14 Realtor Rules When Shopping for New Construction
1. Representation-You vs the builder
The representative in the builder's sales office is an advocate for the builder's best interest, not yours. You want an agent who will be an advocate for your best interests.
2. Negotiation
You may be a good negotiator, but often the most effective negotiation occurs when a third party is working on your behalf. If your agent has no emotional ties to the transaction they can be a more effective negotiator. Many builders are more likely to negotiate on fees, or upgrades than they are on price. Builder may offer closing costs, credits, upgrades, or appliances, but you have to know how to ask, and when. An experienced agent can help guide you through the negotiations to get you the best bang for your buck.
3. Contracts
What does the builder contract look like? Some buyers have no idea what they are agreeing to, and how they can hold the builder responsible for a contractual obligation. Builder contracts are written by the builder, for the benefit of the builder. I strongly recommend that you do not sign any documents without your agent being present to review, and advise. An experienced agent can set expectations for you as a new construction buyer, nd help you avoid the pitfalls of allowing the builder to hold all of the cards.
4. Inspections
Why would I want to have my home inspected if it is brand new? Does the builder mitigate Radon? Has a disgruntled contractor poured concrete down the sewer line? Builders often times are on a tight schedule, and subcontractors have been known to cut corners to make deadlines. The builder is not always going to point out where they may have sacrificed quality for deadlines. A third party home inspection will not only give you as the buyer, leverage , it will keep the builder honest when addressing any potential shortcuts that occured during construction. One line I have coached my buyer's to say is "I don't feel comfortable closing until this has been addressed" it works like a charm.
5. Financing
Many builders have in house mortgage lenders that are owned by the builder, even if they have a different company name. Other builders partner with large national mortgage lenders to offer financing to new construction purchasers. How competitive are the products that builder companies and partners are offering? What kind of incentives do builders offer to use their in house lenders, or insurance companies? What about your rate lock, and how potential construction delays out of control may impact your financing? An experienced agent can help you understand how to get the most out of the mortgage financing process with a builder.
6. Quality of Construction
How familiar are you with the builder? What is their reputation? What are the construction industry standards?I can't tell you how many times I have heard a client say "That wall doesn't look straight" or "That concrete has already settled" An experienced agent can help you hold the builder's construction crews to high standards. I have known builders to intentionally gloss over poor construction results, hoping the buyer wouldn't notice that something needed to be torn out and redone.
7. Build Schedule
Does the builder begin on your home as soon as you sign the purchase agreement, and make the deposit? Is the builder waiting for the other lots on the street to sell before they excavate and pour the foundation for your new home? These are important questions to have answered before you start packing to move. An experienced agent will know how to help you time your move. If you need to sell you current residence, how do you time the sale and move so you don't have to move twice? The right agent will use their experience to make sure you are prepared for unmet expectations from the builder.
8. Warranty
Builders do offer warranty coverage for new construction. What does the warranty cover? How long is my new home covered? What is the warranty process? Concrete work vs. foundation, what's covered? Does the builder use an outside warranty company, or do they stand behind their product? These are important factors when it comes to protecting one of your biggest investments.
9. Location ,Location, Location
Builders price their products based on quality. This applies to everything from upgrades to the lot. Builders often will charge a lot premium for a more desirable lot location. This location may be a corner lot, close to a park, or away from a school or high traffic area. When you work with an experienced Realtor, your agent knows the best lots, and how to pick a product that will serve you not only while you are living in the home, but retain value when it's time to sell.
10. Construction Material Recall’s
Have you ever received a recall notice from a car manufacturer? Building products also have manufacturer defects, and recalls. These issues can be costly to the builder, and a nightmare for the homeowner. Can you imagine living in your new home while it turns into a construction zone? What if you can't live in the home, or worse, can't sell it because all of the homes in the same development have the defect? Our firm has had experience in this area of recalls, and construction defects, don't navigate these waters alone.
11. Design center/Upgrades
What you see is NOT what you get. You tour the model, and fall in love. The problem is that the advertised base price is just that, the base price. The builder puts all of the bells and whistles in the model, but offers a product that only has the basics. The builder does make a profit from all of the tile, cabinets, carpet, tile, appliances, flooring that they can sell you. Our experience in the design center will help you get the newest design style, without being trendy, or breaking the budget.
12. Inventory homes
Many builders work off of backlog. This means that the builder does not start construction until a deposit has been made, and an agreement has been signed. Sometimes builders will produce "spec" homes with all of the finishes planned and picked by the builder. Buyers also back out of their agreements, and leave the builder holding the bag, and even forfeit a deposit. This resulting homes are referred to as inventory homes. This means that the builder is sitting on inventory, and nobody likes to own a vacant home. These are often the best deals that builders offer as far as pricing, and the builder is a motivated seller. Our experience with new construction allows our firm to recognize these opportunities, and zealously represent you.
13. Agent Fee
Builders view commissions to Realtors as a perfect way to cooperate between parties. Realtors work with serious buyers, and builders want their properties shown to serious buyers. Builders will not credit the offered commission to the buyer, but rather keep that commission in house, and not negotiate a commission credit. There is no out of pocket expense, and no cost to you as a buyer to have professional representation.
14. Register
Unless you want to be by yourself when negotiating against a builder, make sure to register me as your agent on your first visit to the builder sales center. If you do not communicate that you have representation on your first visit to the sales center, the builder may try to make you represent yourself. Why not have an experienced professional working for you by making sure you visit the sales center with your agent, or register your Realtor when you first visit the builder.
