Most buyers who purchase existing houses use the services of a real estate professional to help navigate the intricacies of the transaction. But do you need an agent when you are purchasing a brand-new home?
When Ritu Desai bought her first new house in 1999, she flew solo. Now, as a real estate agent with Samson Properties in Chantilly, Virginia, she realizes she made a big mistake.
Desai says she "regret(s) to this day" not having an agent represent her interests when dealing with her builder. She uses this personal experience to warn her clients that they need representation when dealing with a builder.
Many builders tend to disagree. While some builders welcome agents who bring would-be buyers to their model homes or sales trailers, many would just as soon see the agents disappear once the buyer shows real interest in purchasing a house.
The attitude is: "Thanks for bringing us this buyer. We'll take it from here."
But Desai and many of her colleagues argue that new-home buyers need someone to represent their interests, just as folks who purchase existing homes do.
"Sure, lots of people go it alone," says R. Bruce Lynn, a broker-associate at Keller Williams Realty in Coppell, Texas. "But they often could get a better price, a better house and a lot less headaches" by using an agent --ideally, a specially trained buyer's agent.
Cara Ameer, an associate broker with Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida, agrees: "To undertake what is your single largest purchase without any representation is simply being foolish."
First, let's talk price: As part of their marketing budgets, builders include commissions they'll have to pay agents who bring them buyers. That's anywhere from 2 percent to 4 percent, or $4,000-$8,000 on $200,000 house. And if there is no agent, they take that money directly to their bottom lines.
But since that money is already built into the builder's price, solo buyers should be able to persuade the builder to lop off at least some of it from the cost of the house. After all, some builders' profit margins are high enough as it is.
But if you have an agent, the builder pays the commission, not you. So it costs you nothing to use an agent, and the "savings" could be well worth the price.
Money isn't everything, though. So here are a few other reasons why an agent could prove invaluable:
While it is common knowledge that everything is negotiable when you are buying an existing house, most people don't realize that the same is true when the house in question is brand-spanking-new.
"Buyers are often so focused on price that they don't know they can bargain" with the builder, says agent Lynn.
Builders won't be nearly as flexible as individual sellers. But a seasoned agent who is familiar with the new home market -- or even familiar with your particular builder -- may be able to sway the builder to throw in a couple of extras, move a wall here or there without cost, or maybe even lower the price a bit.
Good agents will also advise their clients to obtain an independent home inspection, just like they would if the house was a resale. Most people get so caught up in the glitz of a new house that they don't think about an inspection. After all, they equate "new" with "perfect," but that's hardly the case.
"I've never seen an inspection on a new house that didn't have a laundry list of issues," says Lynn. And these are often issues that you may not notice when you do your own final walk-through, but that need to be corrected before you move in.
Rae Catanese of RE/MAX Bay to Bay in Tampa, Florida, had a client whose builder vowed an inspection was unnecessary. But her buyers hired an inspector anyway, who turned up some sloppy drywall work and unfinished trim, among other things.
"Ultimately, the builder fixed everything," Catanese says.
And then there's the builder's sales contract, which is usually incredibly one-sided. With a veteran agent speaking for you, the builder might be willing to eliminate a few of the more onerous clauses.
"An experienced agent will make sure that everything you want, or any matters related to the transaction, are stated in the purchase contract," says Dao Alderman, an associate broker with Keller Williams in New Tampa, Florida. "Even if it seems unimportant, it could cost you in the end if it's not part of the contract."
Warranties are another issue. Builders almost always provide a one-year warranty against workmanship and defects, and some offer 10-year protection against major structural flaws. But do you know what's actually covered and what's not?
"A good real estate agent who handles new construction will ask the necessary questions," says Florida agent Ameer. For instance: Which aspects of the home are covered under the builder's warranty, and for how long? Who administers the warranty?
The bottom line is this: The builder and their salespeople represent themselves and their interests, which are not always aligned with yours. Consequently, it is always a good idea to have another set of eyes and ears on your side of the table.
Let this be a lesson, from one of Desai's clients . Midway through the construction process, it was discovered that a very important option was not in the house, even though it was in the contract.
When the mistake was pointed out to the builder's agent, the buyers were told they would have to pay extra for it. But with Desai arguing on their behalf, the builder backed down and agreed to adhere to the contract.
"I am not dropping a child off at day care," says Desai. "I stand by my clients."