Building a new home from the ground up is a process that can be exciting, thrilling, frustrating, expensive, challenging, and more. From beginning to end, there are a lot of moving parts to contend with and manage as a builder and a buyer. The builder has the sales agent orchestrating their moves and overseeing their interest; and with so much at stake – money, emotion, time commitment, etc. – it makes perfect sense for buyers to have representation too. Read on to see why if you’re buying a new construction home you need to hire a REALTOR® – especially an experienced one like me.
Myth: Buyers who use a real estate agent for a new construction home purchase pay more for their house than buyers who don’t use an agent.
Fact: Builders price a home taking into account all of their costs. This includes the compensation paid when a home is sold – to both their sales agent AND to the buyer’s agent. If you don’t have representation, it’s like ‘found’ money for the builder since they calculated for an expense that wasn’t used. Do they pass this savings onto the buyer? No, their profit margin increases and the buyer does not receive a price reduction.
A Real Estate Agent Can Save You Money When Buying a New Construction Home
I have relationships with many builders and sales agents in Northern Virginia (and can make quick acquaintance with those I don’t know) – and this can actually SAVEyou money. Why?
It’s very hard for builders to cut the price of a home (if they do it for one, others would expect it, creating a domino effect that would chip away at their profits). They can, however, offer savings on “the back end” of a deal. This can take the form of free or reduced price upgrades and/or options, more attractive financing terms and/or assistance with closing costs. Another benefit for buyers: sales managers will sometimes extend special deals to me as an agent because of the volume of business I bring to them.
If the builder doesn’t offer outright, I like to negotiate for favorable pricing on upgrades and options. Buyers are often unaware of the break in price they can get if they just ask. I’m always, always, always a voice for my clients speaking up to get the best price possible. Some people call it haggling, to me it’s just good business!
Expert Advice: It’s important for you to have an agent to represent your best interests, from advising you on how to structure your offer to be most appealing to the builder to making choices that can affect your home’s resale value. (Redfin)
A Real Estate Agent Can Help You Make Your Best Deal
There are some features of a new home that a buyer needs to seriously consider paying for even if they don’t want to. Case in point, the very unglamorous double areaway walkout basement door. It’s not a “sexy” purchase, but you will thank me for it when you are moving furniture into or out of your house and of course, at resale. The walkout is a feature buyers find attractive.
Conversely, it’s also my responsibility to help direct you away from choices that don’t make sense for you now or for future resale. I find clients appreciate having an objective voice to help them make rational decisions during the new home buying process. With so many selections to make, the costs really add up quickly, it’s my pleasure to help remove some of the emotional stress by serving as an impartial sounding board.
Myth: It’s not practical to have an agent since the builder has a sales agent to help me make smart choices.
Fact: No matter how kind and helpful a builder’s sales agent seems, they are always looking out for the best interest of the builder. Always. End of story. So, if they have someone promoting their cause, shouldn’t you? Yes! Bring me along the first time you are entering a model home to meet the sales agent. They will know right from the start that you are savvy, serious home buyer.
Expert Advice: “Purchasing new construction is usually more complicated and intimidating than buying a resale home. It is important with a new-home purchase that a buyer hire a real estate agent to represent them in this process. This agent should be a local expert and have experience with newly constructed homes. Builder contracts and the building process is different from what most real estate agents deal with on a daily basis, so having new construction experience is important.” (Inman)
Unfortunately, I know too many horror stories of people feeling like they were pressured into upgrades and options that they didn’t really want, or financing terms they couldn’t afford because they were intimidated by the sales agent. Remember, the sales agent is employed by the builder to protect and grow company assets by selling as much product as they can. If what’s best for the builder conflicts with what you want or what you feel comfortable paying for, well, it’s their job to help you feel like you want “it” and can afford “that.” The results can sometimes be disastrous.
This happened to clients of mine who didn’t think about consulting me before signing a contract for a new construction home. After they put down a significant five-figure deposit, they realized they made a mistake, but the builder wouldn’t return the deposit or let them out of the contract. After much angst and lengthy negotiations, I was able to turn their situation around. They got lucky, this is not always possible.
Myth: All builders are pretty much the same. You’ve talked with one, you’ve talked to them all.
Fact: Builders are like snowflakes – no two are alike. They come in all shapes and sizes, can be publicly owned, family owned, environmentally focused, etc. It pays to do your research before you visit a builder to know what to expect. Also, while some have dedicated sales agents, sometimes they hire real estate agents to help with sales and some are so small that the builder-owner is also the sales agent. As part of the buying process, you have to perform due diligence on each builder you are interested in. It can be time consuming, but it will help you narrow your selection.
Contact Me at the Beginning of the New Home Construction Process
As a new construction specialist, It’s much easier for me to help you negotiate a contract that reflects your true desire than it is for me to come in after you’ve signed terms you are uncomfortable with – and try to get you out of it. Come to me at the beginning of your new construction search, I promise to use my expertise and negotiation skills to save you time and money.