Buying New Construction Homes – Always Use An Agent

Apr 18, 2019

Using An Agent When Buying New Construction HomesA common question from home buyers is should they have an agent representing them when buying new construction homes? In short, my response is always yes, they should. There are many advantages to purchasing a newly-built home, such as quality, design options and the amenities that usually come with a home in a master planned community. But experienced home buyers will notice distinct differences in the home buying process when buying from a developer. The most obvious is that buyers don’t prepare an offer to submit, the purchase contract is prepared by the seller. Let’s look at some facts regarding sale of new subdivision homes and why working with an agent is beneficial.

Fact #1: You’re Up Against Professionals

Most subdivision sales centers are staffed by either licensed real estate brokers (or their agents) or employees of the developer. This means they have been specifically trained to sell the homes with terms most beneficial to the developer. Unless we have an agent on our side, we may not be able to fully understand all those terms and determine if they are reasonable, acceptable or perhaps negotiable. Our agent can also advise us on market conditions to make sure we’re negotiating the best price, not unnecessarily paying whatever the seller asks.

Fact #2: There Are No Standard Sales

Developers, or the brokers they hire, usually have a standard selling process. But standard processes and formats of “standard purchase agreement” forms may vary greatly from developer to developer. Certainly all sales must comply with applicable laws, but aside from that, the developer is free to conduct the sale any way they choose. These variables can be compounded by the current stage of construction, design options and escape clauses that developers might use to limit their liability (but not always yours) in the event of unforeseen constructions delays or expenses.

Fact #3: You Can’t Always See What You’re Buying

New homes are always inspected during the construction process by code-compliance inspectors. When construction is complete, they are inspected again prior to issuance of a “Certificate Of Occupancy.” Does this mean the property is flawless?  No way.  It means the structure meets all applicable building codes. Defects that could cost buyers money, such as small holes in the walls, stained carpet, paint splatters on tile, or optional features ordered – but not installed – are not code compliance issues. Having a real estate professional to assist with final inspections and implementation of corrective actions prior to closing escrow is certainly beneficial when buying a new construction home,

Fact #4: An Agent’s Commission May Already Be Priced Into The Sale

Developers frequently offer commissions to agents who bring buyers to their properties. The commission amount may indicate current demand for homes in the subdivision. Sometimes the commission is built into the price, but may or may not be subtracted when a buyer makes a purchase without an agent. Having an agent review the developer’s purchase agreement can provide opportunity for price negotiation that most buyers are unaware of how to spot.

In Conclusion…

For the reasons described above, working with a real estate agent when buying new construction homes levels the playing field for buyers.  Are developers willing to sell to buyers who are represented by an agent?  Most of the time, yes.  However, it is also common for Sales Center staff to tell buyers that they don’t need an agent because the developer’s sales price and terms are not negotiable. They might even say that as an agent themselves, they are available to assist the buyer if needed for no extra charge. Buyers should not be fooled – the developer’s agent is there to get the best deal for the developer and by advising buyers regarding the purchase agreement, they are creating a risky dual agency situation.

I hope you found this information about using an agent when buying new construction homes interesting and helpful. If you have any questions about real estate strategies or need help with any type of real estate purchase or sale, drop me a line. Contact Us

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