Having a Realtor For New Construction is Smart!
Do I need a real estate agent when buying a new home? Inquiring minds want to know.
The pros of using a Realtor for new construction far outweigh the cons. It’s not even close.
Buying a house without a Realtor can be financial suicide, whether it is a new construction or a resale.
It can seem so easy when you decide to take the leap and buy a new construction home – a property you get to customize and be the first to live in it.
You are the one calling the shots, and there is no risk of winding up in a home with many problems caused by previous owners.
Unfortunately, if you go forward blindly into your home purchase, you will not be the first to discover that buying new construction is not as straightforward or as trouble-free as you imagined.
There is still a lot that can go wrong, and you can still wind up with a property that is not nearly as perfect as you expected.
When purchasing new construction, buyers often wonder whether it is necessary to have a buyer’s agent. The answer is a resounding yes!
You need a buyer’s agent to look out for your interests when buying new construction. A Realtor for new construction in your corner can be invaluable.
As with any home purchase, there are too many potential pitfalls, hidden risks, and complications involved in the process to guarantee a good result unless you have experienced help.
It is vital to have a list of questions to ask a builder before moving forward. The answers to these questions could dramatically impact whether you enjoy your home-building experience or end up frustrated! This is one of the best resources around on what to think about before buying a new home. Be sure to read it!
Let’s have a comprehensive look at why having a new construction Realtor makes sense.
How Does a Realtor Get Paid on New Construction?
Like most other real estate transactions, a realtor will be paid for new construction. Typically, a builder will offer to pay a buyer’s agent half the commission, just like in a resale home.
Sometimes buyers will think if they go directly to the builder or the person manning the sales office, they will save half the commission. This is not the case.
There will be no benefit in going directly to the builder. They will not discount or give you a rebate because you didn’t come with your Realtor.
Keep in mind the person working in the sales office represents the builder. They don’t represent buyers. So it is commonplace for builders to pay Realtors a commission for new construction.
What Happens When You Visit New Construction Without a Realtor?
Over my thirty-seven years of selling real estate, many potential buyers have asked me what happens when I visit new construction without a Realtor.
The answer is you could be out of luck. Once you sign into a builder’s sales office without a Realtor, they may not allow you to have one.
The Realtor may not be able to receive a commission, and you may be out of luck having a buyer’s agent represent your best interests.
Unfortunately, sometimes nothing is posted anywhere at the builder’s sales center that tells you this. It may be posted in multiple listing services (MLS), but only Realtors will see it. That doesn’t do you much good.
Don’t sign your name or provide other contact information when you visit a new construction development. Instead, speak with your Realtor for new construction.
Go back and tour the home with your agent present. Having your real estate agent take over will be the wisest thing you can do.
Should You Have a Specialized Real Estate Agent For New Construction?
If you are not already working with an agent, it might make sense to seek out someone with lots of new home sales experience.
A new construction Realtor is someone who specializes in new builds. As a Massachusetts real estate agent, I’ve worked with numerous builders. My dad was a builder as well.
Being around new construction has given me insights that other agents do not have. New construction is a much different animal than traditional homes. It is a much more complex transaction with far more decisions to be made.
The knowledge and experience of a new construction real estate agent can be highly beneficial.Click To Tweet10 Reasons You Need A Buyer’s Agent When Buying New Construction
The benefits of using a Realtor to buy new construction are numerous. Here are some essential things a new home Realtor can help with when pursuing new construction.
1. Your Agent Can Help Ensure You Hire The Right Builder.
Undoubtedly, one of the top reasons you should have a buyer’s agent when purchasing a new home is to get a professional’s advice on the builder’s reputation.
One of the best things about working with a good Realtor is that you benefit from their network of agents, vendors, lenders, and other industry professionals.
Word gets around when businesses or service providers don’t take care of their customers in the real estate industry.
If a builder in your area isn’t reputable, chances are the agent will know about it. On the flip side, they are likely to have heard about the builders that go above and beyond for their customers.
With new construction, just about anything can go wrong. You are, after all, building a home that takes a while to construct. There is any number of things that can cause problems, including weather, labor shortages, as well as issues with materials.
Some builders have an exceptional reputation for delivering homes on time. Others are the exact opposite. One of the most significant complaints from those buying new construction is the builder’s inability to complete the home on time.
It doesn’t come as a shocker to know how stressful buying and selling a house at the same time can be when your new home is not going to be completed on time!
2. Your New Construction Realtor Can Consult on Financing
A realtor who works with new construction should know where to go for a mortgage. Are you getting a traditional end loan or a loan for construction?
Maybe you don’t plan to build immediately and will need a loan for land instead.
In either case, a new construction Realtor should be able to guide you to the best mortgage lenders for your specific circumstances.
3. Your Agent Can Help Guide You Regarding The Lot, Location, and Neighborhood.
The best value in real estate is not always clear without extensive experience to guide you.
While you can go with your gut, working with a Realtor for new construction can help you choose the purchase that best serves your interests.
Picking out the best lot, the right community for your lifestyle, the neighborhood features you want, and the worthwhile upgrades – your agent can help with all these things.
You are the final decision maker, but the best leaders have capable advisers to help guide their choices.
While you can choose to work with any real estate agent, having someone in your corner with experience selling new construction can be a tremendous asset!
For example, the lot you choose in new construction can have significant consequences. Quite often, buyers choose a lot from a classy-looking neighborhood plan. It will look all green and pretty.
You don’t know what you’re getting from looking at a builder’s marketing plan.
An agent who knows new construction inside and out will ask to see the lot’s specific site plan or property survey. From this, you will be able to gather the topography of the lot.
Maybe you don’t want a steeply sloping lot? How about finding out there is a large drainage ditch in your backyard? You may discover a large utility box smack dab in your front yard! Are you getting the point here?
Many buyers do not think of these things until they have committed to a contract and it’s too late.
A new construction real estate agent representing your interests can also check out other things that may impact the long-term value of your property.
This is another excellent reason why it is paramount to have a skilled buyer’s agent in your corner.
4. Realtors For New Construction Can Recommend Appropriate Upgrades and Plan Modifications.
New construction Realtors know what is in and out of new construction. They can be a great ally in making sure you make the right choices.
One of the nice things about new construction is you should be able to customize the home to your exact needs and wants.
Of course, like any other home, there are specific amenities that are going to be more critical than others. Without proper guidance, you could easily spend a lot of money on things that don’t matter when it comes time to sell.
Again, an experienced buyer’s agent can guide you into some of the best new home upgrades with the highest return on investment. Some improvements make a difference, while others are throwing money away.
A new construction real estate agent with experience working with builders from the ground up can often be a great consultant for making slight modifications to a plan. I can’t tell you the number of times I have tweaked a builder’s standard plan into something better.
Most recently, this happened in Millbury, Massachusetts. A recommendation on removing a hallway and sliding a bath in its place resulted in a floor plan becoming extremely popular. It became one of the best sellers in the builder’s neighborhood.
This is the kind of advice that can help you years later when you go to sell.
5. Your Agent Will Ensure All The Paperwork is in Order.
Having a buyer’s agent isn’t just important when buying a new home. Having a fiduciary in your corner is always essential.
Many folks often wonder what a buyer’s agent does for you. Real estate purchases involve a lot of paperwork and documents that can be confusing and overwhelming. Your agent will make sure all the paperwork is filled and filed correctly.
They will also help you review any contracts you sign to ensure you are protected and getting what you think you are getting. Your agent will verify that you understand all aspects of the contract and that you are OK with them.
If there are any issues, the agent will notice them and be capable of explaining them clearly to you and the builder.
Your agent can also recommend an attorney for real estate who will add addenda to the contract that will guard against complications should something go wrong.
Typically, a builder’s standard contract is written in a highly protective manner that favors the builder.
The attorney can help protect your interests, including looking over the thoroughness of the building specifications and builders’ warranty.
6. Your Real Estate Agent Will Negotiate on Your Behalf.
When buying new construction, you must have a buyer’s agent. Someone who is in your corner representing your best interests.
In most circumstances, you do not want to go directly to the listing agent. In many states, this is what’s referred to as dual agency.
A real estate agent is supposed to explain how dual agency works, but many agents don’t know themselves or explain it in a way that makes it sound wonderful to a consumer. It is not.
A Dual agent is a neutral party in the sale. They are not allowed to guide you as a buyer’s agent would by law!
With dual agency, you have nobody in your corner to negotiate on your behalf. Dual agency is, in fact, the dumbest thing that was ever created in the real estate industry.
It has been made illegal in some states because it is bad for consumers.
A strong negotiator understands the value of all aspects of the deal. Your agent understands what you want and need. They also understand what the builder values most.
Because your agent sees both sides clearly, they are most capable of negotiating a deal that will benefit you.
Can a Realtor Negotiate Price of New Construction?
For example – everyone knows the builder will want to sell the home for the highest price possible. But the builder is not just motivated by making as much money as possible from the sale. The builder also wants to keep the price high because it helps the builder sell the next home for a similar price.
The builder can point to your sale and expect the next buyer to accept a price near what you paid. However, because keeping the price at a certain point is so essential, the builder might be willing to give you other concessions in negotiations – such as offering upgrades.
Keep in mind, however, that every market is different. If the builder sells all his homes at full price and does not give away any upgrades, don’t expect your agent to perform miracles.
In some areas, builders can’t build homes quickly enough to meet buyer demand. Don’t expect a builder to discount when they don’t need to.
On the other hand, if it is a buyer’s market, a new construction Realtor will have a grasp on what concessions a builder is willing to concede.
7. Your Real Estate Agent Will Represent You Through The Entire Building Process.
Anyone with the financial means to buy a new home can find a builder and purchase new construction. Unfortunately, doing things this way puts the buyer at a considerable disadvantage.
Not only does the average person not have the ability to determine which builders are reputable, but they’re also likely to be taken advantage of by the professionals working for the builder.
It doesn’t have to be malicious; it’s just business. The builder and the builder’s employees are there to make as much money as possible.
With a reputable buyer’s agent, you get to step back and make the critical decisions that will get you what you want – while the agent filters all the marketing, salesmanship, and other noise into the facts that will help you make the best choice.
8. The Agent at The Builder’s Site Represents the Builder, Not You.
As previously mentioned, the real estate agent working for the builder is focused on the best interests of his client – the company selling the homes. This cannot be emphasized enough.
You deserve to have your own agent, someone looking out for you. Most of the time, the site agent will be happy to work with your agent. You should always have your own real estate agent to protect your interests.
When buying any home, it is always wise to have an exclusive buyer’s representative in your corner, fighting hard for your best interests.
There are so many questions that can come up when buying new construction. You want a trusted advisor you can bounce your questions off of.
Asking for advice from a builder representative will probably get you very different answers. Hopefully, by now, you understand why having a buyer’s agent when purchasing new construction is paramount to your success.
9. Your Agent Will Help With Getting a Home Inspection
While it is true that new construction homes will be inspected by city or town officials, you still may want your own professional inspection.
The cost of having a home inspection is well worth it in most circumstances, considering the money you’re spending. Some may recommend skipping the inspection.
Whether the home inspection is worth it could depend heavily on the builder’s reputation. Speak to the neighbors and others the builder has worked with to get insights.
10. Your New Construction Realtor Continues to Represent You After Closing
A Realtor’s job is never done even after the sale is complete. With new construction, you will likely need some fine-tuning with your home after you move in.
For example, you may have closed on the home with some uncompleted work. The builder may not have completed the punch list entirely. A Realtor can help with communicating with the builder’s representative.
The same would be true if, a few months in, something needs attention that is covered by the builder’s warranty.
Pros and Cons of Using a Realtor For New Construction
The pros vs. cons of using a new construction real estate agent are very much lopsided. Let’s have a final review.
Pros of Using a Realtor
- Realtors can help you choose the right builder.
- It does not cost you anything – the builder pays the commission.
- Your Realtor can help you get appropriate financing.
- You have a fiduciary looking out for your best interests.
- Your real estate agent will be negotiating on your behalf.
- They can help you decide on the right lot.
- Realtors have experience choosing the best upgrades for return on investment.
- Your Realtor can recommend a professional home inspector.
- You’ll continue to have representation after closing.
Cons of Using a Realtor
- None unless you choose the wrong one.
Final Thoughts on Having a Realtor For New Homes
The benefits of using a Realtor to buy new construction should be evident. It makes little sense to go directly to someone who represents the builder.
It would be like using your spouse’s divorce attorney to settle the divorce for you. There is a reason real estate attorneys can’t represent parties with opposing interests.
Do yourself a favor and always work with a Realtor when buying new construction.
Additional Helpful Home Buying References
- Advice for buying a new home – see additional advice via Paul Sian on buying new homes.
Use these additional resources to make intelligent decisions when buying new construction!
About the Author: The above Real Estate information on the pros and cons of using a Realtor for new construction was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 37+ Years.
Thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.
Great advice, Bill. Smart buyers can save themselves a lot of headaches with the assistance of a Realtor in the purchase of new construction.