4 Reasons Why You Really Need a Buyer Agent When Buying a New Construction Home
October 29th, 2007 Categories: Buying a Home, New Construction Homes
I work with all types of buyers in my Raleigh real estate business. First time buyers. Buyers moving up or downsizing. Relocation buyers… lots of relocation buyers. Regardless of what category my client fits into, many of you choose new home construction.
Over 35% of my clients have purchased new construction this year. That’s pretty consistent with our market which is currently about 39% new construction listings. Many of my clients understand how important it is that they be represented by a buyer’s agent regardless of the type of home they are buying. Occasionally, however, I run into a prospective client who asks the question: “Why would I need someone to represent me when I am buying a new home?” That’s a fair question. Here’s my take on the advantages of having an agent working for you when purchasing a new home.
#1 – The On-Site Agent Works For The builder
Remember who benefits from pleasing who. The nice on-site agent in the model home works for the builder, so naturally they will be working to protect their employer and look out for their best interests.
Real estate transactions are complicated and it is just a good practice to have someone who is with you every step of the way making sure you are aware of all the conditions and potential risks of the large purchase you are about to make.
#2 – The Builder’s Contract Favors The Builder
This is a really big one. Builders typically do not use the standard NC Offer to Purchase and Contract. This standard Realtor contract was created jointly by the NC Association of Realtors and the NC Bar Association and includes lots of NC real estate law in a way that protects buyers and sellers from harm.
The builder, on the other hand, usually has their own contract created by their own lawyers. Who do you think this contract favors? You need someone who can at least explain the risks involved with the builder contract and possibly negotiate with the builder to add some additional protection for you. A good buyer’s agent will do this for his clients.
#3 – Knowing The Sales History Can Get You A Lower Price
It is very important to know what the builder has been doing with regards to discounting and what he is faced with regarding market conditions. If you are coming from a market in another part of the country where deep discounts are common due to market conditions, that may or may not be the situation here in the Raleigh market. In either case, you are in a better position to get the home of your dreams if you know exactly which set of conditions apply.
A good buyer’s agent can do several things to help you here. First, many builders put their sales in MLS. A good buyer’s agent will look at this and the tax records to try to get an idea of the discounts that have been given to other buyers.
The other thing a good buyer’s agent should do is to apply current market conditions to any offer you choose to make. If inventory is building and sales are flat or slowing, that is a good sign the builder may be willing to negotiate. On the other hand, if the builder has inventory, but it is selling very close to completion dates and has not been discounting, you could loose the home you really want by haggling over a few thousand dollars.
This is actually rather complicated to figure out. There is wisdom in knowing when to negotiate and when to offer full price. There is a time for both. It is practically impossible for an unrepresented buyer to interpret on their own the sometimes subtle market signs that could signal potential savings.
#4 – New Homes Sometimes Need The Most Repairs
This is going to sound a bit strange to some of you, but my experience is that many times brand new homes need more repairs than a resale home. This is typically due to miscommunication with subcontractors.
I have seen things like propane gas water heaters installed on a natural gas system, a huge fire hazard. Tub drains that leak when filled and then emptied by the inspector. This one would not be noticed in normal usage unless you crawl under the house right after taking a shower or bath. The result over time could be thousands of dollars in damage to the floor system.
The builder, and their agents, certainly will not recommend that you have a home inspection. Most builder contracts do not even mention a home inspection and provide no language to determine what, if anything, to do about items discovered in the inspection process that need repair.
Also, I do not ever recall a builder’s contract giving the buyer the right to have a radon test done and promising to mitigate this deadly gas if high levels are found. Radon is the leading cause of lung cancer among non-smokers. A simple test can tell if the home you are about to buy puts you at risk.
In North Carolina the only valid real estate contracts are the ones that are in writing. If you wish to have a contract that gives you adequate protection in case something goes wrong, choose a good buyer’s agent who can help you navigate your way to a fair, written contract that gives the builder what they want and gives you what you want.
PS – Check out this related article by fellow blogger Mary De Luca over at BeltwayRamblings.com
Hey Bob…I HEARTILY agree that a buyer should utilize a buyers agent when purchasing new construction from a builder. I have been involved in many transactions where my client did not have a Buyers agent. Nine times out of ten, these clients had not negotiated their best deal NOR did they know how to handle the repair issues with the builder. The onsite agents were not always customer service oriented once they knew the client was under contract. As you mentioned, the contracts were VERY one sided towards the builder. A buyers agent can advise their clients of their rights under the contract and make sure it is not so one sided when all is said and done. I KNOW that they could have arrived at a more advantageous price AND concessions with the assistance of a quality buyers agent.
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