The answer to this can vary depending on your ability to do builder research, construction process knowledge, and comfort level. My first home I owned was one I had built in a subdivision. I did have a Realtor I was working with, but after signing the original papers that day I never saw her again until closing (we did have a few phone conversations). You should expect to meet your agent at the home several times during construction, and your agent should also just be dropping by to check on quality during different phases. In my case I had very little builder issues, they did what was expected other than some minor things that were corrected during the process. I don’t really have a complaint about it.
This year a friend of mine had a house built, did lots of research and chose who he thought was the best builder for this price range. My friend has good construction knowledge, and negotiated everything with the builder without an agent. This was someone who really didn’t need the help of an agent because of his knowledge and him living on site to keep an eye on things. However, he had issue after issue with the builder, cheap quality contractors, sloppy work, and poorly written builder contracts. He recently moved into his house, but it was a battle the whole way keeping them in check just to get what anyone would expect out of a new construction home.
Tips for going unrepresented with new construction:
- Builder Research - Spend a lot of time deciding what builder is right for you. Read reviews and complaints online on many different sites to help your decision.
- Price Research - Look online at various sites to see what other similar homes sold for in that neighborhood. You don’t want to build the most expensive home in the subdivision. You also want to know what upgrades are worth the cost and not. Many times upgrade prices are very high, and you can hire them out on your own after you move in to save some money.
- Incentives - Builders are always offering incentives (much like car company’s) during given months. Most of the times they are free or discounted upgrades, or a credit of $xx,xxx in free upgrades of your choice. Just because they are offering something doesn’t mean you cannot push for more. You can negotiate larger credits and other upgrades.
- Preferred Lenders - Many times they offer $2k-$3k in closing credit to use their preferred lender. This is also negotiable. I see new build listings all the time advertise a fixed lender credit, but at closing the buyer was able to get a lot more by negotiating. Also, keep an eye on their loan fees. Even if they are offering a sizable closing credit all their loan fees might be significantly higher than other lenders.
- Additional Discount - Builders have buyers agent commissions built into their price structure already, which is why having a buyers agent does not cost extra. If you decide to purchase without and agent you should push for additional discounts since they are saving money.
Benefit of building your home with the guidance of a Realtor.
- Contracts - Builder contracts are all one sided, and in many cases have financial relationships with their preferred lender and title companies. Nothing in all these contracts protects you if something goes wrong. Agents can help you understand what you are signing, and agreeing to.
- Comps - Your agent can pull up past sale prices, closing cost credits the buyers received, and other info on similar homes the builder has already closed on. Additionally, we can contact the agents of those sold homes and ask for their clients feedback of the process, quality, and builder incentives they might have received (for comparison).
- Agent Networking - When an agents client has a bad experience with a particular builder, you can bet they warn other agents. Additionally, agents who are working with builders they haven't worked with before will seek info from others who have.
- Bonus Incentives - On occasion we get emails from builders offering bonus incentives to our buyers.
- Upgrade Guidance - Which upgrades will you see a return on, and which ones are way overpriced? Not all upgrades are worth the expense. It's important you don't overpay for certain upgrades that won't give you any return.
- Lot Selection - The additional money for more desirable lots may or may not be worth the costs. We can help you understand the positives and negatives of your lot options.
- Extra Eyes On The Construction - Your agent will be with you the entire way with an additional set of eyes overseeing everything. It's even better if your agent has general construction knowledge to look for incorrect, or sloppy work.
- We're On Your Side - When using an agent, we work for your best interests. Although most builders are fair, they are ultimately working in their best interests.
- No Cost To You - Buyers do not have to pay for our services, as it is already built into their pricing model.
There you have it! Hopefully this post will help you make an informed decision. Would you like do discuss your New Construction options? Give me a call, or email me today!