Do I need a Realtor When Buying a New Construction Home?

With all the new homes currently under construction in southern California. It is inevitable that new home construction will be a consideration at some point when looking for a new home. The dream of owning a new home with no imperfections or needs for updating is what many new homeowners envision when purchasing a newly constructed home. But do you need a realtor when buying new home construction? The answer, to be honest, is yes.

If you do not bring your own realtor along, you will be using the builders agent to process your documents. You can avoid so many issues by bringing along an independent agent to represent you at new home construction listings. 

The most straightforward reason to use a buyer agent is you will get representation for absolutely free. Who wouldn’t take advantage of free professional help when making such an important financial decision?

Even with the access to using a buyer agent for free, many people buy newly constructed homes through the agents representing the builder. Yes, they are real estate agents, and yes, they represent the builder. If you do not bring your agent to the first visit of these model homes, you may not be able to bring in an agent later. If you purchase a home from the builder, using their agent, the agent that is representing the builder will represent you in the transaction. Keep in mind the agent’s primary commitment is to the builder. The builder agent was initially representing the builder and will continue to represent them, this relationship may prevent them from disclosing certain information about the seller by law. An independent real estate agent is not bound by these commitments to the seller and will only be concerned with what is best for you, the buyer.  

Here are some things you will likely not receive by using the builder agent:

Representation 

The real estate agents at the model homes are there to represent the builder and protect their interests, not yours. When you have an independent real estate agent, they are there to represent your interests exclusively. Additionally, an independent real estate agent will help you navigate the costs of new construction, in turn, making the real estate transaction smooth and frustration-free.

Model homes can be deceptive 

When you walk through the model homes, they will look awe-inspiring. One thing most homebuyers do not realize is the model homes are loaded with upgrades and professionally stage. In most cases, the upgrades in the model homes will cost an additional $100,000 to $200,000 over the base price. Most model homes will use top tier granite countertops, upgraded flooring, upgraded appliances, upgraded paint, crown molding, built-in shelves, and entertainment centers. These upgrades can add to the final price of the home.  An experienced real estate agent can help you navigate the hidden costs of having your new home meets your expectations.

Negotiations

While you may expect to be able to negotiate a better deal if you don’t have a real estate agent, this is generally not true. While you may be a great negotiator, when it comes to purchasing a new home, there is a lot of emotion involved in the thoughts that go into the purchase. An agent will look at your home purchase with a more skeptical eye to help you avoid any pitfalls that may not be so obvious. An experienced local Realtor knows the builders and understands what is negotiable and what is not. For example, some builders will offer assistance towards closing costs, including a home warranty or provide free upgrades. Builders are often more willing to work up deals on cerian upgrades than they are ready to negotiate a price. Hiring an excellent realtor will help you get the most home for the best price.

Documenting Everything

Anything that the builder offers needs to be in writing. You should never sign anything, but if they are offering you free upgrades, discounts, or fees, it needs to be in the contract. So many times, an agent at the builder’s office will make offers that are not in the final agreement. If you skip this step, the builder does not have to honor what was said, and this happens quite often. Your real estate agent will make sure that all promises and agreements get put into the contact.

Proper Home Inspections

Most people don’t realize that getting a newly constructed home inspected is very important. Many times there can be defects in the construction of the house. These defects are not detectable to the untrained eye, and these issues do not become noticeable until long after any home warranties from the builder have run out. Any real estate agent worth dealing with will close relationships with several independent home inspectors. A good home inspector will be able to find any defects that the builder will need to correct before you buy the home. Armed with a proper home inspection report, your agent can work with the builder to get your home in the condition you should expect. 

The Best Financing

Almost every builder has some lender in their office, offering you financing. In most cases, they are not offering the best lending options or the best rates. One of the tricks that many builder lenders use is providing closing cost assistance. They make it sound like this is only available if you use their lender, this is sim[ply not accurate. Many independent lender programs offer closing cost assistance. A good agent will have several lenders that they have worked with in the past that can provide better financing options. 

Correct Contract

Most people are not familiar with real estate contracts and the documentation that goes along with the transferring of real estate. Many times there can be hidden fees, taxes, and other charges that you will not know about until it is too late. A real estate agent experienced with new home construction and the new communities in the local area will be well aware of these hidden costs. They will be able to let you know what you are buying into before you put down your hard-earned deposit money.  It is of the utmost importance that you do not sign any paperwork or contract without your agent reviewing the documents and explaining them to you.

Honest Assessment of the Builders Quality of Construction

An agent that specializes in new home construction will know the quality of each of the local builders. The agent will know what kind of issues previous homeowners may have experience with the builder and how to avoid them with your new home. They will be able to explain all the options that each new home builder is offering and what kind of deals the builder will be willing to make. 

Now that you have a better understanding of the benefits of hiring a buyers agent, why don’t we discuss what it will take to hire an agent?

What does it cost to hiring a buyer agent

The best thing about getting an agent when you are looking for a home, buyers do not pay any real estate agent fees. When a home sale occurs, the seller or in the case of new construction the builder pays all the real estate agent commission. Builders already know that commissions are part of doing business. They already use agents at their models to bring in clients. It is part of the new home construction process. Many people feel they can work a better deal if they save the builder commission, but this is not true. Many times the builder will have to pay the buyer commission to the agents working at the builder’s office or keep it themselves. It all depends on the deal they have worked out with the broker. Even if the builder keeps the commission, they will not lower the price. The reason behind this is lower home sales prices will negatively affect future home prices from reduced appraisal values. 

Finding a good agent

Not all real estate agents are knowledgable on new home construction and may not be knowledgable of the builders in the area you are interested in living. When looking for an agent, you will need to ask them if them their experience in new home construction sales and what they know about the builders in that area. This knowledge will greatly benefit you when working with the builders. So interviewing a real estate agent is essential. 

When should you contact a real estate agent about a new construction home

Before you go to look at models!! Once you go to look at models, you will often be asked to register personally or register your agent. Failing to register your agent on your first visit could prevent a buyer agent from getting a commission, no agent will work for no commission.  

How the builder’s agent can help you

A builders agent can be a valuable resource of information. They have the most contact and the longest-running relationship with the builder at that site. The builder agent can provide information about the amenities within the community, the construction schedule for the community, background information, and the general vibe of the community. 

Now don’t rely on the builder’s agent as the only source of information on the community. I suggest that once you locate a community, you are considering you should walk the new construction sites. Take this opportunity to look at the construction in progress and also walk the existing neighborhoods. Make it a point to talk with the people living in the prior phases. Ask them how their experience has been and what they like and dislike about the neighborhood.  

Southern California is currently in a seller’s market. During a seller’s market, homes do not stay on the market long, and buyers need to act quickly before the house is sold to someone else. With new home construction, you are often afforded more time to check out the builder, neighborhood, and your options than when buying an existing home. Most development projects have phases, and if you do not get home in the current phase, there will be homes available in future phases. 

Be sure to check out all the new home site we have extensive knowledge of in Beaumont, Banning and Calimesa