Who represents who?
Let’s start by understanding what makes purchasing new construction different than other home sales. If you are dealing with someone sitting in a model home or that works for the brokerage listed as the selling brokerage, you are dealing with someone who is loyal to the builder. Legally and practically, they cannot provide you with advice on the purchase. At least, not advice that is in your best interest. Worse yet, many buyers think that by dealing with the builders’ representative, they will save money or get benefits that would not otherwise be available.
You can be certain that when dealing directly with the builder’s representative it will not save you money or get you extras that were not otherwise available. The builder simply gets to keep more money. They can’t afford to reduce the price of the home because it affects their ability to maintain appraised value for other homes. A good buyer’s representative can negotiate you the same extras. If purchasing new construction, you need a licensed real estate agent that understands new homes.
What difference does representation make?
Plenty. Is it really in your best interest to use the builder’s lender? Sometimes it is, sometimes it isn’t. Make sure to perform a thorough analysis of the different costs, interest rates, and loan payments.
An experienced buyer’s representative understands the process of building, completing, and closing on new construction. It dramatically impacts when you lock your interest rate, what rate you pay, and when you will be able to move in. A buyer’s representative assists you in monitoring construction. This is meant to assure you that your new home is ultimately what the builder represented and promised. It is now more critical than ever to be able to accurately project when you will be able to close, when you can give notice or close on your other home, and when you can begin to incur costs to move.
In the current market, your representative should conduct a thorough analysis of the terms.
- Can the builder simply cancel the contract?
- Can the price you negotiate increase at the decision of the lender?
- If so, did you plan for that contingency with your lender so you are not left without a home? Then there is the ability of the home to appraise for the amount you are paying.
Your agent should be able to provide you with a comparable market analysis. This demonstrates the reliability of getting the necessary appraised value.
Lastly, get an agent who understands the process of building. They should know what a finished product should look like. They should also be present when you do the inspection of the home and/or the final walk-thru. Someone representing the builder simply cannot afford to be pointing out the flaws of the product they are selling. Getting it right prior to closing keeps the leverage with the buyer.
Get an expert to represent you
Most real estate agents don’t fully understand new construction and the subtleties involved with representing new home buyers. Find out how many new home buyers they have represented. Ask about their building expertise. Make certain they understand new home lending. You will be glad you did.
For representation when buying new construction, contact Grind Real Estate Group and we’ll make sure you get the best deal on your new home.