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.

Are you ready to buy your first home?

There are many great reasons to own a home. For one, the place is yours.

When you own your own home you have a place to raise your children and to be a part of a community. You can even pass your home down to your children and their children, creating security for generations to come.

Owning your own home can even help you reduce your taxes. You can deduct the interest on your mortgage and property taxes you pay on your home on the tax returns you file each year. These tax savings partially reduce, or offset somewhat, the actual cost of owning your home.

Another good reason to own your own home is that your monthly payments won’t ever go up, that is if you choose a fixed-rate mortgage! A fixed mortgage is one that stays the same for the life of the loan. If the mortgage is 30 years, you’ll pay the same mortgage payment each month for the entire 30 years of the loan.

So what are the risks of owning a home, you might ask? Overall, homeownership is a good investment for most people. If you understand the benefits and risks of homeownership, you can make the best decision about when to buy a home.

The first risk is that your monthly housing expenses can increase if your mortgage is higher than what you are used to paying in rent. On the flip side, rent goes up while your mortgage can stay the same. Another risk is that if an appliance breaks, you will have to pay for its repair or replacement. You are also responsible for the maintenance and upkeep of your home and your property.

If you are somebody who plans to move soon, the downfall of owning is that you have to wait to sell your home to move. Depending on the local real estate market, you might not be able to sell your home quickly. You should also factor in the likely expense of hiring a real estate professional. Fees can be negotiated and vary across regions. They also vary from professional to professional.

The last risk is that property values can depreciate. You can lose value in your home for a number of reasons, such as a recession, the condition of your home not being kept up, or a drop in a neighborhood’s home values. If your home loses value and you have to sell it for less than you owe, you will be required to repay the full mortgage.

Many people don’t even consider buying a home as they believe that you need great credit to become a homeowner. The fact is, you may still be able to buy a home with less-than-perfect credit. And remember, you can improve your credit over time.

Another myth about buying a home that often keeps people from looking is that you need to put 20% down. There are many types of mortgage products and programs that allow low and no down payments. But remember to factor in other costs such as closing costs, property taxes, moving expenses, and repairs.

So are you ready to buy your first home? Certainly the benefits outweigh the risks.
About the Author: Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal services. For more information, please visit www.electronicappraiser.com.