Realtors Can Help Buy Newly-Constructed Homes
When house hunting, there is the allure of new construction or building your own home. You get to be the first to live in the pristine home where everything is brand new.
It may seem under these circumstances that it is unnecessary to use a realtor, but this couldn’t be farther from the truth.
Buying a new construction or custom-building a home is very different from buying a resale home and requires a different knowledge base and level of experience.
It may seem simple when buying a new construction; you pick out your floor plan and lot. But the fact is that with any real estate transaction, it’s best to have a professional to assist with the process.
It is essential to have someone who represents you throughout the building and/or purchasing process.
It is important to know that having a realtor represent you does not cost you anything. The home’s builder is considered the seller and is responsible for paying all realtor commissions.
“Realtors can really help you find the location and type of home that is best suited for you,” said Jeff Thomas, owner of Oakmont Development. “They are very knowledgeable and can be of great assistance with all aspects of navigating the construction process and buying a newly constructed home.”
The responsibility of the real estate agent is to help you get the most value for your money with the least hassle and frustration.
When it comes to purchasing a newly constructed home, this may include negotiating extras, recommending financing and overseeing home inspections and approvals.
Realtors also can serve as a valuable resource for learning about a potential new home. They are knowledgeable about the home’s construction, the amenities being offered, the housing development and information on the general community.
Real estate agents can be a great source for background information.
They are also invaluable when it comes to finding a reputable builder. They know the quality of workmanship, the type of warranties they offer and how they work to resolve issues and problems.
“There are dozens of excellent builders to choose from in Fort Wayne,” said Melissa Maddox, real estate broker with North Eastern Realty Group. “My role as a realtor is to help you decide what things are most important to you as a buyer and then matching you up with a builder and the lot location that can best fulfill your needs.”
Realtors are also able to assist with understanding and overseeing the timeline when purchasing new construction.
This process is a little longer than buying a resale home, as the necessary steps include choosing a layout then enduring the construction phase, inspections and closing. And of course with the building process, there can be delays with permit issues, getting inspections, financing, etc.
When it comes to purchasing a newly constructed home, the contract is different. It is important to have someone who can guide you through the process of understanding the selection of floor plans, earnest money requirements, deadlines for requesting changes, timelines for completion etc.
It is equally critical to have someone who can assist with price negotiations. Real estate agents understand that builders don’t necessarily want to negotiate on price as they have an incentive to keep up the sales price so the next buyer sees a higher closing price.
Rather than negotiating on price, builders may rather throw in closing costs or additional upgrade credits. Real estate agents will have information on where there is wiggle room in the negotiation process and where the builder is likely to make concessions.
Real estate agents can also assist with selecting a home’s upgrades. It is important to make decisions about upgrades early in the process because every change costs money. Builders offer endless options and upgrades, and buyers can often get overwhelmed.
A realtor can assist with selecting the upgrades that will get the most bang for the buck – especially when considering resale value.
You want to avoid over-improving which can jeopardize the home’s appraisal before closing. However, the agent can use his skills as a negotiator to get extras including upgraded counters and appliances, extra perks, amenities and upgrades.
“A real estate agent is there to make sure you get the best deal, the most favorable terms and continue to look at for your best interests,” said Kimberly Ward, president and principal broker for North Eastern Group Realty. “Experienced agents truly understand the ins and outs of purchasing a home.”
To-Do List for Buying New Construction
1. Hire a realtor to assist with getting good financial rates and fair closing costs and to understand the required building standards.
2. Don’t sign a builder’s contract until details are worked out. A realtor will ensure everything is included.
3. Research the builder. You don’t want a builder who sells too many properties to investors. You want a builder who constructs homes of greater and/or equal value in your neighborhood to keep property values high.
4. Research city plans. You want to know what will happen in your area and what you are buying into. It is good to see what are the city’s plans for roads, public spaces, parks and schools. You want confidence the neighborhood is going to be a good place to live as it develops. Realtors will likely have this information.
5. Understand the difference between base model and upgraded model. A realtor can advise on what upgrades make sense and which ones aren’t worth the cost.
6. Consider upgrades. An agent can help you understand what options are standard and what are upgrades. Builders often want cash upfront for upgrades, and you don’t want to be held accountable for your extras if you decide to walk away from the sale. A realtor can help you understand and negotiate payment for upgrades.
7. Plan for the closing and contingencies. A realtor can look out for the buyer to make sure you don’t close until all the work is finished. Once you close it may be more difficult to have things completed. Realtors can also assist when things happen beyond the builder’s control. They can help with contingency plans for cost overruns, temporary housing if necessary and bridge loans.