Five Reasons Why You Need Representation When Buying New Construction

22 Nov 2015 · Lyn

Buying a brand new home can be an exciting process. Looking at a beautiful model home is sure to inspire even the least creative among us! It’s easy for you and the sales agent onsite to become fast friends as you fantasize about all the wonderful new ways to decorate and use space. Who knew you needed a 500 square foot drop zone?! While we are fortunate to work with some of the best new construction sales agents and have a great relationship with them, we would like our clients to know when you decide to buy new you are best served to have your own representation. And here are five reasons why.

  1. Guess who wrote the contract? The attorney hired by the builder (and paid by the builder) wrote the contract. That attorney’s job is to protect the builder’s best interests. In other words, not yours. Unless you are a real estate attorney, you will want one of our experienced agents to review the document to let you know of any red flags and other implications of entering into the contract. Some items we have seen on contracts that a buyer should be well aware of are:
    • Build Time – Some new construction contracts state that the builder has years to complete construction and you agree to any delays on their part.
    • Sub Prime Financing – One contract we recently encountered said that if the buyer is unable to obtain financing using traditional lending methods, the builder would require the buyer to apply for a loan with any lender the builder chooses at any interest rate necessary to obtain the loan.
    • Cost of Upgrades – Another caveat our team discovered on a new construction contract… During your trip to the design center, if you exceed a certain amount of upgrades, you will be require to pay for a portion of these with cash before construction can begin.


  1. Negotiation – There is a common misconception out there that you cannot negotiate the price of new construction. This simply is not true and our team has a successful track record of getting builders down to their bottom line. We have data on everything that has sold in the neighborhood and other neighborhoods where that builder has inventory. We will use this information to determine how much a builder will typically come off on price, and start below that. We have successfully negotiated the inclusion of refrigerators, washers, dryers and blinds, as well as had lot premiums waved.


  1. Funds for Buyer’s Agent Commission—Builders rely on Realtors to bring a good deal of business their way. We do have good working relationships. They have funds available to pay for your agent’s commission and if you don’t have an agent, they do not take it off the price, they just keep it. Taking it off the price would upset too many agents who the builder relies on to keep bringing buyers to their communities.


  1. Inspections– Having a thorough home inspection is just as important on new construction as it is on a resale home. There’s a saying in our business: Code is not quality. Just because something passed county inspection, does not mean it’s of the upmost quality. We recently had a couple hesitate to incur the cost of a home inspection. After some encouragement, they decided to go ahead with it. Everything checked out well, except one item. Their furnace, which was in the attic, was leaking carbon monoxide—an odorless, deadly gas. The fix was simple and the builder gladly took care of it right away, but imagine what could have happened if our agent had not advised them to have a professional home inspection? You’re spending hundreds of thousands of dollars on this new home, please invest another $500 for an inspection.


  1. The Actual Cost of the Home—“Oh the model…it’s so beautiful! And the base price is only $250,000!” As agents, we have all been there with the couple rushing from room to room exclaiming what they love and how they want this feature and that. Forty- two- inch castled cabinetry, travertine shower with dual shower heads, radiant heated floors. The list can go on and on, and the price goes along with it. Your agent will help you decipher which of the costly upgrades featured in the model home actually comes with the base price. Because of our experience, we know what a reasonable up-charge for an upgrade is, as well as help you determine if it is something that can wait and be done at a later date, if at all, and let you know how it will help (or hurt) resale value. Don’t forget, it is very important to not upgrade your home so much that you end up with the most expensive home in the neighborhood. A good agent won’t let you make that mistake. After all, we’ll be the ones trying to sell it for you in seven to 10 years!

Please understand that we have nothing against new home sales agents or builders. They are doing their job, just like we are doing ours. Just as you wouldn’t go to court without a lawyer, you should have your own representation when buying a home, new or resale. Together we can make your new home purchase a wonderful experience, and a smart investment!

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