reported by Freddie Mac) http://www.freddiemac.com/news/finance/pdf/Jan_2007_FRECOM_Outlook.pdf ).
As a buyer of a “new construction home” should you use the expertise of the Realtor® on the buying side? Typically a Realtor® who helps a buyer find a home is recognized as a “buyer’s agent”, someone who represents the buyer.
As a buyer’s agent, the real estate agent owes you a certain amount of loyalty. They should be acting in the buyer's best interest. They should maintain confidentiality by not offering information to the seller/builder that would influence your ability to negotiate the best terms. And a buyer’s agent would disclosure to other parties of the transaction that they represent you, the buyer only.
Let’s examine a few areas where a Realtor® / buyer’s agent can help.
Negotiating:
Not every unit with a builder’s inventory is fixed in price. Builders are often negotiable on homes (especially in this market). Builders have been known to throw in everything from carpet upgrades to a new car if you buy one of their homes. Having a buyer’s agent on your side can take the pressure off of you negotiating with the builder. The buyer’s agent acts as a third party to the transaction, often like a messenger, “Don’t shoot the messenger, just because he wants a built in pool……for free”.
Builders often factor in a co-operating or buyer’s agent commission in the pricing of their homes. They are not charging you extra because you bring your agent to the table. The use of a buyer’s agent ends up being a free service. It is not commonplace for a buyer’s agents to charge you as the buyer a commission.
Don’t feel that if you don’t use a buyer’s agent that you will also be entitled to receive a discount off the purchase price, any price reductions will need to be negotiated separately.
Loan:
Many builders are associated with or have a marketing agreement with a lender. This is not necessarily a bad thing but using an on-site lender doesn’t give you the ability to shop different lenders for better terms. A Realtor® can guide you through the mortgage process and help you shop for the best terms.
Re-Sale Items:
Let’s face it, although this may be your dream home, you may not live in it forever. A buyer’s agent can help you with items that can affect you reselling your home such as the floor plan, elevation choices, lot location, and upgrades. Most agents would agree that unless your home has an elevator, a home with a master bedroom on the first floor is the most desirable configuration.
Your agent may recommend one lot location over another, or which direction your patio should face. Did you overlook the busy street your new home backs up to….your Realtor® may catch it.
Contract:
Builder real estate contracts are often very different than those commonly used in your state and tend to be slanted in the builders favor. They also do not like to negotiate on the fine print of their real estate contracts. A buyer’s agents are not attorneys but regularly prepare contracts. They can help you in some of the terminology within a contract and may be able to point out language and can or can’t live without.
Walk Thru and Inspections:
Let you buyer’s agent do some of the work for you. Buying a newly built home is very exciting, and you may visit the site daily to see how it is progressing, don’t be afraid to let your buyer’s agent give you an update or email you pictures of the progress, after all they are being paid for their service.
Finally:
Do your homework in selecting a buyer’s agent. Recommendations are worth their weight in gold. And make sure the builder will cooperate (compensate) with a buyer’s agent in advance of your first visit to your builder. Builders are not fond of showing you a property on one day and you showing up with your Realtor® the next to write a contract
Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.
As a buyer of a “new construction home” should you use the expertise of the Realtor® on the buying side? Typically a Realtor® who helps a buyer find a home is recognized as a “buyer’s agent”, someone who represents the buyer.
As a buyer’s agent, the real estate agent owes you a certain amount of loyalty. They should be acting in the buyer's best interest. They should maintain confidentiality by not offering information to the seller/builder that would influence your ability to negotiate the best terms. And a buyer’s agent would disclosure to other parties of the transaction that they represent you, the buyer only.
Let’s examine a few areas where a Realtor® / buyer’s agent can help.
Negotiating:
Not every unit with a builder’s inventory is fixed in price. Builders are often negotiable on homes (especially in this market). Builders have been known to throw in everything from carpet upgrades to a new car if you buy one of their homes. Having a buyer’s agent on your side can take the pressure off of you negotiating with the builder. The buyer’s agent acts as a third party to the transaction, often like a messenger, “Don’t shoot the messenger, just because he wants a built in pool……for free”.
Builders often factor in a co-operating or buyer’s agent commission in the pricing of their homes. They are not charging you extra because you bring your agent to the table. The use of a buyer’s agent ends up being a free service. It is not commonplace for a buyer’s agents to charge you as the buyer a commission.
Don’t feel that if you don’t use a buyer’s agent that you will also be entitled to receive a discount off the purchase price, any price reductions will need to be negotiated separately.
Loan:
Many builders are associated with or have a marketing agreement with a lender. This is not necessarily a bad thing but using an on-site lender doesn’t give you the ability to shop different lenders for better terms. A Realtor® can guide you through the mortgage process and help you shop for the best terms.
Re-Sale Items:
Let’s face it, although this may be your dream home, you may not live in it forever. A buyer’s agent can help you with items that can affect you reselling your home such as the floor plan, elevation choices, lot location, and upgrades. Most agents would agree that unless your home has an elevator, a home with a master bedroom on the first floor is the most desirable configuration.
Your agent may recommend one lot location over another, or which direction your patio should face. Did you overlook the busy street your new home backs up to….your Realtor® may catch it.
Contract:
Builder real estate contracts are often very different than those commonly used in your state and tend to be slanted in the builders favor. They also do not like to negotiate on the fine print of their real estate contracts. A buyer’s agents are not attorneys but regularly prepare contracts. They can help you in some of the terminology within a contract and may be able to point out language and can or can’t live without.
Walk Thru and Inspections:
Let you buyer’s agent do some of the work for you. Buying a newly built home is very exciting, and you may visit the site daily to see how it is progressing, don’t be afraid to let your buyer’s agent give you an update or email you pictures of the progress, after all they are being paid for their service.
Finally:
Do your homework in selecting a buyer’s agent. Recommendations are worth their weight in gold. And make sure the builder will cooperate (compensate) with a buyer’s agent in advance of your first visit to your builder. Builders are not fond of showing you a property on one day and you showing up with your Realtor® the next to write a contract
Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.
Labels: home buying advice, home buying help, new home buyers
posted by Electronic Appraiser at
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